DeFi has gained enormous traction in the crypto world since 2020. With the rise of DeFi platforms, decentralized finance apps like Compound surged higher in 2021. It is an algorithmic money market protocol built on the Ethereum blockchain.
The COMP token saw a surge of over 550% in 2021, reaching a record high of $911.20 on May 12. The purported goal of Compound was to tackle the lack of utility in interest-building in traditional banks through decentralization.
Several investors have started questioning the future of Compound. Considering all its features, factors, and use cases, let’s see whether Compound could be a millionaire-maker coin.
Compound (COMP): What Is It?
Compound is an algorithmic and autonomous interest rate protocol explicitly built for developers to unlock a world of open financial applications. Its decentralized blockchain-based protocol allows users to lend and borrow multiple cryptocurrencies seamlessly.
The COMP is the native coin of the Compound network. It is also known as a governance token since it offers its holders a right to vote on protocol management decisions, including technical upgrades, whether to include new assets on the platform and so on.
The development team behind the digital asset describes the Compound Chain as “a distributed ledger capable of transferring value and liquidity between peer ledgers.” With its unique features, Compound has become the most recognized blockchain project in the market so far.
Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.
Is Compound A Millionaire-Maker Investment?
As Compound runs on the blockchain of Ethereum, it used to deploy Ether as the primary medium of making deposits in the beginning. Later its native token called COMP was released in June 2020.
The project has raised over $30 million in financing. It distributed almost 4 million of its native COMP token on its grant launch between 2018 and 2019. Later the team released a detailed white paper explaining the Compound Chain as a new tool to bring more assets into the protocol from numerous ledgers.
With Compound, crypto enthusiasts can lock up their digital assets in lending pools. Further, they receive interest from borrowers who opt to take out loans. This unique approach opens up new opportunities for investors to put their crypto to work and reap profit from the tokens they plan to hold for the long haul.
The brainchild of this unique crypto project was Geoffrey Hayes and Robert Leshner. They founded Compound in 2017 to provide an open lending platform where users who make deposits in the form of ERC-20 tokens can seamlessly take out secured loans.
Currently, the team behind the development of the Compound Protocol is Compound Labs, Inc. With an array of developments in place, its unique blockchain feature Compound could be the next millionaire-maker coin for investors soon.
Check Out: Why Compound is Going to Explode
Factors That Drive Compound To Be A Millionaire-Maker Coin
Multiple factors back up the prediction that Compound can be the next millionaire-maker coin in the crypto space. Let us explore some of them.
Lending And Borrowing
Lending and borrowing are two significant features that drive the value of Compound in the crypto market. Regardless of whether a user is lending or borrowing, the initial step is to lock the crypto with Compound. Locking your crypto is just like putting your money in a savings account. In Compound, it is done with a decentralized, blockchain-based protocol which makes it more efficient and productive.
The crypto goes directly to the Compound wallet, just like how the money would go into the bank. Therefore, investors can immediately start earning interest on their crypto, similar to how they would if they lent to the bank.
Similarly with borrowing, once the crypto token is locked within the Compound, users can borrow against it. It does not necessarily require a credit check, which means anybody anywhere in the world with crypto can borrow. The limit for borrowing is further determined by Compound depending on the quality of the asset.
Compound Tokens
Compound has two major tokens with unique functionalities. cTokens are the lending tokens on the Compound DeFi platform, while COMP is the native governance token.
cTokens are created from Ethereum as ERC-20 tokens and are highly beneficial for a blockchain-based crypto money market. They receive these tokens whenever a user deposits a cryptocurrency using the Compound protocol. It represents the initial deposit plus accrued interest.
cTokens can be transferred, traded, or even programmed into other Dapps in the DeFi ecosystem like other Ethereum tokens.
COMP or the Compound Governance Token is the native token of the Compound protocol. Users that hold COMP can enjoy several benefits, like making network proposals. It also delegates users with the power to vote on issues such as the acceptance of new collateral types, choice of oracles, and interest rate models.
Users should hold at least 1% of the total supply of COMP to submit a new proposal on the network. Therefore, the more COMP a user holds, the more influence they have over the decisions in the Compound network. This will eventually increase the adoption of COMP, boosting its value and demand in the market.
High Security
Compound has a highly secured network as it has undergone several security audits by reputed agencies like Open Zeppelin and Trail of Bits. They have also certified Compound network’s coding as highly capable of handling demands of the network, safely and securely.
Earn Interest On Multiple Coins
Compound is indeed one of the best money markets as users can earn interest and lend nine different types of coins using it. The list includes Dai (DAI), Ether (ETH), USD Coin (USDC), 0x (ZRX), Tether (USDT), Wrapped BTC (WBTC), Basic Attention Token (BAT), Augur (REP), and Sai (SAI).
The ability to turn your existing coins into a source of passive income is itself a game-changing shift in the cryptocurrency market, which Compound puts forth. This is the unique feature that can drive it to become the next millionaire-maker coin for investors.
Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.
Could Compound Be A Millionaire Maker Coin?
The primary driving force behind the Compound network is its strong development team and advanced features. If the digital coin asset carries on updating its protocol, there will likely be a positive uptrend for COMP by the end of this year.
As of writing, the COMP token trades at $119.18 with a market cap of $777 million. Several experts and crypto enthusiasts have a bullish prediction for Compound in the coming years, saying that it will reach a value of $1000 by 2025.
Compound also holds an advantageous position as the first to introduce yield farming into the crypto market in 2020. It allows users to lock up their digital assets in lending pools and then receive interest from borrowers who want to take out loans.
With a brilliant combination of easy returns and the ability to earn without trading, Compound has successfully become the pioneering force within the DeFi sector. This could probably drive it to be a millionaire-maker coin in the near future.
The Bottomline
This unique cryptocurrency is thus revolutionizing the Decentralized Finance sector and has a bright future ahead. It is the best long-term investment option for all DeFi investors looking for a unique opportunity with high growth potential.
Therefore, considering all these factors, Compound has become a high-valued financial asset that could potentially be the next millionaire-maker coin in the crypto space.