Home Crypto What is a Comp token? It’s worth and Importance

What is a Comp token? It’s worth and Importance

Comp token
Comp token

Introduction

Decentralised finance has made it possible that you can simply have your shares of borrowing and lending across its distributed platform, without any need of intermediaries. Which makes it the most acceptable and popular form of digital finance where you are your own lender and borrower, those who worry about getting a loan, can now have quicker access to the amount of money without any collateral and interest rate!

About its detailed process, we have already discussed the terms and protocol to be followed in our Blog about Flash Loans, but today! Our topic is not about getting instant loans, but about the software that makes it possible to get instant loans, so without delaying further, let’s move ahead to know about this software called, ‘Compound’. For more information, visit crypto genius .

What is Comp Token?

‘Compound Token’, better known as Comp in the digital world, is the token which is the native element of the decentralised finance Protocol named ‘compound’. Now, what makes it so special that we are discussing it today?

Compound is an incentive generating software for the investors through its distributed computer networks. It acts as a dual benefactor for both lenders and borrowers, as the lenders earn interest rate on the digital fund they have deposited in Crypto pools while the borrowers can access these funds for their own benefit without any delay!

When did Comp Token launched?

Compound software was created by Robert Leshner and Geoffrey Hayes and it turned out to be one of the biggest funds in 2018 when it generated a revenue of $8.2 million. And this session increased in 2019 when it was able to garner revenue of $25 million from many investors throughout the world. These all things were possible due to its distributed networks and great incentivized programs after depositing funds.

How does Comp Token work?

The basic work starts with a depositor who is depositing his digital funds in some investing pools, which get locked for some time till the transactions are done.

  • After depositing the money, the Compound software connects the borrowers through the smart contracts channel which runs on Ethereum blockchain.
  • Now, the incentivized program is promoted when a Borrower is able to meet the lender and the lender earns the reward in form of cTokens.
  • These cTokens are available in many versions like cETH, cBAT, etc.
  • This whole software is available through code execution and automatic way of redeemable reward programs.
  • The software has its own native token called Comp, which is given in the form of a reward whenever the investors enter the compound market.
  • The loan is provided at a very low interest rate, which is accessible and it generates a high liquidity rate.

 What are the additional requirements of Compound Protocol?

  • COMP token requires a maximum number of transaction confirmations, which are said to be 35 in number hosted by Ethereum blockchain.
  • The minimum withdrawal which you can take from Compound is 0.01 COMP And Maximum is 4,400 COMP tokens.
  • Each day, a total number of 2312 COMP is distributed to its users which is allocated to the other cryptocurrencies market like Ethereum and USDC, etc.
  • These distributed tokens are divided into two equal halves among lenders and borrowers governed by the COMP token holders.

Final Thought

Compound token is the best alternative for a quicker loan access which is an ERC-20 based asset promoting the community-based protocol, and gives governing power to COMP token holders to distribute the comp token overall the digital markets. And let the lenders and borrowers earn the profit over the Compound protocol.

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