What Value does the Compound Protocol (COMP) have?
Compound (COMP) is an algorithmic protocol that allows developers and users to earn interest from cryptocurrencies and other digital assets.
They claim Compound was earning interest on $10.536 billion worth of assets in 18 markets on 24 March 2022. For example, they claim Compound was earning 1.6% interest on $88.33 million worth of TrueUSD (TUSD). In addition, they claim Compound was earning 2.77% interest on $2.028 billion worth of DAI (DAI), 6.44% interest on $399,000worth of SushiSwap (SUSHI), and 3% interest on $711.27 million worth of Tether (USDT).
However, Compound earns little or no interest from some assets. For example, the Compound Protocol was earning 0.15% interest on $1.502 million worth of Wrapped Bitcoin (WBTC) on 24 March 2022.
How Compound Works
The Compound Protocol (COMP) integrates community-interfaces into pools of digital assets. An algorithm in the protocol automatically adds interest to the assets.
The Compound Protocol uses exponential math to create the interest. The interfaces work with institutions, including Coinbase Treasury, Compound Treasury, Anchorage, Fireblocks, Bitgo, and Ledger. It earns interest with popular exchanges such as Binance, Crypto.com, Pool Together, ImToken, Argent, OKEx, Zapper, Exodus, and BarnBridge.
Community-built interfaces integrate the protocol and allow users to manage assets. Each interface adds functions to assets Compound holds.
For example, InstaDapp lets you supply, borrow, and migrate MakerDAO CDPs into Compound. In contrast, Zerlon allows users to save, borrow, and monitor Compound (COMP) and Ethereum (ETH). Plus Eidoo allows users to buy, sell, trade, and earn in app or pay with the Eidoo Card worldwide.
Conversely, Token Tax is adds tax and accounting software to Compound to help with taxes. Cointracker tracks portfolios and calculates taxes in Compound. Finally, Lumina offers institutional-grade portfolio management and tax accounting.
How Compound Earns money from Borrowing
Compound (COMP) reported a Total Supply of $10.540 billion and a Total Borrow of $3.785 billion on 24 March 2022. They claim there were 301,365 Compound Suppliers and 9,321 Compound Borrowers on 24 March 2022.
Moreover, they claim Compound was earning 2.35% in interest from $110,00 worth of the Compound Governance Token (COMP) on 24 March 2022. In addition, Compound was earning 2.65% interest from $95.58 million worth of Ethereum (ETH) borrowing on 24 March 2022.
Plus, Compound was earning 1.86% interest from $2.510 billion worth of USD Coin (USDC) and 3.53% in APY from $1.5484 billion worth of APY borrowing. For example, Compound was earning 0.15% in interest on $1.502 billion worth of Wrapped BTC (WBTC) and 3.66% in interested on $77.09 million in WBTC borrowing.
Plus, Compound can earn money from decentralized autonomous organizations (DAOs). For instance, Compound (COMP) was earning 0.38% interest on $1.41 million in yearn.finance (YFI) and 5.02% in interest on $144,000 worth of YFI borrowing on 24 March 2022.
Hence, Compound can make money from borrowing and finance. I think those capabilities make Compound (COMP) an excellent speculative cryptocurrency.
What is Compound (COMP) worth?
Mr. Market thinks Compound (COMP) offers some value. For instance, CoinMarketCap named Compound the 92nd largest cryptocurrency on 24 March 2022.
Additionally, CoinMarketCap gave a $120.76 Coin Price, a $803.091 million Market Cap, a $1.208 billion Fully Diluted Market Cap, and a 24-Hour Market Volume of $123.191 million on 24 March 2022. They based those numbers on a Circulating Supply of 6.648 million COMP, a Total Supply of 10 million COMP and a Maximum Supply of 10 million COMP.
In comparison, CoinBase gave Compound a $120.67 Coin Price, a $802.7 million Market Capitalization, and a $123.5 million 24-Hour Market Volume on 24 March 2022. They based those numbers on a Circulating Supply of 6.651 million COMP. I consider Compound (COMP) an unstable asset because it had a $911.20 all-time high Coin Price.
I consider Compound an excellent speculative asset because it has a protocol that actually performs a financial service. That service is to accrue interest. I think there is a real demand for Compound’s service. Hence, I consider Compound a protocol that could make money at some point. Speculators seeking a protocol that could pay off need to investigate Compound.