There have been remarkable breakthroughs in the field of DeFi (Decentralized Finance) recently. The growth of the DeFi industry, which has been continuing step by step since 2018, is progressing with a stronger momentum in 2020.
DeFi can be defined as the ecosystem of financial applications running on Blockchain. DeFi, which provides advantages to the financial world such as the elimination of intermediaries and central system risks, as well as greatly reducing costs, is the most popular use area on borrowing and lending.
Borrowing and lending at DeFi have advantages such as instant credit opportunity, instant transaction termination, easy borrowing, easy lending, minimizing the need for trust, lack of credit control, and virtually zero transaction costs compared to the traditional banking system. .
Compound, which has been mentioned a lot in recent days, is an important part of DeFi world and provides the opportunity to borrow and lend money without the need for intermediaries. Here, the interest rate is determined by the supply and demand of each cryptocurrency. Currently, the protocol supports DAI, USDC, WBTC, USDT, ZRX, REP and BAT. In other words, users can borrow or get interest on these cryptocurrencies by locking their existing assets into the protocol.
There are two separate token structures in Compound: cToken and COMP. When you transfer your asset to the Compound protocol, you receive cTokens that can be transferred, bought, sold or programmed similarly to other Ethereum tokens. These cTokens represent the money that users deposit in Compound. For example, when USDC is locked into the protocol, cUSD tokens that generate interest for users are automatically generated. The user can convert his cUSDT to normal USDT at any time and in addition receive the interest paid with USDT.
While converting locked assets of users into ERC-20 format in Compound, these tokens can be freely transferred, bought and sold or used in other decentralized applications.
Another token in the Compound is COMP. COMP, first introduced in late February, is the management token of the Compound protocol. Owners of this token have the right to vote for decisions to be made at the Compound.
One day after COMP was released on Monday, Coinbase announced it would list this token. In the statement made on the stock exchange, it was reported that the token will be tradable on June 22 with USD and BTC pairs.
COMP, which is also listed on FTX, increased more than 260 percent from $ 63 to $ 229 in two days.
On the other hand, as the distribution of COMP started, the amount of outstanding debt in the protocol grew by 400 percent in 3 days. At the point reached, the dollar equivalent of the total value locked in the Compound is 402 million dollars as of the minute the news is published. This figure was around $ 97 million three days ago. In terms of locked value, Maker ranks first with $ 500 million in DeFi protocols.