What is COMP Token?
Compound is a cryptocurrency lending and borrowing platform. Investors can lend their cryptocurrency and earn interest on it, while traders can borrow cryptocurrency to gain access to credit. Compound token (COMP) is the governance token for the Compound protocol.
COMP token holders can propose, discuss, and vote on all changes to the Compound protocol.
What’s unique about borrowing from the Compound platform is that there are no credit checks; transactions can happen without anybody even knowing the name of the person they’re dealing with.
This is possible as long as borrowers put up enough crypto collateral in the form of Ethereum and other crypto assets; smart contracts automatically give investors access to loans.
The yield farming craze started when Compound began to release their COMP token. According to the Compound website, 50% of the COMP that gets released every day is distributed to borrowers and 50% is distributed to lenders.
So a person who is “yield farming” is collecting interest for depositing their crypto in Compound, as well as the COMP token reward. Here’s an example.
- Iven the Investor lends DAI to the Compound protocol. Rates are typically much higher than those for your average savings account (check this page for current rates). In addition to earning interest from lending DAI, each day, Compound will also reward Iven with a certain amount of COMP tokens relative to how much he is lending to the platform.
- Iven can sell the COMP tokens for a profit or hold them for an investment. This is yield farming: Iven is earning yield on his lending (6.9% yearly as of writing) as well as yield from collecting COMP tokens, which he can hold or sell on the market.
One reason that decentralized finance (DeFi) has surged recently is that more investors want to capture yield farming gains from Compound and other protocols. That means more money coming into the system, which has caused the value stored in DeFi to skyrocket into the billions.
(For more information on Compound.Finance itself, check our Compound.Finance review!)
Where to Buy COMP Token
There are a couple of easy ways to buy the COMP token. First, we’ll explain how to buy COMP with crypto, and then some information on how to use fiat currencies like dollars and euros to buy COMP.
Comp Token Exchange (Buy COMP with Crypto)
If you already have some crypto, then one of the fastest ways to get COMP is to exchange another crypto for it using Exodus. Here’s how.
1. Download Exodus if you don’t have it already
2. Deposit crypto - Open your Exodus wallet and select the cryptocurrency that you want to buy COMP with. Click on the Receive button and send the cryptocurrency to the provided address.
3. Begin the exchange - To the right of the Receive button are two arrows. Click on these arrows to go to the exchange page.
4. Enter the details - Choose how much COMP you want to buy. Once all of the details are correct, click on the Exchange button.
5. The exchange process will begin and the COMP tokens should show up in your COMP Exodus wallet shortly.
Comp Token Coinbase
Coinbase is the best exchange if you want to buy COMP with fiat (US Dollars, Euros, etc.) Coinbase is available in dozens of countries and they’ve recently added support for the COMP token.
The fastest way to buy COMP with fiat on Coinbase is to use a debit card. However, this is also the most expensive option. It’s cheaper to buy COMP using a bank transfer, but you won’t be able to take the crypto off Coinbase until at least five days after the purchase.
COMP Token Distribution: Don’t Buy COMP, Get It for Free!
DeFi fans and yield farmers can access Compound directly within Exodus. This makes it easy to stake your DAI and earn a passive income without even having to transfer your crypto out of your wallet. Also, crypto that you lock up in Compound via the Exodus wallet can earn COMP tokens, making the reward even better.
If you’d like to find out how much you can earn with Compound, you can quickly find out by using the Exodus calculator.
COMP Token Reddit
Whether it’s Bitcoin, Ethereum, or COMP, there’s always a crypto discussion happening somewhere on Reddit. The following threads are an excellent place to get some more information on how COMP works, what its advantages are, and why it has appreciated so much in price since its release.
The Future of COMP
The COMP token is interesting since it’s one of the best performing crypto assets of 2020. COMP also started the yield farming craze, which has led to an explosion of decentralized finance (DeFi).
Hopefully this article helped explain what COMP is, why it’s valuable, and where to buy COMP token. It will be interesting to see how COMP and other token projects lead us further towards true decentralization!
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This content is for informational purposes only and is not investment advice. You should consult a qualified licensed advisor before engaging in any transaction.