This post is a review on COMP, the native token of the Compound Protocol.
As of December 11, 2020, COMP ranks #39 on CoinMarketCap.
Pretty good for a token that was launched only 5 months earlier, don’t you think?
So, how is COMP faring well in the crypto market? And what use is this token to you anyway?
Read this post till the end to find answers to these questions and more.
This COMP review is grouped under the following subheadings:
- COMP Overview
- What Are The Uses Of COMP?
- Exchanges Where You Can Buy/Sell COMP
- Wallets Where You Can Store COMP
A click on any item above will display its content right away.
1. COMP Overview
The native token of the Compound network is called COMP.
It is used to reward lenders and borrowers as a way to boost liquidity and participation.
This distribution is achieved using a smart contract.
And the amount of COMP a user gets largely demands on the interest rate of the different markets (lending or borrowing).
An asset having a higher interest rate and more participants will get more COMP.
That notwithstanding, the total COMP given to the lenders is the same as that given to the borrowers daily.
Interestingly, there was no initial coin offering (ICO) for the COMP token.
10 million tokens were supplied and nearly 60% was allocated to investors, founders, current team members, future team members, and community growth.
Below is the breakdown of this distribution:
|2.4 million||Shareholders of Compound Labs Inc.|
|2.2 million||Compound founders and team|
|400 000||Future team members|
|800 000||Community initiatives|
For the remaining 40% which is 4.2 million tokens, they will be distributed to the users of the protocol over a 4-year period.
The plan is to maintain a consistent daily distribution of 2880 tokens.
Also, the 2.2 million COMP tokens given to Compound’s founders and team members is seemingly temporary and will be ‘returned’ after a 4-year period.
This will provide a transition period where the founders and team can still guide the protocol via voting as it gradually becomes community driven.
Next, we’ll see the uses of COMP.
2. What Are The Uses Of COMP?
a. It is required for voting. With 1 COMP, every user has a say in the future of Compound.
b. Additionally, users can delegate their votes to other users without having to transfer the tokens to them.
c. Furthermore, users can table proposals for the platform if they own up to 1% of the total COMP supply.
A proposal requires a minimum of 400,000 votes to be affirmed. 3-days are given for the voting process.
If the proposal succeeds, it will be executed after 2 days.
d. Also, you can exchange COMP in decentralized exchanges like Uniswap for other tokens.
e. Another relevant use of the COMP token is yield farming.
Using InstaDapp, COMP owners can participate in yield farming and enjoy huge returns.
InstaDapp is a platform that allows users to interact with multiple DeFi apps from a single point of reference.
How can COMP owners maximize this platform to earn big?
The “Maximize $COMP mining” feature of InstaDapp can give you over 40X increased returns in COMP tokens.
In other words, the USD equivalent of COMP tokens you receive will be more than the USD value of the interest you owe on the money you have borrowed.
Here’s an example:
Ikechukwu has 100 DAI and he decides to deposit it into Compound.
Next, he uses the 100 DAI to borrow 200 USDT from Compound using the ‘Flash Loan’ feature of InstaDapp.
Then, he converts the 200 USDT into 200 DAI and put the 200 DAI back into compound as a lender.
Adding this 200 DAI to the initial 100 DAI deposit means he is now lending 300 DAI and owe 200 USDT.
At this point, he will receive a return in COMP that will yield an annual interest rate in USD that will most likely exceed 100%.
And that is even after paying off the interest rate for borrowing the 200 USDT.
Superb! Isn’t it?
Now, let’s see the exchanges where you can trade COMP.
3. Exchanges Where You Can Buy/Sell COMP
Since its release in June 2020, several trading platforms have listed the COMP token.
For the purpose of this article, we’ll discuss 7 of them:
- Huobi Global
Binance is a popular Cryptocurrency Exchange, founded in 2017 by Changpeng Zhao.
It provides a platform for users to buy and sell COMP easily and swiftly.
There are different convenient payment methods that you can use.
Plus, the COMP token is available for margin trading on this platform.
On Binance, you can trade COMP with BTC, BUSD, BNB, and USDT.
You can read our review on Binance to learn more.
Coinbase is another popular cryptocurrency platform that has listed the COMP token.
Brian Armstrong and Fred Ehrsam founded Coinbase in 2012. It is fully licensed and regulated.
On this platform, you can exchange COMP for USD and BTC.
COMP is not only listed on Coinbase Pro, the trading platform but also in Coinbase.com, its simplified version.
Additionally, users can trade COMP in the Coinbase Android and iOS apps.
Read our Coinbase review to learn more.
OKEx was founded in 2014 by Star Xu. It has its headquarters at Malta.
This platform enables users to buy COMP using various payment options.
Also, this token is available for margin trading on the OKEx platform,
Here, users can trade COMP with BTC and USDT.
Read our OKEx review for more info.
It was founded in 2018 by Hayden Adams.
Uniswap was one of the first platforms to list the COMP token.
However, users must ensure that they hold the token they wish to swap on their wallet before initiating the process.
Poloniex is a digital currency exchange that is based in the United States.
Tristan D’Agosta founded the company in 2014.
Here, users can exchange COMP for USDT and ETH.
Also, the platform supports cUSDT, the ERC-20 token version of USDT on Compound.
This allows users to earn and accumulate COMP tokens on Poloniex exchange with their cUSDT balance.
ProBit is another cryptocurrency exchange that has listed the COMP token.
It was founded in 2017 and it is based in Korea.
Users can trade COMP for KRW and USDT on ProBit.
This platform also features over 500 trading pairs that users can benefit from.
vii. Huobi Global
Huobi is a cryptocurrency exchange based in Seychelles.
Leon Li founded the exchange in 2013.
It allows users to trade COMP for USDT, BTC, and ETH.
Moving on, you will find the wallets where you can store your COMP tokens.
4. Wallets Where You Can Store COMP
Ledger Nano S
We have here a hardware wallet where you can safely store your COMP tokens.
The Ledger Nano S also supports a wide range of crypto currencies. And it is very secure.
Additionally, this wallet makes backup and recovery very simple.
It has a strong development team and and an excellent customer support.
You can read our review on Ledger Nano S for more info.
This is another hardware wallet that supports COMP tokens.
Trezor One also supports over 1000 cryptos like BCH, LTC, ZEC, Erc20 tokens, etc.
It features a passphrase support that enables users recover their lost passwords.
Read our review on Trezor One to learn more.
If you don’t feel ready to invest in a hardware wallet, you can go for Trust Wallet.
It is a popular mobile wallet among crypto traders and investors that supports the COMP token.
Trust Wallet is convenient and secure.
It also allows you to store other ERC20 tokens.
MyEtherWallet is a desktop wallet that grants you control of your private keys.
It supports COMP and other ethereum based tokens.
MEW also allows users to write and access smart contracts.
It also has an ETH to BTC swap feature. Cool, right?
This is another desktop wallet where you can store your COMP tokens.
The wallet supports about 300 types of tokens.
It is easy to use and you are always in control of your keys.
MetaMask is a very common ethereum wallet where you can store your COMP.
It functions as a browser which can be used to access the ethereum network.
Also, users get access to Ethereum Decentralized apps.
It comes with a chrome and Mozilla Firefox extension.
Furthermore, MetaMask is one of the wallets listed on the Compound protocol for easy transactions.
This is another wallet that is listed on the Compound protocol.
It is a mobile wallet where you can easily store your COMP.
Coinbase Wallet grants users control of their private keys. iOS users can also back up their keys on iCloud.
This is a keyless cryptocurrency wallet where you can store your COMP.
Using the ZenGo swap feature, users can swap COMP for other coins supported on the platform.
Also, users can hodl their cryptos on ZenGo and earn rewards and interest.
We are almost done here but before we go, let’s quickly answer some frequently asked questions.
Rather, it is distributed to users as they borrow and lend crypto on Compound.
The Compound Protocol allows users to perform transactions using their staked tokens.
However, you cannot withdraw such tokens.
The more you lend and borrow tokens on Compound, and also vote on various governance proposals, the more COMP you will earn.
Also, you can earn more COMP from the apps listed under the ‘Earn’ and ‘Manage’ buttons on the Compound home page.
COMP is a versatile token. It can be collected and withdrawn, exchanged for other coins, and used for voting.
We have now come to the end of our discussion on the Compound governance token. I hope you enjoyed your read.
So, tell me:
What do you think of this token? Do you think it will increase in popularity like bitcoin?
Would you invest in this token? Perhaps, you already did, has it been profitable?
Let’s hear your thoughts in the comments section right now.
Also, share this post with your friends. Thank you!
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