Is Compound coin a good investment? What will happen to COMP in the future?
Contents
- How does Compound work?
- How does the Compound application attract users?
- But what about COMP?
- What of the future?
- Making a Compound crypto price prediction
- FAQs
There have been a lot of talk about Compound coin, but what is going to happen to it? Will it go up? Let’s look at a Compound coin price prediction.
First, though, we will explain what Compound coin is, what it is used for and how it works.
One of the goals of any cryptocurrency is for it to be used like a fiat currency. The ability to carry out everyday purchases in crypto is a dream for anyone who sets up an online currency. Right now, there are other things fiat currencies are better at, such as financing projects through loans. If we could use crypto to make and receive loans, a world of possibilities opens up.
Entrepreneurs Geoffrey Hayes and Robert Leshner saw a potential gap in the market and teamed up. In 2017, they created Compound, which allows cryptocurrencies to be borrowed and loaned. They officially launched the system in January 2018. Leshner, who serves as the project’s CEO, said at the time: “As it currently stands, just about the only thing you can do is move your assets off exchanges (where they are vulnerable to hacks and losses) and into your own control. And then...wait until you’re ready to sell.”
Later in 2018, Compound raised $8.2m from venture capital companies Andreessen Horowitz and Bain Capital Ventures. The following year, it raised a further $25m in seed funding.
How does Compound work?
The programme enables people to deposit their cryptocurrency into a pool, which is used to make loans. People who make deposits earn interest based on the amount they put in. Perhaps more interestingly, they receive something called a cToken, which can be transferred or traded to anyone at any time – but it can only represent the cryptocurrency that has been deposited. The system runs on the Ethereum protocol.
Everything on Compound is automatic, meaning that people can withdraw their deposits at any time. People who lend can take out a loan worth the value of their deposit in another cryptocurrency. If the value of the cryptocurrency loaned goes up and becomes worth more than the deposit, borrowings can get liquidated. If that happens, other users can repay a portion of what is outstanding in return for a share of the collateral at a discount to the contemporary market price.
Compound is the world’s eighth-largest decentralised-finance (DeFi) protocol with a total value locked of $8.3bn, according to DeFi Llama.
How does the Compound application attract users?
It does this with its own native governance token, COMP. If you use the Compound system in any way, whether borrowing, repaying or withdrawing, you can earn COMP.
People who own COMP have voting rights when it comes to the system’s protocol and they can assign those rights to someone else. The token was launched on 16 June 2020.
But what about COMP?
What has COMP done? And can you use the Compound coin price history to make a Compound coin prediction? Let’s take a look.
COMP launched at $78.58. The DeFi token was popular, hitting $336.22 on 22 June 2020. While that initial high was followed by a drop, the Compound coin price hovered somewhere between $100 and $150 for much of the rest of the year, barring a brief surge in late August and early September, when it reached a high of $256.35. It touched a low in November 2020 at $87.36. A small recovery saw it pass $100 later that month.
Things changed in 2021. It hit a high of $535.29 on 6 February and experienced peaks and troughs until late April. It stood at $475.97 on 20 April and then rallied, reaching an all-time high of $854.45 on 12 May, a rise of more than 79.5% in the space of 22 days. But COMP was hit by the crypto crash of late May, dropping to $344.54 on 24 May, a loss of just under 60% from 12 days previously. Compound also suffered from a bug during an update in early October, sending $90m to users. However, COMP recovered quickly and saw highs of $292.35 by early November.
At the time of writing on 17 January 2022, COMP was trading at roughly $198.47.
COMP/USD price history
| Date | Close | Change | Chg% | Open | Min. | Max. |
|---|---|---|---|---|---|---|
| 2022-09-30 | 52.9 | -0.76 | -1.42 | 53.66 | 52.83 | 54.04 |
| 2022-09-30 | 52.78 | -0.71 | -1.33 | 53.49 | 51.09 | 55.33 |
| 2022-09-30 | 53.5 | -2.72 | -4.84 | 56.22 | 52.36 | 57.82 |
| 2022-09-30 | 56.2 | 4.75 | 9.23 | 51.45 | 51.29 | 57.13 |
| 2022-09-30 | 51.44 | -0.82 | -1.57 | 52.26 | 50.45 | 55.85 |
| 2022-09-30 | 52.25 | 3.92 | 8.11 | 48.33 | 48.06 | 52.42 |
| 2022-09-30 | 48.34 | 2.57 | 5.62 | 45.77 | 45.32 | 48.41 |
| 2022-09-30 | 45.77 | -2.30 | -4.78 | 48.07 | 45.01 | 49.33 |
| 2022-09-30 | 48.05 | -2.50 | -4.95 | 50.55 | 46.33 | 51.35 |
| 2022-09-30 | 50.54 | -3.04 | -5.67 | 53.58 | 49.06 | 55.87 |
| 2022-09-30 | 53.55 | 3.63 | 7.27 | 49.92 | 49.82 | 54.67 |
| 2022-09-30 | 49.89 | 2.21 | 4.64 | 47.68 | 46.65 | 51.01 |
| 2022-09-30 | 47.68 | 1.18 | 2.54 | 46.5 | 45.93 | 48.11 |
| 2022-09-30 | 46.49 | -0.04 | -0.09 | 46.53 | 45.15 | 47.3 |
| 2022-09-30 | 46.49 | 2.07 | 4.66 | 44.42 | 43.96 | 47.85 |
| 2022-09-30 | 44.41 | 3.50 | 8.56 | 40.91 | 40.91 | 44.67 |
| 2022-09-30 | 40.9 | 0.07 | 0.17 | 40.83 | 38.76 | 41.41 |
| 2022-09-30 | 40.82 | 0.27 | 0.67 | 40.55 | 39.9 | 42.1 |
| 2022-09-30 | 40.56 | -0.78 | -1.89 | 41.34 | 39.25 | 41.44 |
| 2022-09-30 | 41.33 | -0.84 | -1.99 | 42.17 | 40.96 | 42.42 |
What of the future?
What does the average COMP coin price prediction look like? And what should we look out for when making a Compound coin price prediction for 2022 and beyond?
Compound Coin price predictions can often be affected by overall sentiment in DeFi markets – all governance tokens are prone to suffering downturns and surges.
A powerful example of this came in November 2020, when the Binance exchange reported that most DeFi tokens had lost anywhere between 70% and 90% of their value in the space of two months. This coincided with attention shifting to bitcoin, which was at the very early stages of a dramatic sixfold increase.
If you decide to explore what COMP has to offer, do remember that sentiment can shift quickly – there may be times when this governance token lags behind bitcoin during explosive periods of price growth.
Another threat to COMP’s success is that new DeFi protocols are emerging all the time. In a competitive market where crypto enthusiasts are continually on the lookout for the biggest gains, a younger upstart could easily wrest market share away from Compound – and in some cases, all it takes is a couple of days for a protocol to surge up the rankings.
For instance, PancakeSwap has rapidly established dominance on the Binance Smart Chain as one of the world’s most popular decentralised exchanges. At times, trading volumes have overtaken Uniswap, one of the first platforms to emerge in this space.
Trade COMP to USD – COMP/USD chart
Making a Compound crypto price prediction
Wallet Investor suggests the Compound coin price could be $120.28 in a year’s time.
DigitalCoinPrice has a Compound coin price prediction of $319.19 for 2023, $327.76 in 2024, $418.5 in 2025 and $667.46 in 2028.
LongForecast predicts the Compound coin price will go up and down before reaching somewhere between $346 and $398 in January 2025, while Gov.capital very optimistically says it could reach as high as $1,460.73 this time next year.
FAQs
It potentially is. Analysts are predicting a price rise over time, although there is a belief that it will not be a steady increase. Predictions are not set in stone. You should always remember to do your own research and know that the value of your investment can go down as well as up. Never invest more than you can afford to lose.
It depends on who you believe but there does seem to be consensus in Compound coin price predictions for 2025 that it will be higher than their current positions. DigitalCoinPrice suggests it could reach $418.5, while LongForecast suggests lows of $346. However, please be aware that things could happen to the markets that are difficult to predict.
COMP is available on Dzengi.com. Just remember to do your own research and don’t invest more than you can afford to lose.
