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.
|Circulating supply (approx. as of August 2020)||~3,210,000 COMP|
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.
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