How To Buy Compound (COMP)?

A common question you often see on social media from crypto beginners is “Where can I buy Compound?” Well, you’ll be happy to hear it is actually quite a simple and straightforward process. Thanks to its massive popularity, you can now buy Compound on most cryptocurrency exchanges, including Coinbase and Binance in 3 simple steps.

Step 1: Create an account on an exchange that supports Compound (COMP)

First, you will need to open an account on a cryptocurrency exchange that supports Compound (COMP).
We recommend the following based on functionality, reputation, security, support and fees:

In order to sign up, you will need to enter some basic information, such as your email address, password, full name and, in some cases, you might also be asked for a phone number or address.

Note: On specific exchanges, you might need to complete a Know Your Customer (KYC) procedure in order to be able to purchase cryptocurrency. This is most commonly the case with licensed and regulated exchanges.

Step 2: Deposit funds into your account

Many cryptocurrency exchanges will allow you to purchase Compound (COMP) with fiat currencies, such as EUR, USD, AUD and others. Furthermore, they will also provide you with multiple deposit methods through which you can fund your fiat account, such as credit and debit cards, ewallets or direct bank transfers.

Note: Some payment methods will have higher fees than others, such as credit card payments. Before funding your fiat account on your chosen exchange, make sure to do your due diligence to find out the fees involved with each payment method to avoid unnecessary costs.

Step 3: Buy Compound (COMP)

This process is similar across almost every cryptocurrency exchange. All you have to do is find a navigation bar or a search bar, and search for Compound (COMP) or Compound (COMP) trading pairs. Look for the section that will allow you to buy Compound (COMP), and enter the amount of the cryptocurrency that you want to spend for Compound (COMP) or the amount of fiat currency that you want to spend towards buying Compound (COMP). The exchange will then calculate the equivalent amount of Compound (COMP) based on the current market rate.

Note: Make sure to always double-check your transaction details, such as the amount of Compound (COMP) you will be buying as well as the total cost of the purchase before you end up confirming the transaction. Furthermore, many cryptocurrency exchanges will offer you their own proprietary software wallet where you will be storing your cryptocurrencies; however, you can create your own individual software wallet, or purchase a hardware wallet for the highest level of protection.

For more in-depth instructions, our ‘Absolute Beginner’s Guide To Cryptocurrency Investing‘ will take you through the process step-by step. In addition to providing instructions for sending and receiving your cryptocurrency.
And if you’re completely new to crypto our beginner, intermediate and advanced level articles will get you up to speed with everything you need to know about the cryptocurrency space starting out. 

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What Is Compound (COMP)?

Compound is a Defi protocol that has attracted a large number of new users since its launch in 2018. It is a decentralized application (DApp) that works on top of the Ethereum network. The platform works by letting users contribute or deposit crypto funds into a liquidity pool in order to earn interest on their assets. Users can currently use 18 different cryptocurrencies and the top three markets in Compound are USD Coin, Dai  and Ether. 

Compound allows users to seamlessly lend, borrow, and earn interest in cryptocurrency. If you lock in your crypto funds with the platform, you can pocket increasingly lucrative returns with compounding interest (hence the name). For example, if you lent ETH to Compound’s pool of funds, you would begin to see interest accrue in the form of ETH almost immediately. This idea is identical in nature to holding your funds in a high yield savings account at a bank. Yet instead of routing through banks, the system is entirely peer-to-peer (P2P). 

How Does Compound Work? 

Compound automates the process of matching lenders and borrowers by combining crypto funds into pools of liquidity. To offer a visual metaphor, Compound users each contribute their coins to a jar (the pool) and other users who require funds now can borrow coins from it. Eventually, the borrowers will need to put the coins back into the jar, with additional interest. Compound will reward those who placed their coins in the jar by transferring the earned interest into their wallets. 

This automated process is possible thanks to smart contracts that are built into Compound’s native cTokens. Each time users lock in funds with Compound, the platform will temporarily convert their holdings to cTokens that represent the value of the crypto they put in and therefore their stake in the pool. 

These cTokens act like a contract at a bank, through which borrowers and lenders agree to the terms of the transaction. However, the Compound protocol shortcuts many of the processes associated with taking out a traditional loan. Users don’t need to sign papers or to formally apply for the loan; the contract terms are coded into the protocol and cTokens. Decisions, e.g. how much interest is rewarded, are based on these predetermined smart contracts. 

Removing these barriers begs the question: what happens if I don’t repay my loan? There are no authorities involved and there would be no one coming to seize the crypto or penalize you. So why wouldn’t everyone borrow crypto from Compound and never pay it back? The answer is that to take out a loan on Compound, you must “overcollateralize” your loan. This means you need to have more funds locked in with Compound than your loan is worth. The only party that would take a loss from not paying back the loan would therefore be the borrower. That is why Compound doesn’t require any identity verification or other documentation from its users. If you decide not to repay your loan on Compound, the automated contract will simply subtract the value of the loan from the value you hold in Compound as collateral (which, as noted, can never be less). 

The idea behind this is similar to trading on margin. You wouldn’t be able to borrow money to trade on an investment platform if you had an account balance of zero. In this case, if the value of the trade dips below a certain amount, your position is closed and your collateralized funds liquidated (as in a margin call). As anyone who has spent time investing in cryptocurrency may know, the value of your crypto loan may at some point drastically decrease, due to price volatility. This can drastically and suddenly affect the value of your loan.   

Who Are the Founders of Compound?

Compound was founded in 2017 by Robert Leshner and Geoffrey Hayes, both of whom previously worked in high-profile roles at Postmates — an online food delivery service. The two continue to hold executive positions at Compound Labs, Inc — the software development firm behind the Compound protocol, with Leshner currently serving as CEO, while Hayes is the CTO.

Though both founders have experience founding successful companies, Robert Leshner, in particular, has been particularly active in helping to grow the blockchain space, and has publicly invested in popular crypto platforms including Argent Wallet, Opyn, and Blockfolio.

The Compound team now comprises over a dozen individuals — almost half of which work as engineers.

What Makes Compound Unique? 

It may be clear to you by now how Compound can help you to benefit from earning interest or borrowing without using a bank but how is it different from other DeFi protocols? By now there are hundreds of liquidity protocols and DeFi apps out there, including Uniswap, Aave, Maker, Curve, Bancor and SushiSwap. They each offer unique solutions to users, so what sets Compound apart? 

• Definitive Yields. The make or break moment for many cryptocurrencies seems to rely on how well they can simplify and maximize what they offer. Compound has made what it offers as simple as possible and has advertised it effectively. It was helped in thisby a new major investor: Coinbase. Compound was able to make users aware that they could earn attractive interest on the crypto holdings they had laying dormant, just like with a traditional savings account. 

• COMP Token. The COMP token is currently trailing UNI, MKR, and AAVE, yet it is still a valuable asset. It has reported a nearly 500% return in the past year (since June 2020). Additionally, its backing from Coinbase positions it well for the future. 

• Compound Treasury. With its treasury, Compound is opening the doors to give businesses an opportunity to earn 4% APR on savings accounts, fixed income products, no-loss lotteries, and more. It offers daily high-interest yield payouts, on-demand liquidity, and transparent reporting for companies, making it a highly attractive offer.

What is the COMP token?

Like with other DeFi protocols, COMP acts as the native crypto and governance token for the Compound platform. COMP tokens enable their holders to vote on the platform to determine the future direction of Compound. All COMP holders can also get an inside look at the platform’s protocol, treasury and other inner workings of the ecosystem. 

Compound development updates in 2023

Compound, a major player in the decentralized finance (DeFi) sector, has seen various developments in 2023. As a leading DeFi protocol, Compound has continued to innovate and adapt in the ever-evolving cryptocurrency market. Here’s an overview of the most significant updates and events surrounding Compound in 2023:

• Launch of a Native USDC Market on Arbitrum: Compound announced the launch of a native USDC market on Arbitrum, a layer-2 scaling solution for Ethereum. This development allows users to lend and borrow USDC on Arbitrum, benefiting from lower fees and higher throughput compared to Ethereum. This integration enhances the liquidity and interoperability of USDC in the multi-chain ecosystem, thanks to Circle’s Cross-Chain Transfer Protocol (CCTP) that facilitates the transfer of native USDC from the Arbitrum market to other supported blockchains​​.

• Market Performance and Technical Analysis: As of the latest updates, Compound’s price was facing a consolidation phase, with some fluctuation in its market value. Technical analysis indicated that the Compound price might either stay in a range or continue to decline. The Relative Strength Index (RSI) and Exponential Moving Averages (EMAs) suggested a neutral to bearish sentiment in the market. Compound’s price faced resistance at around $80 and had declined, trading below major EMAs​​.

• Governance Dynamics and Developer Recognition: Compound DAO experienced a notable event where a proposal to reward a developer for patching a critical vulnerability in the v3 protocol, known as Comet, fell short of the required votes. The proposal aimed to grant the developer a $125,000 reward for their efforts in identifying and fixing a potential exploit that could have allowed hackers to steal user funds. Despite strong support, the proposal did not meet the quorum, raising questions about the governance mechanisms within Compound DAO. This incident highlights the challenges and nuances of decentralized governance in blockchain protocols​​.

• Resubmission of the Reward Proposal: Following the initial proposal’s failure, the developer resubmitted the proposal, this time requesting a reduced reward. This ongoing situation emphasizes the importance of effective governance and decision-making processes in recognizing and incentivizing contributions within the DeFi landscape​​.

These developments reflect Compound’s ongoing efforts to enhance its platform and maintain its position in the DeFi sector. The launch of new markets on layer-2 solutions like Arbitrum demonstrates Compound’s commitment to improving user experience and efficiency. Meanwhile, the governance challenges shed light on the complexities of decentralized decision-making and the importance of incentivizing community contributions to protocol security and development. As Compound continues to evolve, it remains a significant entity in the DeFi space, contributing to the broader discourse on the future of decentralized finance.

Official website: https://compound.finance/

Best cryptocurrency wallet for Compound (COMP)

There are plenty of different crypto wallets available. The best one for you depends on your general trading habits and which provides the most security in your situation. There are two main types of wallets: hot storage wallets (digital) and cold storage or hardware wallets (physical). Both have their pros and cons, and there is not necessarily a right or wrong answer when it comes to figuring out which crypto wallet is best for you.

HOW DO I DECIDE WHICH cryptocurrency WALLET TO USE for Compound (COMP)?

Deciding which type of wallet to use depends on a variety of factors, including:

• How often you trade. In general, hot wallets are better for more active cryptocurrency traders. Quick login ability means you are only a few clicks and taps away from buying and selling crypto. Cold wallets are better suited for those looking to make less frequent trades. 
• What you want to trade. As mentioned earlier, not all wallets support all types of cryptocurrencies. However, some of the best crypto wallets have the power to trade hundreds of different currencies, providing more of a one-size-fits-all experience.
• Your peace of mind. For those worried about hacking, having a physical cold wallet stored in a safe deposit box at the bank or somewhere at home, provides the safest, most secure option. Others might be confident in their ability to keep their hot wallets secure.
• How much it costs. It is important to investigate the costs associated with each wallet. Many hot wallets will be free to set up. Meanwhile, cold wallets, like any piece of hardware, will cost money to purchase.
• What it can do. While the basics of each cryptocurrency wallet are the same, additional features can help set them apart. This is especially true of hot wallets, many of which come with advanced reporting features, insights into the crypto market, the ability to convert cryptocurrencies and more. Security features can also be a good differentiator.

For a more in-depth overview of cryptocurrency wallets visit our “Cryptocurrency Wallets Explained” guide.

If you’re going to be dealing in larger volumes of crypto, investing in cold storage might prove advantageous.
Most widespead examples of this being the Ledger Nano and the Trezor.

Ledger manufactures cold storage wallets designed for users who want increased security. Their wallets are a physical device that connects to your computer. Only when the device is connected can you send your cryptocurrency from it. Ledger offers a variety of products, such as the Ledger Nano S and the Ledger Nano X (a bluetooth connected hardware wallet).

Trezor is a pioneering hardware wallet company. The combination of world-class security with an intuitive interface and compatibility with other desktop wallets, makes it ideal for beginners and experts alike. The company has gained a lot of the Bitcoin community’s respect over the years. Trezor offers two main models – The Trezor One and Trezor Model T (which has a built in touch screen).