The cryptocurrency universe has made several people rich. Those who decided to get involved in the new digital economy early enough have enjoyed several benefits. Some have also lost a good chunk of investment because they made the wrong decisions.
Making money through cryptocurrency investment is not rocket science. However, you need to know the right coins to buy, when to buy them, as well as when to sell to maximize profit. If you are interested in long-term investments, you have to be choosier with your investment options. You may also need to know more about how the market works.
In this post, we are going to consider the viability of Compound (COMP) as an investment option. We are going to discuss the most important things that can affect the price of the cryptocurrency in the long run. The aim is to provide insights into the future of the coin and help you determine whether it is a good investment option that can make you rich in ten years.
At Trading Education, we strongly believe that our readers should be able to make the right investment decisions when they have the right information. We dig deep to ensure that we furnish you with accurate information that will help you make the difficult but right decisions about online trading.
At the end of this post, we believe you should be able to decide whether Compound can make you rich in ten years and also determine whether it is the right digital coin to add to your investment portfolio. It is important that you read through carefully to get every detail you need to make the right decision.
What Is Compound?
Compound is an innovative decentralized (DeFi) protocol that runs on the blockchain of Ethereum. It is an algorithm money market protocol that utilizes ERC-20 protocol and makes investing and earning from the cryptocurrency market easier for investors.
Compound is one of the first DeFi applications to run a money market without financial intermediaries like banks and similar institutions. It facilitates loans in different cryptocurrencies, utilizing a borrowing pool that can be accessed by any cryptocurrency user. Investors can deposit funds into the authorized pools and earn interest on them.
You can describe the Compound platform as a form of cryptocurrency bank. The major difference is that it is a decentralized platform and focuses on cryptocurrencies. Interests from investing on the platform are received through the use of specially-issued native Compound tokens.
Another important thing to note about Compound is that it utilizes a mixture of Ethereum-based smart contracts to link borrowers and lenders in the ecosystem. Lenders are ideally compensated based on the number of cTokens available in their wallets, as well as a variable interest rate. The interest rate is principally dependent on the available supply of the asset. This means the higher the liquidity in the market, the lower the interest rate.
Like other cryptocurrency platforms, Compound has a native currency that facilitates transactions within the ecosystem. This token is simply referred to as COMP. For the purpose of this post, we are going to focus on COMP. It is the digital asset you will get when you invest in the crypto. Of course, you can lend your tokens to earn interest, but the primary purpose of this post is to discuss the viability of COMP as a long-term investment option for cryptocurrency enthusiasts.
Read Also: Could Compound Be A Millionaire-Maker Coin?
How Compound Works
Already, we have provided adequate information about how Compound works. The next important thing to know is that to be eligible for a loan, users must lend their crypto assets to the Compound protocol. Again, loans can be collected in any cryptocurrency of the lender's choice – that means you can obtain a loan in EOS, Chainlink, IOTA, etc.
Borrowers get secured loans from any Compound borrowing pool after pledging their collateral. There is a maximum loan-to-value (LTV) ratio, but it fluctuates according to the collateral asset and the availability of the desired token. It is also important to also note that borrowers may be forced to liquidate their collateral asset if it falls beyond a set maintenance level.
What Makes Compound Unique?
Compound provides an avenue for cryptocurrency users to get their tokens to work for them even without selling them. Unlike the traditional crypto platforms, it discourages leaving digital assets dormant on exchange platforms or wallets. As stated earlier, it performs the function of a traditional bank, but without the array of problems that depositors and borrowers go through.
Compound is also considered unique because it operates in a transparent and secured manner. Of course, it is part of the disruptive DeFi sub-sector, but it is one of the first protocols to make lending and borrowing easier in the crypto universe.
There are similar platforms to Compound, but its community governance approach sets it apart from the rest. Holders of the Compound token are the real decision-makers – they can propose, debate, and implement protocol modifications, even without consulting with the Compound team.
More About COMP
Now that we have discussed the most important things about the Compound platform let’s concentrate on the native currency (COMP), which is the asset you will get when you invest on the platform.
COMP facilitates transactions on the Compound protocol. It is similar to every other cryptocurrency in the same that it is traded on various crypto platforms. Its price also fluctuates from time to time, which is the essence of trading.
COMP has an interesting price history which we will get to very soon. Your ability to make a significant profit from investing in Compound primarily depends on the performance of the COMP token.
Is Compound A Good Investment?
There are several interesting things that portray the Compound network as an exciting ecosystem. These things are not the only things to consider when investing in the COMP. You can't judge whether COMP is a good investment option by considering only the network. In fact, the past, present, and future of the COMP token should be your primary concern.
To answer the question correctly, we need to consider the price history of COMP, its recent performance and current position, as well as predictions. This is the point you need to become more attentive to gain an insight into what will become of your investment if you add COMP to your portfolio.
Compound Price History
COMP was launched in 2017 and became very popular. We can’t find genuine data about the performance of the coin from 2017 to 2020. However, reliable data from Coin Market Cap shows show that the coin was worth as much as $280.80 on June 22nd, 2020. By July 31st, it had dropped to $134.59. It slipped further to $100 on October 26th, 2020. It gained considerably towards the end of the year, closing at $149.89 on December 31st, 2020.
COMP opened 2021, at $145.39. It gained considerably to reach $208 on January 16th. The price fluctuated for a while, but by January 31st, it closed at $347.42.
In February, COMP continued on an upward trend, reaching $534.09 on the 5th. The price went down a little but got back to $537.78 on February 12th. It dropped considerably afterwards, recording $361.1 on March 25th. Again, it gained a little and closed at $398.39 on March 31st.
Recent Performance And Current Position Of Compound
COMP performed considerably well in April 2021. It sold for $511.33 on April 5th and $566.86 on 16TH. By the end of the month, the coin had reached $742.86.
May was the special month for COMP, just as it was for several other digital coins. It opened the month at $803.99, and by May 11th, it reached $854.48. The next day, May 11th, COMP reached its all-time high of $911.20. This was followed by a sharp drop that saw the coin selling for $342.96. Compound managed to recover by November and at the beginning of the month traded at a price of $383.49. By the end of the year, COMP's price had dropped slightly and the coin had a closing price of $200.29 on the last day of 2021.
At the time of writing this post, COMP was selling at $119.48. Within the previous 24 hours, it had recorded a low of $119.47 and a high of $130.69.
COMP’s market cap at the time of writing this piece was $779 million, according to Coin Market Cap. This makes it the 88th ranked cryptocurrency in the world in terms of market capitalization. However, the fully diluted market capitalization is $1 billion.
Currently, the circulatory supply of the Compound token is 6,522,795.17 COMP. This is just about 65% of the expected total/maximum supply of 10,000,000 COMP.
Compound Price Predictions
To have an idea of what a crypto token will be worth in the future, you have to look at predictions from authority websites. These sites use different algorithms to estimate what a coin can be worth in the future. However, keep in mind that some predictions can be wild off the mark in the long run.
According to Wallet Investor recent predictions, the COMP token is likely to drop in price, as low as $27.79 within the next 12 months. They forsee this drop to continue in the long term as they also predict it will be worth as much as $2.47 in the next five years (2027).
Digital Coin Price predicts that COMP can be much more valuable in the future than it is at the moment, but they are still conservative about the growth potentials. They predict that the coin will be able to reach $156.21 at the end of 2022. They also predict that the coin will reach $180.77, $197.82, and $275.61 by the end of 2023, 2024, and 2025 respectively. They predict that it will reach $374.47 in 2028 and about $493.54 by the end of 2029.
Trading Beast gives a similar prediction as Digital Coin Price. They predict that the coin will record a maximum price of $150.58 in December. By December 2023, they expect the coin to be worth around $271.16. Their prediction also shows that the coin will reach a maximum of $339.09 in 2024 and $388.34 by the end of 2025.
Cryptonewsz.com is also predicting steady growth for COMP. Their recent prediction shows that the coin can attain a high of $600 in 2022. They predict that the coin will reach $750 in 2023 and rise further to $880 by the end of 2024. By 2025, they predict that the Compound token will cross the $1000 mark.
Don't Miss: Compound Price Predictions
Where Will Compound Be In Ten Years?
Ten Years is enough time for Compound (COMP) to break barriers and make early investors very rich. But you need to keep in mind that the cryptocurrency universe is a little complicated and unpredictable.
If we are to go with the data we have at hand, we can conclude that COMP will reach new heights in ten years. The network is great, and the potentials are there that the token will gain significantly in the future.
To be clear, we believe COMP can become one of the most valuable cryptocurrencies in ten years. At the same time, we acknowledge that a lot can happen in ten years. The wind can blow either way, but the odds are starkly in favour of COMP as an investment vehicle.
Top Reasons To Invest In Compound
There are many reasons to invest in COMP, and we will discuss the most important ones as briefly as possible:
Compound Can Revolutionize Lending and Borrowing Globally
Core cryptocurrency enthusiasts know that Compound has changed the game when it comes to lending and borrowing. As more people gravitate towards cryptocurrency, the network will become the go-to platform for lending and borrowing in every continent. The platform has adequate infrastructure to function in this capacity.
You Can Earn Interest When You Invest In Compound
Compound is one of the first platforms to open investors' eyes to the possibilities of earning interests with their crypto assets instead of leaving them dormant. Investing in COMP gives you more ways to earn than investing in more other cryptocurrencies, and this is already attracting more traders and investors.
Compound Protocols Open the DeFi Door to Every Cryptocurrency (Including Bitcoin)
Compound is one of the few cryptocurrency platforms that bring other digital currencies together. The platform even makes it possible for Bitcoin holders to have a test of decentralize finance as even Bitcoin holders can use Wrapped Bitcoin as collateral on the protocol.
COMP Has a Finite Supply
Unlike Dogecoin and many other crypto assets, COMP has a finite supply that is capped. The implication is that scarcity can set in with time, and this will further drive up the price of the coin. Early investors have everything to gain and almost nothing to lose once the token becomes scarce.
COMP’s Price History Shows That It Is Reaching for the Moon
In just a few years of circulation, COMP has shown what it is capable of in terms of return on investment. Even if you invested when the coin was selling at barely $76, you would have enjoyed over 1,098% ROI when the coin reached its all-time high in May 2021. It is currently down but will most likely beat the current all-time high in few years to come.
Read More: Pros and Cons of Investing in Compound
Why You Should Think Twice Before Investing In Compound
Things are looking pretty well for the Compound token, and it certainly looks like an excellent investment option. You should know, however, that every cryptocurrency should be considered a risky investment. Here are a few reasons you may want to look deeper before investing in COMP:
It Is Volatile
Volatility is a common problem in the cryptocurrency universe, and COMP is not immune to it. A bearish market can set in at any time since the market is based on speculations.
It Can Be Affected By Regulations and Government Interference
Compound performs a function that is similar to what regulated financial institutions do. Interference from big economies can affect the coin, but this is an unlikely scenario.
Dependence on Ethereum Can Be Costly
Compound uses an ERC-20 token, which means it is dependent on Ethereum. While this has several benefits, it can also be a bad thing for the token if Ethereum should suffer a major setback. Again, this is unlikely.
Should You Play The Long-Term Game With Compound?
Compound is an excellent platform, and the COMP token is an exciting digital coin, especially for cryptocurrency enthusiasts. But how suitable is this digital asset for long-term investment?
Well, we can all agree that it is more suitable than most other cryptocurrencies as a long-term investment option. It has grown significantly since it was launched, and it has been projected to perform even better in the future.
Another attractive thing about investing in COMP is that you can be earning interest even as the value of your investment is growing with the market. Overall, the potential benefits of investing in COMP far outweigh the risks.