Compound’s COMP Becomes Most Valuable DeFi Token, but There’s a ‘But’

Compound's COMP Becomes Most Valuable DeFi Token, but There's a 'But' 101 Source: Adobe/Mykyta.

Just days after it first participated in blood circulation, decentralized loaning and cost savings platform Substance’s new token COMP has actually placed itself as the most valuable token in the decentralized financing (DeFi)space It’s high assessment might not show the complete photo, as more then 7 million coins are yet to go into blood circulation, says a market expert.

As of press time on Wednesday (10: 29 UTC), COMP traded for 0.31 ETH, or USD 72.58 on the decentralized token trading platform Uniswap According to ranking website, the current price offers the COMP token a market capitalization of more than USD 735 million if the whole token supply of 10 million COMP is counted, well ahead of MakerDAO’s MKR token with its USD 551 million assessment. The last 24 hours have actually seen a drop in COMP price of over 20%.

Compound's COMP Becomes Most Valuable DeFi Token, but There's a 'But' 102 Source:

Furthermore, per Uniswap, there were 777 deals in the COMP- ETH market in the last day, with a reported volume of USD 412,489

Nevertheless, according to Anthony Sassano, SetProtocol item marketing manager and author of the Ethereum-focused newsletter The Daily Gwei, the lofty assessment might not offer the best representation of the real circumstance.

In a newsletter released on Tuesday, Sassano composed that although the total token supply will become 10 million COMP, “the current circulating (free float) supply is around ~2.4 million COMP” (or USD 174.2 million), which is the amount that has already been dispersed to investors of Substance Labs, Inc.

A big part of the staying tokens are booked for the liquidity mining program, and have hence yet to be dispersed.

This suggests that 7.6 million COMP should ultimately go into blood circulation and this is bound to impact theprice Usually speaking, a boost in supply typically suggests a drop inprice


We called Compound’s General Counsel Jake Chervinsky for comment and will update should he reply.

At first revealed in late February, the COMP token first went into blood circulation on Monday today, with community governance for the protocol gone for the exact same time. Unlike other platforms, Substance is providing its token through a new system called “liquidity mining.” What this suggests is basically that tokens are provided to people who either supply liquidity to, or obtain funds from the platform, instead of being offered through a preliminary coin offering (ICO) or comparable procedure.

The goal of this procedure is to offer a direct reward to grow the use of the platform itself, instead of just hypothesizing on the price of the tokens. And evaluating by the enormous boost in the total USD worth locked on Substance over the past couple of days, the reward appears to be working for now.

Compound's COMP Becomes Most Valuable DeFi Token, but There's a 'But' 103 Source:

On the other hand, gaining from Substance’s token launch is also a new decentralized exchange called Curve, which saw a enormous spike in trading volume on Tuesday today of USD 214 million, self-reported information from the exchange revealed. According to Curve creator Michael Egorov, the unexpected growth in volume is mostly driven by the way COMP works by rewarding users for making deals on Substance.

Recently, significant crypto exchange Coinbase also stated in an announcement that it is “exploring the addition” of COMP, amongst numerous other new digital assets, for listing on its exchange.

COMP does not currently trade on any significant central exchanges.

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