Compound

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1)What is Compound？

Compound is a decentralized finance (DeFi) protocol built on the Ethereum blockchain, primarily known for enabling users to lend and borrow cryptocurrencies. Here’s a detailed overview based on the latest information:

Basic Concept and Functionality:

Compound facilitates the lending and borrowing of crypto assets without intermediaries, using smart contracts for automation and security.

Users can deposit their crypto assets into a liquidity pool, from which borrowers can take loans. This process is decentralized and transparent, with open-source smart contracts accessible for review.

Interest Rates and Collateral:

The protocol employs sophisticated algorithms to determine interest rates, based on global crypto supply and demand.

Borrowers must provide collateral above a certain threshold to secure loans. Compound supports various altcoins like Ethereum, USD Coin, and Wrapped Bitcoin.

No ID Verification and Flexibility:

Compound does not require ID verification or perform KYC checks, which aligns with the DeFi ethos of open and accessible financial systems.

There are no lower limits for lending or borrowing, and no specific terms or penalties, providing flexibility to users.

Risk and Rewards:

Users must ensure their collateral value doesn’t drop below a set limit. If it does, the protocol automatically liquidates the borrower’s collateral to secure the loan repayment.

The primary use of Compound is to earn interest on crypto assets deposited on the platform.

cTokens and COMP Token:

cTokens represent the amount of crypto a user has deposited in Compound, automatically generating interest. For example, depositing Ethereum yields cETH tokens.

COMP, the native cryptocurrency of Compound, cannot be mined and is distributed among users based on their activity on the platform. It is also used for governance, allowing COMP holders to vote on key decisions.

Liquidity Pool and Interest for Lenders:

The liquidity pool, a network of smart contracts, manages all transactions between lenders and borrowers, with lenders earning interest each time a new Ethereum block is created (approximately every 15 seconds).

COMP Token Trading and Governance:

COMP is traded on most popular cryptocurrency exchanges and is used as a governance token, enabling community-based decision-making for the ecosystem’s future.

Platform Accessibility and Security:

Compound is known for its transparent and secure network, operating on Ethereum’s smart contract technology, which ensures reliability and trust in the DeFi space. In summary, Compound is a significant player in the DeFi space, offering a platform where crypto holders can lend their assets to earn interest or borrow against their crypto holdings. Its decentralized nature, lack of intermediaries, and use of smart contracts for automation and security make it a unique and innovative financial tool in the cryptocurrency ecosystem.

2)Which sector does Compound belong to?

Compound belongs to the Decentralized Finance (DeFi) sector. DeFi represents a broad range of financial services and products offered within the Web3 world, such as payments, borrowing, lending, investing, trading, and staking. DeFi aims to democratize access to financial services by operating without centralized control, thus enabling new models like automated market making. Current Situation of the DeFi Sector

Total Value Locked (TVL): Despite market challenges in 2022, DeFi’s TVL remained over $39 billion, demonstrating its resilience and sustained interest.

Innovation and Growth: DeFi has been a catalyst for the growth of related sectors like NFTs and GameFi, with new models emerging, such as lending with NFTs as collateral.

Security Challenges: The DeFi space suffered from several security breaches in 2022, leading to a loss of nearly $3 billion across 125 hacks. This highlighted the need for stronger security measures and better infrastructure to protect users and attract institutional capital. Development Prospects of DeFi

Institutional Adoption and Innovation: Despite challenges, the DeFi industry continues to innovate, with growing interest from institutional players. Large banks and financial institutions are increasingly engaging with DeFi for payments, custody, and AML solutions. Notable investments from firms like BlackRock and Citigroup signify a rising institutional presence in DeFi.

Regulatory Developments: With past failures and user fund losses, regulators and central banks are likely to play a greater role in shaping the DeFi landscape. While this may seem counter-intuitive to DeFi’s ethos, it could bring more credibility and stability to the sector.

Technological Advancements and User Onboarding: The failure of centralized platforms has shifted volumes to DeFi platforms. Improved on-ramping infrastructure, such as wallets with fiat-to-crypto conversion features, are expected to enhance user experience and attract more first-time users to DeFi.

Integration with Web3 Gaming: DeFi integrations in gaming projects are expected to grow, contributing to the overall growth of the Web3 ecosystem. This integration offers unique earning models and value propositions absent in traditional games.

Movement towards On-Chain Banking: Anticipated developments in on-chain banking, where transactions are instant and transparent, could lead to new business models and financial products within the DeFi space. In summary, the DeFi sector, despite facing significant challenges, continues to innovate and attract interest. With the promise of increased institutional involvement, regulatory clarity, technological advancements, and integration with other Web3 sectors, DeFi is expected to mature and stabilize, paving the way for more sustainable growth in the coming years.

3)What is tokenomics of Compound (includes allocation and supply schedule)?

The tokenomics of Compound (COMP) can be summarized as follows:

Token Type and Supply:

COMP is an ERC-20 token facilitating decentralized governance.

The token launched on June 15, 2020, with a maximum supply cap of 10,000,000 tokens.

COMP is inflationary, with daily emissions, and is expected to reach its maximum cap by July 2024.

Initial Token Distribution:

Liquidity Mining: 42.15% of the tokens were allocated for liquidity mining activities.

Shareholders of Compound Labs: 23.95% was allocated to shareholders.

Founders & Team: 22.46% was set aside for the founders and the team.

Community: 7.73% was reserved for the community.

Future Team Members: 3.71% was allocated for future team members.

Distribution and Emission Rate:

Compound has an inflationary emission rate of 1,234 COMP tokens per day.

These tokens are distributed to protocol users, mainly through markets like ETH, USDC, DAI, etc.

The emissions are managed within the governance process, with suppliers and borrowers each earning half of the emissions.

Vesting Schedule for Founders and Team Members:

The founders and team have an assumed four-year linear vesting period with daily unlocks scheduled between April 17, 2020, and April 17, 2024.

For future team members, the tokens were fully unlocked on April 17, 2020, with the governance deciding the exact distribution schedule.

Distribution Over Time:

Approximately 3,600 COMP is assumed to be distributed daily between June 15, 2020, and April 5, 2024, to users.

Shareholders of Compound Labs were allocated nearly 2.4 million COMP, while founders and current team members were allotted 2.2 million tokens with a four-year vesting schedule.

Circulating Supply and Market Position:

As of the latest information, COMP has a circulating supply of 6,856,085 tokens out of the maximum 10,000,000.

Compound is ranked ninth on DeFi Llama’s leaderboard with a TVL of $2.37 billion and is ranked 98th on CoinGecko with a market cap of $409 million. In summary, the tokenomics of Compound involves a careful allocation of tokens among various stakeholders, including liquidity miners, shareholders, founders, team members, and the community. The protocol employs an inflationary emission model to distribute COMP tokens, with a clear vesting schedule for the founders and team. This structure supports the decentralized governance and operational model of the Compound DeFi protocol.

4)What about the team and the investors of Compound?

Team Behind Compound The team leading Compound is composed of individuals with significant experience and expertise:

Founders:

Robert Leshner: He is the CEO of Compound Labs, Inc., the firm behind the Compound protocol. Before Compound, Leshner worked in high-profile roles at Postmates, an online food delivery service. He has been active in growing the blockchain space and has invested in several crypto platforms like Argent Wallet, Opyn, and Blockfolio.

Geoffrey Hayes: Serving as the CTO, Hayes has a background in technology and has been a Maintainer of Exthereum, an Ethereum client. He was also involved with Postmates and is the technology founder of two startups.

Team Composition:

The Compound team includes over a dozen individuals, almost half of whom are engineers. This diverse team brings together a range of skills and experiences, contributing to the protocol’s development and management. Funding History Compound’s funding journey reflects substantial interest from venture capital and the broader investment community:

Seed Funding Round:

In May 2018, Compound secured $8.2 million during a seed funding round. This early support was crucial for the protocol’s initial development and market entry.

Series A Funding Round:

In November 2019, Compound raised an additional $25 million in a Series A round. This round included significant support from Andreessen Horowitz, a prominent venture capital firm.

Other participants in this round were Bain Capital Ventures, Polychain Capital, and Paradigm. This funding was instrumental in sustaining Compound before it achieved significant market share.

Additional Funding:

Alongside its Series A, Compound also received $1 million in USDC from Coinbase’s “USDC Bootstrap Fund” in 2019. This investment highlights the confidence and support from major players in the crypto and blockchain industry. The team’s backgrounds and the strong support from reputable venture capital firms underscore Compound’s credibility and potential within the DeFi ecosystem. Their collective efforts have positioned Compound as a pioneering force in the DeFi sector, contributing to its continued growth and innovation.

5)What is the development history of Compound?

List all important events and milestones in the development process of Compound. The development history of Compound, a prominent DeFi lending and borrowing protocol, includes several important events and milestones:

Foundation and Initial Funding (2018): Compound was founded by Geoffrey Hayes and Robert Leshner. In 2018, it raised $8.2 million from venture capital firms such as Andreessen Horowitz and Bain Capital Ventures. In the following year, an additional $25 million was raised, including from Paradigm Capital, a VC fund with ties to Coinbase.

Launch and Early Development (2018): Compound was first launched in September 2018 by Robert Leshner and Geoffrey Hayes, both University of Pennsylvania graduates. It began as a community-inspired project enabling users to borrow crypto assets, pioneering a user-to-protocol approach rather than a peer-to-peer lending model.

Compound I and II (2018-2022): These early versions of the network focused on providing liquidity to lending pools using a basket of fiat-pegged stablecoins. Compound I and II were developer-centric and integrated with Dapp and other DeFi systems. These versions were popular for their algorithmic, autonomous interest rate protocol.

Introduction of COMP Token (2020): The initial coin offering (ICO) of the COMP token occurred on June 15, 2020. COMP is used for platform governance and as a medium of rewards for using its lending and borrowing services.

Compound v2 (2019): This version introduced COMP tokens for community governance and cTokens, which users received upon depositing assets. cTokens allowed users to collect interest and use them as collateral in other DeFi protocols.

Listing on OKEx (2020): In June 2020, the COMP token was listed on OKEx, a cryptocurrency spot and derivatives exchange.

Compound Treasury (2021): Launched in June 2021, it enabled non-crypto native enterprises and financial institutions to benefit from the Compound protocol. The Treasury simplified issues like crypto-to-fiat conversion and interest rate volatility.

Gateway’s Debut (2021): In March 2021, Compound launched Gateway, a cross-chain interest rate market that allowed users to borrow assets native to one chain using collateral from another chain.

Compound III (2022): Launched as a major upgrade to address risks found in Compound II, it streamlined the lending process by reducing the number of cryptocurrencies users could leverage and focusing on USDC as the base asset. It also improved capital efficiency and the user experience, with a few assets like wBTC, LINK, UNI, and COMP being used as collateral.

Integration with Chainlink Oracles (Date Not Specified): Compound III integrated Chainlink oracles for reliable pricing, enhancing the protocol’s reliability and sustainability. Chainlink is a top-tier decentralized oracle solution that solved issues of centralization plaguing earlier oracles.

Upgrades to Compound Treasury (Year Not Specified): Compound upgraded its Treasury to cater to institutional-level clientele. The Treasury received a B- credit rating from S&P Global Ratings, a significant achievement for a DeFi protocol. It also introduced a new lending mechanism for fintech, crypto companies, and banks, allowing these groups to borrow assets using digital assets as collateral.

Compound Treasury’s Borrowing for Institutions (Year Not Specified): The Treasury unveiled a lending mechanism for institutions, enabling them to borrow at a reliable 4% APR on holdings, with the possibility of increasing this to 6% APR for accredited institutions. The system allowed the use of ERC-20 assets as collateral and required institutions to remain over-collateralized.

Total Assets and Transaction Volume (Date Not Specified): As of the latest update, Compound has over $3 billion in assets and a total transaction volume of $285 billion since its launch. These milestones highlight Compound’s evolution from a novel DeFi lending protocol to a sophisticated platform incorporating governance, efficiency, and institutional services. The integration of cutting-edge technologies like Chainlink oracles and the focus on regulatory compliance and institutional involvement demonstrate Compound’s commitment to advancing the DeFi ecosystem.

6)What is the progress and future roadmap of it?

Significant Events and Milestones in the Development of Compound:

Foundation and Early Funding (2017-2019): Compound was created in 2017 by Robert Leshner and Geoffrey Hayes, with its headquarters in San Francisco, California. The project initially raised $8.2 million in funding from venture capital firms, including Bain Capital Ventures and Andreessen Horowitz in 2018. This was followed by an additional $25 million from similar investors in 2019, showing early confidence and support from the investment community. Recent Developments and Roadmap (2021-2023):

Institutional Interest (2021): In July 2021, digital currency investment company Grayscale unveiled a DeFi fund that includes COMP tokens, demonstrating growing institutional interest in Compound. In the same month, Compound Labs established Compound Treasury, aiming to offer institutional investors the benefits of Compound without directly engaging with the protocol.

Launch of Superstate (2023): In 2023, Compound Labs launched Superstate, a regulated financial product on the Ethereum blockchain. Superstate is essentially a government bond fund, indicating Compound Labs’ move towards regulatory compliance and broadening its product offerings.

Joining the Arbitrum Ecosystem (2023): Also in 2023, Compound joined the Arbitrum ecosystem, integrating with one of the most used Ethereum scaling solutions. This move is expected to benefit users through reduced gas fees, particularly in yield farming activities. These milestones highlight Compound’s ongoing development and adaptation to the evolving DeFi landscape. The integration with Arbitrum and the launch of Superstate reflect Compound’s efforts to expand its offerings and appeal to a broader range of users, including institutional investors. This strategic direction could shape Compound’s future development and positioning in the DeFi market.

7)List all important links related to Compound

Certainly, here’s a list of important links related to Compound, covering official, informational, technical, and social media aspects:

Official Website: Compound Official Website.

General Information and Guides:

Investing In Compound - Securities.io.

How To Use Compound? A Basic Beginner’s Guide - Crypto News.

What is Compound? - Decrypt.

What Is Compound? | CoinMarketCap.

Price and Market Data: Compound Price: COMP Live Price Chart & News | CoinGecko.

Technical Resources:

Compound Protocol on GitHub.

Compound on GitHub.

Social Media:

Compound Finance Official Telegram.

@compoundfinance on Twitter. These links collectively offer a comprehensive overview of Compound, from its official platform details to educational resources, current market data, technical documentation, and social media channels.

Bullishness index for this token from the perspective of token valuation and future potential

As of the latest available data, Compound (COMP), a decentralized finance (DeFi) lending protocol, presents a varied picture in terms of valuation and future prospects: Current Valuation

As of now, the price of Compound (COMP) is around $51.40 to $53.45, with a 24-hour trading volume of approximately $63 million to $99 million.

The market cap is reported in the range of approximately $352 million to $428 million, reflecting variations in data sources.

There are conflicting reports on the circulating supply of COMP, with figures ranging from 6.9 million to over 8 million tokens in circulation. Technical Analysis and Short-term Predictions

COMP has experienced a price decrease, struggling against major exponential moving averages (EMAs) and facing resistance levels. If it breaks these EMAs, potential resistance levels could be around $45 and $50.

There is a possibility of further decline to support levels of $35 and $30 if it fails to overcome current resistances.

Technical indicators like MACD and RSI show a neutral to bearish sentiment, suggesting a lack of strong momentum in the market for COMP. Future Prospects and Predictions

Fundamental analysis of Compound indicates a robust DeFi presence and a variety of use cases, such as offering secured loans and facilitating passive income through its lending pools. The Compound network holds over $1.4 billion in total value locked and is ranked 7th among Ethereum-based DeFi protocols.

COMP’s tokenomics reveal a max supply of 10 million, with nearly 73% currently in circulation. The token is primarily used for governance within the Compound ecosystem.

On-chain metrics and social growth analysis show that COMP’s transaction volume and number of active addresses have been relatively flat, with a correlation between transaction volume and price.

A long-term technical analysis highlights COMP’s historical price volatility and market cap fluctuations. The highest recorded price was $911.20, and the lowest was $26.52. Price Predictions

For 2023, the outlook is moderately bullish, with a high prediction of $87.57 and a low of $45.01, implying a potential return on investment (ROI) of 170.50% from current levels.

By 2025, the outlook becomes more bullish, with predictions of a high of $217.30 and a potential ROI of 571.30%.

The 2030 outlook is very bullish, with a high prediction of $2127.54, representing an ROI of 6472.56% from current levels. In summary, while Compound (COMP) shows potential for growth, especially in the long term, it currently faces challenges in the market, as reflected in its technical analysis and short-term predictions. The DeFi protocol’s fundamentals, tokenomics, and position in the DeFi space, however, provide a basis for optimistic future predictions, particularly in the mid to long term. Nonetheless, it is important for investors to approach these predictions with caution, considering the inherent volatility and risks in the cryptocurrency market.