What is Compound
The Compound Protocol allows users to borrow crypto assets, using any other supported asset as collateral.
Is the governance token of the Compound protocol.
COMP is Used for
- Incentivizing early users
How COMP token works
COMP tokens corresponds 1–1 with voting power in Compound governance. Holders may delegate their voting rights to any other Ethereum addresses.
- COMP — Designates the weight of a user’s voting rights.
- Proposals — 100 000 COMP needed, and a 3 day voting period.
- Voting — If 4% quorum of delegated COMP (i.e. 400,000 COMP) vote for a proposal, the proposal is queued in the Timelock.
- Timelock — A minimum of 2 days, after which proposals that reached quorum can be implemented into the protocol.
How Compound protocol works
Users must first supply crypto assets like ETH or DAI to Compound. These are converted to cTokens and locked into the protocol.
Lenders can then earn interest on their minted cTokens or use them as collateral.
Borrowers of assets pay the interest rate earned by cToken holders.
- ERC20 tokens
- As interest accrues to the assets supplied, cTokens are redeemable at an exchange rate.
- Prices for assets on Compound are supplied signed by Coinbase Pro and OkEX.
- They are also correlated to stay within a certain range of prices on Uniswap v2.
COMP token issuance
Total supply: 10 000 000 COMP
- 2,396,307 Shareholders
- 2,226,037 Team (4-year vesting period)
- 372,707 Future employees
- 4,229,949 Protocol users (distributed to lenders & borrowers over 4 years)
- 775,000 Future governance advances.
- 4 229 949 COMP are transferred at a rate of 0.5 COMP per Ethereum block (~2,880 per day) into the protocol for distribution
- The distribution is allocated to each market (ETH, USDC, DAI…), proportional to the interest being accrued in the market.
- 50% to suppliers and 50% to borrowers.