Compound Dai (cDai) is an ERC20 token of the decentralized platform Compound that was introduced after the platform was upgraded to its advanced version in May 2019. Previously, the platform used only one token COMP. However, after the introduction of the v2 Compound, cDai appeared along with the main token. Now сDai represents the lending or supply balance together with the interest added.
According to the analytical service DeFi Pulse, Compound is ranked the first among the decentralized financial applications. The protocol developer is San Francisco-based Compound Labs headed by the Financial Analyst Robert Leschner.
Over two hundred billion USD have been invested in the crypto industry at the time of writing. But, despite an immense daily turnover on the exchanges, the lion's share of digital assets is frozen until better times and stays intact without bringing income to investors. The developers of the new project Compound decided to change this state of affairs by opening a landing platform based on Ethereum.
A test version of the Compound system was launched in the fall of 2018. The white paper of the project was published six months later, and in mid-May 2019 the protocol was updated to version v2.
The project management has no administrative privileges. Robert Leschner originally intended to gradually "decentralize" the protocol and hand over the reins to the community. At the time of writing, Compound is run by a decentralized community of COMP token holders and their delegates who propose and vote on protocol updates.
Users have to vote to add a new cryptocurrency. Any address to which more than 100,000 COMP has been delegated can put its own version of the network upgrade to a vote. Once a proposal is created, the community can vote during the 3-day voting period. If a proposal is supported by at least 400,000 votes, it is queued in the Timelock contract and can be implemented after a 2-day waiting period.
Users can make money on DeFi tokens if they buy them for storage in anticipation of a price increase. Along with intangible rights, the "holders" of DeFi project tokens have the opportunity to receive speculative income as a result of an increase in their price in the future. At the time of writing, the capitalization of the top 100 projects of the decentralized finance market exceeded 13 billion USD, growing on average more than 30% per month.
Before the upgrade, only a smart contract was used regardless of the type of assets. Now the upgrade has enabled the use of its own smart contract (asset gateway) for each token. Each time a user deposits funds to the Compound platform, cTokens are received as a reward.
Users of Compound can earn interest by lending their funds. The platform’s protocol was designed to alleviate the process for users. The only thing the lender should do is to supply tokens to make them available for borrowing. The protocol became famous after its launch in 2018. However, it gained incredible popularity after the upgrade to v2 and the introduction of the additional token.
A solution to design cDai and cTokens as ERC20 tokens proved to be successful. When the team behind Compound made this decision, it opened many opportunities for liquidity and functionality. cDai and other assets locked in the Compound system are able to move freely across the ecosystem and can be used for other goals in case of necessity. It’s possible to transfer, trade, or send cDai to cold storage as you can do with any Ethereum token. Even their integration to different protocols is possible.
It’s possible to purchase tokens using various mobile services, for example, Trustee Wallet, which is also a service for the safe storage of tokens. It supports the purchase and sale of DAI, the exchange of supported tokens including cDai.
When you provide assets to a composite protocol, your balance is displayed as Compound Dai. Each participant in the network can borrow and take cryptocurrency at interest. Interest rates are a function of the liquidity available in every market and fluctuate in real time depending on supply and demand, and the more the token is demanded, the more a user can earn. Lending transactions are not concluded directly, all funds are in a common pool of liquidity. There are no predefined deadlines such as 90 days, for example, and you can withdraw money or repay it at any time.
Compound financial details
Compound's investors include venture capital giants Andreessen Horowitz, Coinbase Ventures, Paradigm, and Polychain Capital. Compound is listed on almost all prominent exchanges. This trading platform is distinguished by its reliability and high level of liquidity.
The annual interest rates are specified in the interface. Every day tokens are distributed among protocol users, in proportion to the number of transactions in a particular crypto coin. In each market, 50% of the distribution goes to suppliers and 50% to borrowers. As soon as a user has earned 0.001 COMP, the assets are automatically transferred to his or her address.
Registration on the exchange will take a couple of minutes at most, then you need to fill out a form and connect 2FA and you can start trading. COMP tokens are traded in pairs with BTC, USDT, BNB, and BUSD. If you want to buy this digital asset, you must have one of these cryptocurrencies on the deposit. Compound coins are integrated into Coinbase and MetaMask wallets. You can use another application that works with ERC-20 tokens, but you have to add COMP manually.
The hype around the distribution of Comp crypto coins has fundamentally changed the landscape of the decentralized asset market. Compound Labs has surpassed the former leader Maker DAO, and the total amount of funds blocked in DeFi applications has surpassed 11 billion USD at the time of writing.
The team of 12 full-time developers from Compound Labs worked over the project. The success of the platform is also explained by the efforts of Robert Leschner, CEO, Geoffrey Hayes, CTO of the project, Coburn Berry, senior engineer, and many others.