The Compound lending platform is working to create a liquid money market for cryptocurrency, enabling its users to borrow cryptocurrency or lend it to earn an interest rate.
This platform will use a governance token known as COMP which was distributed to founders and investors as well as over the Ethereum network starting on June 15th. Once all the tokens are distributed, Compound will be run by token holders instead of the company itself.
The Decentralized Governance of the Platform
To get a vote on any proposed change to Compound, 1% of the distributed tokens will need to back the measure, which will then be open for a vote for 3 days and will be applied after 2 days if a quorum of 4% is reached.
This governance token was first announced back in February as a process “of continuous and progressive decentralization” of the platform which started with the distribution of tokens to investors, which passed a vote back on June 13th to initiate the distribution of tokens.
The First Day of the Distribution Brings Optimism
COMP’s first day of distribution and trading raised a lot of expectations in the decentralized finance movement. Uniswap was the first one to open a market for COMP using the COMP-ETH pair which has so far seen 1096 transactions and $1,686,725 of volume in the last 24 hours.
It is planned for 2.880 COMP to be distributed daily across the lending markets already supported by Compound: ETH, DAI, USDC, USDT, BAT, REP, WBTC, and ZRX. Both borrowers and suppliers will earn 50% of the distribution in each market.
According to defipulse, Compound is the third-largest DeFi platform with a total of USD 128.5 million in locked assets at this time, an increase of 31.6% in the last day resulting from the distribution start.
Decentralized Banking is the Future
Decentralized finances bring clear advantages to its users over traditional banking such as total control of their financial assets, transparency, security, and ease of access anywhere around the world.
Its current challenge is cultural in nature as blockchain adoption is advancing fast but it has not seen mass adoption. Blockchain and cryptocurrency are still mysterious and inaccessible to non-tech or non-financial savvy people due to hundreds of years of fiat currencies use and lack of
understanding of what decentralization is.
As more industries such as gaming, finances, technology, and imports adopt blockchain into their process and open its use to the masses, DeFi will gain an edge over traditional finance. The question is not “if” but “when”, which is the same question repeated over and over in regards to other applications of blockchain.
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