The government token, Compound (COMP), native to the popular decentralized finance protocol (DeFi) of the same name, has suffered heavy losses after its meteoric first day of trading on Coinbase.
After trading as high as $427 on Coinbase Pro on Tuesday, COMP has fallen back below $250 within 8 hours of the local high. With less than a quarter of COMP’s total supply currently in circulation, the aggressive price changes were driven by relatively low volume, with $24.5 million in trade in the last 24 hours.
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Despite the sharp drop in price, COMP still represents 36.5% of DeFi’s total market capitalization of over $2.3 billion according to DeFiMarketCap.
This increases the excitement around DeFi’s ‚yield agriculture‘, with the COMP as the focus. Many yield farmers have tried to earn COMP tokens by borrowing other cryptoactives.
The great growth and volatility of COMP this week
While COMP was trading between $140 and $180 on its first day on Poloniex on June 18, news that it would be trading on Coinbase Pro caused prices to more than double in just a few days, with COMP trading around $380 on June 21.
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Prices bounced off the $220 support the next day before recovering to test resistance above $350 on Bitcoin Millionaire along with the Coinbase Pro quote on June 23.
Compound tops DeFi ranking
Compound comprises a decentralized loan protocol, which pays its native ERC-20 to both borrowers and lenders.
With COMP making claims that future interest is paid through the protocol, the demand for the token has seen Compound emerge as the top-ranked DeFi project by assets under management (AUM).
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According to DeFiPulse, Compound currently represents $592 million in blocked funds, or over 38% of the total AUM of the DeFi sector. At the time of writing, more than 20% of the market capitalization of the major USD stablecoins (USDC) is hedged in the Compound protocol.
At this time, approximately 26,650 COMP tokens have been distributed out of the 4.23 million tokens allocated to users. The users‘ share represents 42% of the total token supply. 2,880 tokens are issued every day, with 0.5 COMP distributed for each Ethereum block (ETH) mined.
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22.25% of COMP’s supply was allocated to the founders and the project team, subject to a four-year concession, and 24% was allocated to the shareholders of Compound Labs, including Andressen Horrowitz and Coinbase Ventures.