Blockchain technology and DeFi platforms have been growing steadily for the past few years, and it seems nothing can stop its growth now. In this competitive market with a plethora of cryptocurrencies available, crypto enthusiasts are continuously looking for the next big coin.
A unique crypto token that has taken the DeFi sector by storm is Compound (COMP). It is a lending platform on Ethereum that enables users to lend and borrow ERC-20 tokens through a decentralized market. Precisely, lenders put money into an authorized pool in the network and earn interest through borrowers.
This is a prolific innovation in the DeFi space, and thus experts say that Compound might likely hit new records in the coming decades. Let us see why Compound will skyrocket in 2021.
Why Choose Compound Over Other Crypto tokens
Compound is one of the most popular cryptocurrencies built on the Ethereum blockchain, and it was the first crypto platform to introduce yield farming into the crypto space. This groundbreaking DeFi project is a decentralized algorithmic money-market platform that facilitates loans in several cryptocurrencies by leveraging the borrowing pools.
According to Compound, most cryptocurrencies are likely inactive on the exchange platforms drawing no gains for their owners. With its decentralized lending platforms, Compound aims to change this. It allows crypto holders to earn interest on their cryptocurrencies or even take out a secured loan, all in an entirely transparent manner.
Compound offers secure passive income for its users whose funds would otherwise remain stagnant and lay idle. Thousands of users choose Compound because it is fully autonomous, at the forefront of yield farming, extremely secure, and highly interoperable. Therefore, it holds a first-mover advantage in dApps.
Additionally, everything on Compound is automatic. Users can withdraw their deposits any time they want. They can also take out loans worth the value of their deposits in another cryptocurrency. Further, they can also liquidate their borrowings if the value of the cryptocurrency goes up and becomes worth more than they deposit.
Is Compound Going To Skyrocket In 2021?
One significant factor that will fuel the value of COMP in 2021 is the rising popularity of decentralized finance applications. It is not preferable to have money in your savings account for years without seeing any notable growth. Compound's innovative technology has created a solution for this by building a platform where millions of users can deposit their savings and profit from it through interest rates.
It connects lenders and borrowers using a mixture of Ethereum based smart contracts and cryptocurrency-based incentives. By locking their assets into the protocol, lenders and borrowers can take out loans seamlessly. The interest rates paid and received depends on the demand and supply of each crypto asset.
Moreover, COMP has a finite supply of 10,000,000 COMP coins that is capped. This means that scarcity could eventually befall the token in the future. This will automatically lead to a rise in demand and value which will drive COMP to skyrocket in the not-too-distant future.
Factors That Skyrocket Compound’s Price To New Heights
Apart from limited supply, several other factors back up the prediction that Compound will likely skyrocket shortly. Let us focus on some of them.
#1 Uncompromised Security
A prominent factor that will attract more eyeballs to Compound is that it is very safe. It is an ERC-20 token that is built on the Ethereum network. Aside from this, Compound has the necessary codes and encryptions to ensure the complete safety of the protocol.
Reputed technology companies like Trail of Bits and Open Zeppelin have conducted a thorough assessment of the protocol, assuring its capability to handle the enormous demand that the network will be facing.
#2 The Governance Token
COMP token is an ERC-20 asset token that runs on the Ethereum Network and is its native governance token. COMP offers token holders to delegate voting rights to an address of their choice. It can be the owner's wallet, another user's wallet, or an application.
Depending upon the number of cTokens in their wallet and a variable interest rate, Compound compensates its lenders with the COMP tokens. This will further boost the adoption of the COMP token, skyrocketing the value of Compound.
Despite this, users who hold the Compound Governance Token can also make proposals and vote on issues such as the acceptance of new collateral types, choice of oracles, interest rate models, and borrowing capacities. Therefore, the more COMP tokens a user possesses, the more influence they have over the Compound network.
#3 Earn Interest On Varieties Of Cryptocurrencies
Along with providing passive interest income to those lenders who deposit in supported cryptocurrencies, loans on the Compound Network are also helpful for traders who wish to capitalize on short-term opportunities.
The Compound protocol supports loan markets in 11 cryptocurrencies as of writing. They are: Dai (DAI), Ether (ETH), USD Coin (USDC), Ox (ZRX), Tether (USDT), Wrapped BTC (WBTC), Basic Attention Token (BAT), Augur (REP), Uniswap, Compound Governance Token and Sai (SAI).
Therefore, anyone with these cryptos can lend and borrow seamlessly without spending unnecessary time, effort, and cost of dealing with a traditional financial intermediary.
#4 Increasing Investor Interest
Another significant reason why Compound will skyrocket is its rising investor interests due to the strong partnerships forged during its inception of trading. Coinbase, one of the leading exchange platforms, had listed COMP back in June 2020. Others like Binance and Huobi Global followed suit, boosting its adoption worldwide.
Check Out: Pros and Cons of Investing in Compound
Why Compound Will Skyrocket: Expert Predictions
Based on a detailed fundamental and technical analysis, several crypto experts and analysts think that investing in Compound is one of the smartest decisions for the long term, as its price will skyrocket in the coming decades.
Even though the COMP token is prone to the usual downturn and surges in the market, experts from DigitalCoinPrice predict that the prices are expected to touch $1110 in 2021. Long-term forecasts predict that it might spike to over $2246.22 in 2025. Analyst Elena R at CoinPedia has a more bullish forecast, saying that COMP might trade in the range of $1,700 to $2,000 by the end of this year.
Should You Invest $1,000 In Compound Right Now?
DeFi is on the upswing in the crypto community, and several prominent players have emerged in recent years. The Compound token is undoubtedly one of the most popular and potential cryptos among them.
Locking your cryptocurrency in with Compound protocol is just like depositing your money into a savings account, but with a decentralized blockchain-based protocol that will allow you to earn significant profit from them. Moreover, it will enable you to send, lock, deposit, or lend if you own any cryptocurrencies from the above list, making it far more efficient.
Compound has returned over 100% year-to-date, and the price rally of COMP since its inception in 2020 shows that the digital asset shows no sign of slowing down. Nevertheless, it has also become the first DeFi protocol to surpass $10bn in total value locked - a significant achievement celebrated by the crypto community on Twitter.
Therefore, considering all the factors and significant features that the token offers, investing $1000 right now when the token is trading at $290.69 (as of writing) could be an intelligent move towards a profitable investment.
Don't Miss: Compound Price Predictions
Compound is undoubtedly an innovative technology that can disrupt the whole traditional lending and borrowing system. Also, thanks to decentralized finance, Compound can revolutionize the process globally. It has specifically introduced smart contracts to eliminate the need for a middleman during the process.
With DeFi exchanges and tokens gaining huge traction far quicker than any other digital assets, Compound will likely skyrocket its value in the coming decades, establishing itself as a unique DeFi project.
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