Compound (COMP) has made an impact in the crypto world with its distinctive nature and secured network. Several people are investing in the crypto token, which may have made you curious about the network and COMP. So, what is it, how does it work, and how it can benefit you?
In this comprehensive guide, we will explore it all. You will not only understand its working mechanism but also learn about its advantages, along with a step-by-step guide to buying COMP on the Binance network. So, without waiting, let’s go!
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What is Compound (COMP)?
Compound (COMP) is a cryptocurrency token built on the ERC-20 network. It is an Ethereum-based coin that you can use to enter and perform operations in the decentralized finance (DeFi) applications.
The crypto token is different from other cryptocurrencies since it introduced the lending mechanism in the crypto world without any involvement of any third party or middleman.
Importance of DeFi in the Crypto Space
Since the crypto and blockchain realm works on decentralization, where a user has maximum control, DeFi makes it even more accessible to a normal person. It is a relief for every person who wants an escape from the traditional finance system, where a central authority controls everything with fees and additional charges. DeFi gives the users a marketplace to purchase without this middleman’s fee.
Founders of Compound
To address this necessity of the DeFi world, Robert Leshner and Geoffrey Hayes started a crypto token on the Ethereum mainnet. They founded Compound in 2018, with headquarters in San Francisco. Before starting the company, both co-founders had executive roles in Postmates. It was a famous food delivery service, which was acquired by Uber in 2020.
What Makes Compound Unique?
Compound (COMP) is a unique governance token that has introduced the concept of lending in the crypto realm. Anyone who wishes to benefit from the DeFi world but doesn’t have enough funds can get a loan in COMP by depositing ERC-20 tokens. Alternatively, a user can also become a lender and earn interest by providing loans to potential borrowers.
How Does Compound Work?
The compound acts as a direct bridge between the borrower and the lender. These two types of users are categorized as:
- Lenders: They deposit their cryptocurrencies to a lending pool from where anyone can borrow, after paying a collateral.
- Borrowers: They borrow a cryptocurrency from the lending pool after they pay the collateral. When they return the crypto coin, they also pay interest according to the amount and time they keep the crypto.
Smart Contracts and Decentralization
This lending and borrowing deal is secured with Compound smart contracts. The contracts have all the essential information, such as administration, storage, pooled funds, and others. It is the benefit of creating a network on the Ethereum blockchain that brings decentralization to the system. So, both parties have secured the program, carrying on the deal without any trust issues and fear of penetration.
Liquidity Pools
The liquidity pools are like a bank where the lenders deposit their crypto for borrowers. Lending assets benefit the former group as they get COMP tokens in return for their service. On the other hand, it helps the borrowers to get a decent Ethereum-tokens amount supported by the network.
Lending and Borrowing
The smart contracts govern the terms and conditions of both lending and borrowing parties. Borrowers state the required amount, tenure, and collateral and it is governed via a smart contract.
Similarly, the smart contract also determines the interest rate on the loan. All the processes regarding the interest or principal payout and loan redemption is governed by a smart contract.
Interest Rates
The liquidity (assets amount) in the pool determines the interest rates. These rates are flexible and change according to the assets or funds supply and demand. When the supply of funds is high and the demand is low, the interest rates are usually low. Otherwise, the rates rise with the increase in demand.
Benefits of Compound (COMP)
Being a unique crypto token, Compound offers several benefits to its users. Some of those benefits are discussed below:
Yield Farming
Yield Farming is somewhat similar to staking, where you lock your crypto tokens in a farming pool for rewards.
The only difference is that these lock-up durations are much shorter than normal staking requirements (sometimes, it doesn’t require locking up at all).
In the Compound (COMP) network, it works with the liquidity pools where the lenders lock up their assets for interest. When they take out their funds (at anytime), they get a passive increase in their holdings, which also depends upon the amount and period for which they locked the funds on COMP.
Secure
Compound network also has several security measures up its sleeves to provide its users with a trustable platform. Reputable organizations, such as Trail of Bits and Open Zeppelin, have audited and examined the network’s code and issued a green signal. They have shown trust in the platform’s capability to handle the supply and demand of the network.
Interoperability
What’s interesting is that Compound allows its users to integrate third-party APIs to provide flexibility and versatility.
The other platforms can easily create different software packages and tools to aid the users and give them an excellent DeFi experience. So, people can simplify or enhance their UX with the help of different APIs.
COMP Tokenomics
COMP is the native token of the Compound network. It is developed on the ERC-20 protocol, so it has all the advantages of Ethereum network coins.
Their total supply is only 10 million tokens, out of which 7.8 million tokens are available in the current circulatory supply.
Utility and Governance
Compound is a decentralized protocol backed by a governance token, COMP. The holders of COMP tokens can participate in decision-making and vote on different ideas and proposals within the ecosystem.
Some of the proposals that COMP holders can influence include updating interest rates, choosing administrators, and listing new assets.
Distribution and Circulation
A major portion (42.15%) is reserved for Liquidity Mining, while 23.95% is reserved for the Shareholders. On the other hand, 22.46% is allocated to Executive team members and founders, while 3.71% is saved for future team members. Only 7.73% is reserved for the community.
Buy Compound (COMP) on Binance
After we’ve gone through all the benefits and the workings of Compound, let’s discuss how you can buy them. Since its launch, several crypto exchanges have been offering COMP. However, it is better to purchase it through Binance.
Why Binance?
Binance has been the world’s largest crypto exchange for many years. The security measures and user protections of the platform are top-notch. Moreover, it has a high liquidity volume as well as several other valuable features to help you in managing and increasing your digital assets.
Create a Binance Account
Before you buy Compound on Binance, you must create an account (if you don’t have one). Use the link below to register on Binance.
Verification Process
When your account is created, you will need to complete the KYC verification. Otherwise, you cannot buy Compound on the platform.
- Click on your Profile Icon at the top right on the dashboard, and click Get Verified.
- Select Verify Now under the level 1 verification tab to initiate the process.
- Select your Country, which is mentioned in your ID card (that you will submit later).
- Enter the Basic Information precisely to avoid any errors.
- Upload pictures for your Identity Verification. It can be either your ID card, passport, or driving license.
- Submit your Selfie to complete the process.
- You can also verify your residential Address for the level 2 verification.
Enable 2-Factor Authentication
Once you are verified on the platform, the next step is to create firewalls so no one can access your account and assets without permission. One significant step is enabling two-factor authentication.
- Download Binance Authenticator on your mobile phone.
- Login to your Binance account on your desktop and click your Profile Icon.
- Go to the Security section and click Manage in the Authenticator App.
- Click on Enable to get the QR code.
- Open the app on your mobile, tap on Add New, and choose the QR Code.
- Scan the code on your screen with a camera. You can also manually enter the 16-digit code if your camera doesn’t work.
- Enter the 6-digit code on your desktop from your mobile screen once both devices are paired. It will successfully enable your 2F-Authentication.
Deposit Funds
Now you need to deposit funds on your Binance digital wallet to purchase Compound. Although you can deposit both fiat and cryptocurrencies, we’ll describe only the process for fiat here.
- Go to the Buy Crypto section on your Binance homepage.
- Choose the Fiat you want to deposit with a credit/debit card.
- Click Add New Card, and enter its details.
- Enter the amount of your currency you want to deposit.
- Confirm and enter codes to complete the process.
Finding and Buying COMP
When you have enough funds in your account, go to the Buy Crypto section (again). Select your deposited fiat and COMP in the respective fields. Click Buy Now to get the tokens. They will be automatically stored in your Binance digital wallet.
Withdraw for Storing COMP Safely
You can also withdraw these tokens somewhere else. Click on the Wallet Icon at the top and select Withdraw. Now, select COMP tokens from the dropdown list and its network ERC-20. Copy the deposit address from the platform where you want to send COMP and paste it under the respective section on the Binance page. Confirm the information, enter codes, and complete the process.
To learn more about withdrawing from Binance, click here
Future of Compound (COMP)
Compound being a unique governance token, it has a high potential to rise in value. According to experts, the token may experience a surge and probably increase its value by 300% until 2030. So, it can be a decent investment.
Technological Updates
In the future, it’s expected that the COMP ecosystem will collaborate with different protocols and support various blockchain networks to boost interoperability and accessibility for users.
Market Potential
The potential of the COMP token is quite promising. Currently, COMP is illiquid. In the future, we can expect multiple exchanges to list the token, which can increase the trading volume and ultimately have an upward impact on the token price.
Conclusion
Compound (COMP) is an interesting addition to the crypto world, giving its users a unique lending mechanism. People can lend or borrow COMP tokens to use them for spending on the DeFi network or gain interest, respectively. Several organizations also showed trust in its code and declared it a secure network.
So, judging by its future potential, COMP can be a great investment. You can use Binance for purchasing and investing in the token. However, this is not steadfast financial advice as dealing in crypto has high risks due to its volatility. So, if you have confidence in Compound, you are free to invest in its token.
We Coin-Labs.com provides only objective information about Compound.
Therefore, we are not responsible for the investment decision in Compound and the resulting loss.
Compound Basics
Here are some factors that investors should consider before investing in Compound.
| Cryptocurrency Features | Compound (COMP) |
|---|---|
| Publisher or Developers | Robert Leshner, Geoffrey Hayes |
| Headquarters (Registration Number) | San Francisco |
| Symbol | COMP |
| Platform | Ethereum |
| Published Date (CMC Registration) | 2024-11-01 |
| Max Supply | No limit |
Reliability Score of Compound in 2024
These are indexes mesuring the investment reliability of Compound conducted by Coin-Labs.com.
| Investment Reliability Rating Items | Scores and Current Status |
|---|---|
| Company Activation Rate | / 10.0 CAR |
| Communication Rate | / 10.0 CR |
| Technology Transparency Rate | / 10.0 TTR |
| Development Participation Rate | / 10.0 DPR |
| Listing Status on the World's Top 10 Exchanges | Listed on 10 Exchanges |
| Number of Available Pairs Worldwide | 531 Pairs |
| Market Cap of the Cryptocurrency | 423,907,897 USD (Rank #117) |
The table above shows the result of investment suitability evaluation for Compound.
Check out how we evaluate cryptocurrencies on the crypto rating description page.
Compound Price
Here are the price and recent trading volume of Compound. (Data of 2024-11-02 00:35:00)
| Price Items | Price and Trading Volume of Compound |
|---|---|
| Compound Price | 42.608 USD |
| Price Change 24h | -1.79% |
| Price Change 7d | -2.44% |
| Trading Volume 24h | 26,637,870 USD |
| Trading Volume Change 24h | -12.91% |
Cryptocurrency Metadata
You can check the development status and social media information of Compound through the links in the table below.
| Metadata Source | URL |
|---|---|
| 🌎 Official Website | https://compound.finance/governance/comp |
| 📖 White Paper | |
| 🛰️ Source Code (GitHub) | https://github.com/compound-finance/compound-protocol |
| https://twitter.com/compoundfinance | |
| 🎺 Message Board | https://medium.com/compound-finance |
Where to Buy Compound
Here are the top ten world crypto exchanges where traders can buy Compound in 2024.
| Top10 Exchanges | Listed Status | Page URL |
|---|---|---|
| Binance | Listed | https://www.binance.com/en/trade/COMP_BTC |
| Coinbase | Listed | https://pro.coinbase.com/trade/COMP-USD |
| Kraken | Listed | https://pro.kraken.com/app/trade/comp-usd |
| KuCoin | Listed | https://www.kucoin.com/trade/COMP-USDT |
| Bitfinex | Listed | https://trading.bitfinex.com/t/COMP:USD |
| OKX | Listed | https://www.okx.com/trade-spot/comp-usdt |
| Huobi | Listed | https://www.huobi.com/en-us/trade/comp_usdt?type=spot |
| Bitstamp | Listed | https://www.bitstamp.net/markets/comp/usd/ |
| Bybit | Listed | https://www.bybit.com/en-US/trade/spot/COMP/USDT |
| Gate.io | Listed | https://www.gate.io/trade/COMP_USDT |
Frequently Asked Questions
What is the current price of Compound?
Compound price today is 42.608 USD. Furthermore, the price of Compound has fluctuated by -1.79% from 24 hours ago, and by -2.44% from a week ago.
Where is Compound listed?
Currently, it is listed on a total of 10 among the world top 10 exchanges.
What is the market cap of Compound now?
Currently, Compound has a market cap of 423,907,897 USD, which is ranking 117 among cryptocurrencies worldwide.
How much is the trade volume of Compound?
Currently, 8,798,167 COMP coins are circulating through 531 market pairs. As a result, in the last 24 hours, 26,637,870 USD of COMP coins were traded in the market.
