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DeFi Ethereum

What is the COMP token used for?

Why Compound needs the COMP token. The Compound Protocol allows users to borrow crypto assets, using any other supported asset as collateral.

What is Compound


The Compound Protocol allows users to borrow crypto assets, using any other supported asset as collateral.

COMP token


Is the governance token of the Compound protocol.

COMP is Used for

  • Voteing
  • Delegating
  • 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.

Compound Governance consists of

  1. COMP — Designates the weight of a user’s voting rights.
  2. Delegation
  3. Proposals  — 100 000 COMP needed, and a 3 day voting period.
  4. Voting — If 4% quorum of delegated COMP (i.e. 400,000 COMP) vote for a proposal, the proposal is queued in the Timelock.
  5. Timelock — A minimum of 2 days, after which proposals that reached quorum can be implemented into the protocol.

How Compound protocol works


Lending

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.

cTokens are 

Open Price Feed

  • 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

Allocation

  • 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.

Initital COMP distribution

  • 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.

Docs


Docs

Competition


COMP price


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