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The Launch of Compound at ZebPay

19  October  2020 | ZebPay Trade-Desk

The ZebPay Trade team is proud to bring you COMP, yet another exciting token launch to add to our DeFi offerings.

Compound is a DeFi loan platform where you can borrow and lend ERC20 tokens. These include ETH, BAT, DAI, UNI, USDT, and 0x among others.

Compound possesses other important hallmarks of DeFi: Since there is no central party that controls its functioning, it cannot be shut down. It also operates entirely through smart contracts built on Ethereum, which makes it non-custodial. This is extremely important for the security of the asset. Moreover, the Compound protocol is also completely free and open-source. Read more about the technology behind the protocol.

Compound (COMP) Snapshot (at the time of writing):

Market Capitalization$344,558,690 USD
Current Price$103.79 USD
24 HR Volume $56,162,056 USD
All Time High/Low$381.89 USD / $61.25 USD
Script in Circulation 3,319,780 COMP
Total Supply 10,000,000 COMP

The Compound platform was built using traditional equity fundraising. Venture capital firm Andreeson Horowitz—with now-legendary companies such as Facebook, Lyft, and Slack under its belt—were all major investors. COMP is the governance token of the Compound platform. The COMP token is distributed to users of the Compound protocol, in proportion to their contributions. The higher the demand of the token you’re supplying, the more COMP you earn. The token is used to vote on proposed changes to the Compound protocol. COMP token-holders and their delegates debate, propose, and vote on changes to the protocol.

COMPOUND (COMP) – Value Proposition:

  • It’s an algorithmic interest-rate protocol on Ethereum, where assets can be supplied and borrowed by individuals without any intermediaries, and this allows for transactions to happen without any credit checks.
  • The borrowing/lending rates are algorithmically determined by market dynamics. For example, when the asset supply increases in conjunction with deposits, borrowing/lending rates decrease.
  • By placing COMP directly into the hands of users and applications, an increasingly large ecosystem will be able to upgrade the protocol and will be incentivized to collectively steward the protocol into the future with good governance.

Put in simple words, Compound is essentially a cryptocurrency lending and borrowing platform. Investors can lend their asset and earn interest on it, while traders can borrow it to gain access to credit, anonymously.

Investment Analysis:

Since the launch on June 16 this year, COMP has traded in a wide range, after opening at $ 101.65, the price it hit was $389 appreciating more than 275% from it’s opening, the worst price it saw was $61.27, 39.27% below its start price.

COMP has generated a significant amount of interest in the space. It became the leader of decentralized finance ranking soon after it’s launch. 

On the price action front, COMP has traded bearishly recently after touching the high it has traded in low $100’s for the past month. The volatility the asset has shown although high when compared to traditional assets, is actually on lower side when compared to initial phase of other coins, making it a tradable in the short term as well. 

We look at some other ERC 20 tokens namely EOS, OMG, TRON and MAKER to understand how the COMP would have performed YTD if it had existed since the beginning of the year.

COINEOSOMGTRONMKRCOMP
YTD returns-1.9%438.8%93.7%31.4%2.5%

*COMP returns are from June 16 i.e. since launch

As we see to get an idea how other ERC 20 coins have done this year, we see that EOS has a very small negative return, apart from EOS, amongst the coin we looked at OMG has a stellar return of 438% percentage while MKR and TRON both have positive returns of 93.7% and 31.4% respectively. 

This made COMP an interesting offering in space with COMP being different in the sense that it’s programmable. Compound has a chance to become one of the most prominent players in the money market. The ability to participate in the governance of it may, therefore, be very valuable. Still, a very nascent token, COMP does seem to have potential and grow as it develops in the marketplace over time. 

References:

https://www.exodus.io/

https://coinmarketcap.com/

Disclaimer : This report is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any investor. All investors should consider such factors in consultation with a professional advisor of their choosing when deciding if an investment is appropriate. The Company has prepared this report based on information available to it, including information derived from public sources that have not been independently verified. No representation or warranty, express or implied, is provided in relation to the fairness, accuracy, correctness, completeness or reliability of the information, opinions or conclusions expressed herein. This report is preliminary and subject to change; the Company undertakes no obligation to update or revise the reports to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events. Trading & Investments in cryptocurrencies viz. Bitcoin, Bitcoin Cash, Ethereum etc.are very speculative and are subject to market risks. The analysis by Author is for informational purposes only and should not be treated as investment advice.

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