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Compound (COMP): How it works and where to buy

Learn more about how Compound works, why the COMP token is useful and where to buy it.

Andrew Munro
Andrew Munro

Updated

Fact checked
Learn about Compound Learn more
Where to buy COMP Find COMP exchanges

COMP is the native token of Compound, a DeFi lending platform.

On the front end, Compound is an interest rate market where users can deposit cryptocurrency and immediately start earning returns on it. On the back end, it’s a series of liquidity pools.

Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade.
CryptocurrencyCOMP
Circulating supply (approx. as of August 2020)~3,210,000 COMP
Maximum supply10,000,000
TypeERC20
PurposeGovernance

What is DeFi? Read the beginner’s guide

How does Compound work?

When someone deposits funds in Compound, those funds are locked up and they receive cTokens in return. The interest earned from the deposited funds accrues directly to the cToken.

Individuals can turn to Compound to earn interest on their cryptocurrency, while supplying liquidity, and developers can tap into Compound for a source of liquidity, while further bolstering the Compound platform.

The idea is that many people will be accessing the underlying Compound platform through many different applications, and that it will become an important tool underlying many other parts of the DeFi ecosystem.

To this end, Compound aims to become more resilient and open by decentralising its governance across a community of token holders.

What does COMP do?

The COMP token is the governance token of the Compound platform. It is used to practice a type of on-chain governance.

Users who hold at least 100,000 COMP are able to make proposals for the network to consider. If enough other COMP holders vote in favour of the proposal,and the requisite minimum number of votes and majority of voters is met, a proposal is passed.

It also serves as a mild incentive, as Compound users are rewarded with COMP tokens simply for using the network.

In addition to its governance powers, the COMP token can also be bought and sold.

How to buy COMP

Here’s a step by step guide to one way of buying COMP. Note that there might be other options available, so you may want to compare cryptocurrency exchanges to find the one that’s right for you.

Name Product Deposit methods Fiat Currencies Cryptocurrencies
Binance Cryptocurrency Exchange
Binance Cryptocurrency Exchange
Bank transfer (ACH)
USD, AUD, GBP, EUR, RUB, TRY, NGN, UAH, PHP, CZK & 20+ more

304
cryptocurrencies

Trade an extensive range of reputable coins on this world-renowned exchange, popular for its high liquidity and multi-language support.

US residents: As of September 2019, US-based users can only trade USD on the American dollar onramp of Binance, Binance.US.
UK residents: In addition to normal crypto trading services, Binance offers margin lending. As this is a regulated activity which they are not authorised to offer in the UK, we advise you not to use this service. If you're interested in margin trading, see authorised providers.
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