Compound

What is a connection (COMP)?

COMP is a native token Compound crypto project. It is based on the ERC-20 token model on Ethereum. A composite protocol is lending platform which pools assets and sets interest rates using algorithms based on supply and demand. Essentially, by using a platform to lock your crypto funds, you can receive profitable profits with increasing interest.

COMP is a governance token. The supply of Compound tokens is limited to 10 million. Nearly half of the offering is dedicated to Compound users. The remaining half is divided between Inc shareholders, Compound founders, Compound Labs, management fees and future plans.

If you are interested in the Compound price or other token details, be sure to check out the chart above. It will provide you with COMP price history so you can make an informed decision on this project.

Founders of Compound

Robert Leshner and Jeffrey Hayes developed the Compound protocol in 2017. Robert Leshner is Compound’s CEO and Jeffrey Hayes is the company’s CTO.

The Compound protocol was originally part of Complex laboratories. Leshner said the protocol was an experimental project that didn’t even have an official document at first. Overall, the founders did their job by creating the protocol and distributing its tokens.

Now the management of tokens is largely in the hands of community members. Additionally, the Compound protocol is no longer dependent on Compound Labs.

How does a composite protocol work?

Essentially, it’s like a bank. It allows users to lend or borrow assets. Basically, you need to list your assets on the platform and they will be sent to A liquidity pool.

Then you will receive cToken (for example cETH) in return. By holding the token, you will be able to make a profit over time. This happens because the exchange rate of the asset underlying the cToken is rising. Additionally, using smart contracts integrated into cTokens, the Compound protocol automates the process of matching borrowers with lenders.

Talking about borrowersthey can make a deposit pledge obtain a secured loan from any Compound pool. Depending on the collateral asset, the maximum loan-to-value (LTV) ratio ratio may vary. The interest rate paid also varies depending on the type of asset borrowed.

However, if borrowers’ collateral falls below predetermined support levels, they may be subject to automatic liquidation.

Also, note that each pool is always overly wealthy. This is true because the protocol provides a collateralization ratio for each asset that the composite protocol supports.

Liquidators have the opportunity to redeem the collateral for 5% discount when it falls below the minimum maintenance threshold. At this point, part of the loan is repaid, returning the balance to a level suitable for collateral.

This structure serves to ensure that borrowers maintain their collateral level. It also gives liquidators the opportunity to make money and provides protection for creditors.

Using the COMP token

Since COMP governance token, this allows holders to participate in decision-making processes. This includes discussing, proposing and implementing various changes.

Owners of complex coins have the opportunity transfer your voting rights either to yourself or to a specific address. Users with at least 25,000 COMP tokens can create management proposals. At least 400,000 votes must be received during the three-day voting period following the filing of the application. The new change will be adopted in two days if a majority of voters vote for it.

Users can acquire COMP tokens not only by purchasing them, but also through the Compound crypto platform. Every time they lend or borrow assets, they receive Compound tokens.

It’s important to note that Compound’s price is volatile, which is common with crypto assets. However, you can always track this using the graph above.