DeFi Protocol Compound Touches $1 Billion in Cryptocurrency Loans

Ethereum-based cryptocurrency lending system, Compound (COMP), is on the verge of touching the $1 billion mark in crypto loans. This comes amidst total USD funds locked in Defi surpassing $2 billion.

DeFi’s Most Popular Lending Token Hits the Billion Dollar Mark

According to the official Compound website, the total valuation of borrowed crypto assets under the Ethereum based lending protocol has just hit the $1 billion-dollar mark.

Compound’s most popular lending and borrowing token is DAI. Around 80 percent of the users have borrowed DAI, followed by USDC and ETH at 14.4 percent and 2.4 percent.

The total number of borrowers stands at 4579. With 31632 suppliers, these three assets are the most supplied crypto tokens as well.

Interestingly, the USD amounts of DAI token loans supplied as well as borrowed both are around $800 million, with a tight divergence of approximately 10%. This is in stark contrast to other assets as they have considerable differences in their supply and borrow numbers.

Another point worth mentioning is the disparity from the figures shown on DeFi Pulse. As per the DeFi activity tracking website, Compound has around $700 million in total value locked. This is, in fact, the amount deposited by loan suppliers. Upon adding the borrowing figures, the total Compound market supply works out to be around $1.7 billion.

What is Compound, and What is so Special About it?

Put simply, Compound is an Ethereum-based open-source financial system. Participants in this system can borrow and lend funds by locking their spare crypto assets. The protocol’s design allows a decentralized determination of interest rates, based on demand and supply of available crypto assets.

This is a radical move away from the usual banking system that unanimously determines interest rates on savings bank accounts.

In February this year, Compound founder and CEO, Robert Leshner announced a community-based governance system for the protocol. This, according to him, will keep the core team out of the decision-making process.

One can participate in the community by owning the COMP token.

What’s Fuelling This Massive Growth?

As reported by CryptoPotato last month, Compound’s appreciation in total value locked (TVL) is fuelled by a growing interest in ‘liquid mining’.

Borrowers and lenders have been supplying liquidity to the protocol in large numbers, in exchange for COMP tokens, in the hope of reaping profits on the token’s future price rallies.

Investment interest in Compound has ‘compounded’ also because Binance rolled out 50X leverage trading, and OKEx added support for spot COMP trading.

VC firms have not stayed behind either. Andreessen Horowitz and Polychain Capital have invested $79 million and $75 million in Compound, respectively. Among others, Paradigm has put in $26 million, and Dragonfly Capital has invested $7.3 million.

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