The price of Compound (COMP) tokens is seeing an enormous surge amid a manic week for the decentralized finance (DeFi) project, including an inventory announcement by U.S. crypto exchange giant Coinbase.
Compound TVL Crosses $400M TVL Milestone
With the true amount of lenders on the Compound protocol increasing rapidly, data from DeFiPulse shows the project crossing the $400M mark altogether value locked (TVL). A week ago barely, this figure stood at $100 million. Compound becomes the next lending protocol to cross the $400 million mark after MakerDAO.
This vertical climb in Compound’s TVL comes amid a token distribution event – a well planned Coinbase listing which has seen the price tag on COMP tokens moon by over 100% during the last 24 hours, reaching a higher of $240 on FTX exchange. By writing these relative lines, COMP is trading round the price of $228. Yesterday, prior to the launch, COMP was sold for under $65, that results in almost 270% ROI at the peak price.
Coinbase listing announcements have caused altcoin prices to improve significantly with a corresponding dump often, accompanying the hype usually.
Comp/USD within the last 24 hours. Source: TradingVIew
Data from Compound also shows a corresponding massive increase in Tether (USDT) supply on the protocol: From approximately $43 million in the beginning of the week, Tether supply on Compound has crossed the $230 million mark by enough time of writing.
The frenzy surrounding the Compound protocol might get a further spur following FTX, announcing plans to list the token also. An FTX listing shall mean checking the COMP token to derivatives trading.
Liquidity Mining, the brand new DeFi Talking Point
The current massive growth for Compound comes amid an evergrowing buzz in liquidity mining. Called liquidity farming also, it’s the latest token distribution mechanism in the DeFi ecosystem that sees earn tokens by contributing digital assets — “liquidity” — to the project. Liquidity mining incentivizes investors to put on funding for the DeFi project, which spurs using the protocol.
For Compound, the massive growth in TVL shows borrowers and lenders being increasingly thinking about adding liquidity in exchange for COMP tokens in the expectation of future price growth. Venture capitalists are reportedly adding a significant level of equity in the project with likes of Andreessen Horowitz and Polychain Capital putting up $79M and $75M, respectively. Others like Paradigm and Dragonfly Capital also have invested $26 million and $7.3 million, respectively.
As recently reported in the news, the blockchain software company ConsenSys announced plans to introduce a compliance service for DeFi projects and crypto exchanges. February 2020 in, the value locked in DeFi increased by 260% in a single year, after crossing the $1B mark. Currently, the full total DeFi market stands at $1.35B in TVL.