What is Compound (COMP)? Which Advantages Does It Offer?

It is a decentralized platform where users can access options such as borrowing, lending and earning returns on cryptocurrencies without an intermediary. The native cryptocurrency of the Compound project is COMP. In this article, we will look for answers to questions such as what is Compound (COMP), what does Compound (COMP) do, what are the advantages of Compound (COMP).

What is Compound (COMP)? What Does It Do?

What is a Compound? What Does It Do?

Compound makes it easy to get a loan in cryptocurrency. Cryptocurrency borrowers and cryptocurrency lenders come together on this decentralized platform. The Compound project differs from banks in its decentralized structure, which allows users to make fast transactions without the need for any intermediaries and without restrictions. The platform’s money market runs on Ethereum-based assets. On the Compound platform, users can earn returns by lending money. At the same time, those who need cryptocurrency can borrow from the platform by pledging a certain amount of collateral.

The COMP token is awarded to users as a reward. It is also a cryptocurrency used for the functioning of the project’s management system. Holders of COMP tokens can vote on changes to the protocol, propose new features or make decisions to change existing features.

This is how we can summarize the Compoud platform. We will be talking about how the system works in the following parts of our article.

What Advantages Does Compound (COMP) Offer?

With its capabilities, the Compound project has become a popular platform in the field of Decentralized Finance (DeFi). The advantages of Compound (COMP) are listed below.

Ease of Operation:

The Compound project makes it easy to lend or borrow cryptocurrency. There is no need to deal with the complexities of loan application processes or intermediary institutions. The process of granting or receiving a loan is instantaneous.

High Liquidity:

Compound has a liquidity pool. Users can freely lock their assets in this pool. In this way, users who lend cryptocurrency receive a return on their transactions. Of course, on the other hand, users can also borrow cryptocurrencies.

High Return Potential:

Compound automatically adjusts the rate of return that lenders receive, and these rates can rise to high values, offering the potential for high returns. It is important to remember that rates of return are adjusted according to supply and demand.

Multiple Entity Support:

The Compound platform supports multiple cryptocurrency assets. Users can use different cryptocurrencies for lending or borrowing. This allows you to earn returns on different cryptocurrency assets.

Flexibility:

Users can lock or withdraw their cryptocurrency holdings on the platform at any time. This gives users the flexibility to act in a way that suits their financial needs.

Governance and Meritocracy:

Holders of COMP tokens can participate in the governance processes of the protocol and make decisions. In this way, the community can support the development and advancement of the Compound protocol. In the Compound protocol, users’ voting rights vary according to the amount of COMP tokens held. This is where the compatibility of the principle of meritocracy comes to light.

Minimize Risk:

We have already mentioned that Compound is not affiliated with a central brokerage or authority. The biggest benefit to users is the freedom to take independent action. This allows users to control their own assets and take a step forward in terms of security. This also improves the security of the protocol.

How Compound (COMP) Works

What differentiates Compound’s lending system from other lending protocols is that it converts the assets it blocks into cTokens, which represent the money deposited. The cryptocurrency pledged as collateral is stored as cToken during the blocked period. However, this does not mean that the return will be issued as cToken. The rate to be demanded from borrowers and the rate at which lenders will earn a return varies according to the supply and demand amount of the cryptocurrency being traded. If lenders on the platform want to get back the cryptocurrency they deposited, they return the cToken generated by the platform to the platform and get back the amount they deposited. If the collateralized cryptocurrency is, for example, Ethereum, the collateral will be redeemed in Ethereum. The resulting return is transferred to the users’ account as cToken. Examples of cTokens include cETH, cBAT and cDAI. In this way, users can earn passive income from the cryptocurrencies they hold.

Moreover, users receive cToken equal to the amount of cryptocurrency they lock in this system. The more cTokens the user returns at expiry, the higher the return. This means avoiding the “you can’t touch the money until the maturity date” rhetoric of traditional banks. This means that users can use the cryptocurrency they have locked without waiting for the expiry date.

In the Compound project, users have the chance to lend money and earn cryptocurrency as well as borrow money . It is important to note that the amount of debt that can be borrowed may vary depending on the cryptocurrency asset deposited. If users keep a certain collateral value in their wallet, they can borrow cryptocurrency in return. What is important here on the user side is the payment of the debt. If the debt is not paid, the collateralized cryptocurrency is seized.

Who are the Founders of Compound?

Photo of the Compound kurus.
Robert Leshner

Compound work began in 2017 under the leadership of Robert Leshnerand the project was launched in 2018.

Robert Leshner, a graduate of the University of Pennsylvania with a degree in Economics, is an American entrepreneur and a licensed financial analyst. Robert Leshner, who started his career as the founder of Safe Shepherd, a privacy-focused startup that provides customers with information about how their personal data can be used and what they can do about it, is CEO at Compound and a partner at Robot Ventures.

To sum up, Compound is in the cryptocurrency industry as a player in decentralized finance (DeFi). Compound users can earn returns by lending their cryptocurrency assets and borrow from the platform if they need cryptocurrency. At the same time, COMP token holders can participate in the governance processes of the protocol, making decisions and influencing the future of the project. Compound stands out as a protocol that takes steps to help users increase their financial freedom and replace centralized intermediary institutions.

What Other Things to Know About Compound (COMP)?

To find out a little more about Compound (COMP), it is useful to look at the answers to some of the following questions.

Is COMP token? Or is it a coin?

Coin is a cryptocurrency created on its own blockchain. A token is a cryptocurrency that does not have its own blockchain and is created on an existing blockchain. Since Compound does not have its own blockchain, it is a token.

Which blockchain is the COMP token on?

The COMP token is on the Ethereum blockchain and was created with the ERC-20 smart contract.

Is COMP token mining done?

There is no mining in the classical sense. However, those who lend cryptocurrency assets to the platform earn a return.

How to buy COMP token?

To buy COMP tokens, it is sufficient to create a membership at ICRYPEX. Once the membership process is complete, other cryptocurrencies including COMP token can be traded quickly, easily and securely.

How to Become a Member of ICRYPEX?

After visiting www.icrypex.com from a browser, you can click on the “SUBSCRIBE” button at the top right of the page, fill in the required information and you can easily create your membership.

From mobile devices, primarily;

Android users can download our app by clicking here, Apple users by clicking here and HUAWEI users by clicking here. After logging in to the application, you can click on the menu icon at the top left, then click on “SUBSCRIBE” to fill in the required information and easily create your membership.

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