When the compound released its control mark, COMP, on June 16, few in the coding region could predict how quickly it would rise to the top. As reported by Cointelegraph at the time, COMP took only one day of trading to become a leader in the decentralized financial classification. It was a historic moment for any DeFi fan, and it was the first time that Maker (MKR) had been removed from the throne since the start of the DeFi movement.
Coinbase Pro news pushed price to new heights. But as with the cryptocurrency, volatility moves in both directions. After only a few days, computer company prices fell from a maximum of $ 427 to less than $ 250, then jumped 25% after Binance unexpectedly announced that it had also included a code. Some analysts later suggested that the price was artificially inflated with derivatives.
However, COMP DeFis holds first place – at least for the time being. So what is all this noise?
What is the relationship?
Compound is a decentralized loan application developed on blockchain Ethereum. In fact, anyone with a supported cryptocurrency can add it to the complex smart contract, as it joins the pool of liquidity and begins to spark interest. The benefit comes from other users who borrow money and pay interest on loans. However, it is an evolution. So far, it looks like what the bank is doing with money. Only at the bank, when the funds are withdrawn, they stop earning interest.
When the money is posted, the protocol issues codes called cTokens. Thus, if the ETH is placed in the compound, an equivalent CETH value is obtained. Then CETH can be used as collateral for a loan, which means that money can actually be used while fetching interest.
The benefits gained are determined by the most important smart contracts of the complex based on supply and demand. So if a large number of people borrow a specific asset, a smart contract will increase interest rates to attract lenders and increase the cost of obtaining a loan. The boat currently supports nine assets issued on Ethereum, including Tether (USDT), Dai, Wrapped Bitcoin (WBTC) and primary attention symbol (BAT).
Despite the popularity of the complex in the DeFi room, it has already caused some criticism. Amin Al-Suleimani, CEO of SpankChain, has written a now popular article on Medium, highlighting the main points of failure in the compound protocol.
Although smart aggregate contracts have been audited and deemed secure, as is the case with many decentralized DeFi applications, a handful of portfolios responsible for portfolios control the deposited assets. As Soleimani indicated, if an attacker could control the keys to these wallets, it could harm the complex's users.
Who is involved?
The boat debuted in 2017, and it's no surprise that Coinbase Pro jumped into the DeFi management brand, as it is worth noting that the complex was one of the first projects to receive funding from Coinbase Ventures. The funding came from an initial $ 8 million round, which also included Andersen Horowitz, Poly Chen Capital and Payne Capital Ventures.
Since the platform is gaining momentum, it has integrated many other applications into its offerings. Coinbase Custody and Anchorage COMP support cTokens. Since the release of the COMP symbol, it has surpassed many existing exchanges, including Binance, FTX and Poloniex.
Why did driving symbolism rise?
The complex announced that it would begin distributing the token for the administration of the complex on June 10, after the community voted. Symbol pricing was not available, so nobody can predict how it will evolve.
In fairness, it is worth noting that the boat has always been very popular in DeFi Square and has garnered huge support. Currently, the token grants voting rights to questions such as updating the protocol or including new assets for loans and lending on the platform. However, owners may vote to distribute fees or to redeem codes in the future.
But COMP codes do not grant any interest rights in the same way as cTokens. So why feed madness at startup? Vadim Kolyushkin, CEO of Zerion, presenter of the DeFi interface, believes that the motivation behind the current COMP announcement is the interest in a new type of stock. In a conversation with Kointegraf, he explained:
“The boat is one of the first 3.0 web companies to go public, and COMP is cooler than conventional stocks because it is programmable. Symbols do not have profitability, but the complex has an opportunity to become one of the most visible players in the money market. An opportunity to participate in their management could be valuable “.