How to buy Compound (COMP)

Beginner’s Guide

What Is Compound (COMP)?

Compound is a DeFi lending protocol that allows users to earn interest on their cryptocurrencies by depositing them into one of several pools supported by the platform.

To learn more about this project, check out our deep dive of Compound.

When a user deposits tokens to a Compound pool, they receive cTokens in return. These cTokens represent the individual’s stake in the pool and can be used to redeem the underlying cryptocurrency initially deposited into the pool at any time. For example, by depositing ETH into a pool, you will receive cETH in return. Over time, the exchange rate of these cTokens to the underlying asset increases, which means you can redeem them for more of the underlying asset than you initially put in — this is how the interest is distributed.

On the flip side, borrowers can take a secured loan from any Compound pool by depositing collateral. The maximum loan-to-value (LTV) ratio varies based on the collateral asset, but currently ranges from 50 to 75%. The interest rate paid varies by borrowed asset and borrowers can face automatic liquidation if their collateral falls below a specific maintenance threshold.

Since the launch of the Compound mainnet in September 2018, the platform has skyrocketed in popularity, and recently passed more than $800 million in total locked value.

How to Buy Compound Summary

Get a Compound wallet (e.g. Ledger, Trezor , Exodus, Guarda, AtomicWallet)
Find an exchange that sells Compound (e.g. Crypto.com, Binance , Coinbase , Bitfinex , Kucoin)
Deposit money and make the trade
Withdraw the Compound to your wallet

Buying Compound in 3 Simple Steps

Desctop & Mobile

Compound Hardware Wallets

Compound (COMP) is a cryptocurrency that can be stored in hardware wallets, which are physical wallets that store your private keys offline, providing an extra layer of security. Here are some of the most popular hardware wallets that support Compound:

Ledger Nano S: Ledger Nano S is a popular and affordable hardware wallet that supports Compound and several other cryptocurrencies. It is a small USB device that is easy to use and provides users with a high level of security.
Ledger Nano X: Ledger Nano X is the newer and more advanced version of the Ledger Nano S. It supports Compound and several other cryptocurrencies and provides users with Bluetooth connectivity, allowing them to manage their COMP using their smartphone.
Trezor One: Trezor One is a popular and user-friendly hardware wallet that supports Compound and several other cryptocurrencies. It has a simple interface and provides users with a high level of security.
Trezor Model T: Trezor Model T is the newer and more advanced version of the Trezor One. It supports Compound and several other cryptocurrencies and provides users with a touch screen display and a more advanced interface.

It is important to remember to always purchase hardware wallets from official sources and to ensure that you are following the manufacturer’s instructions for setup and use to ensure the safety of your Compound and other cryptocurrencies.

The best option for storing any cryptocurrency would be to use a hardware wallet. These are pieces of hardware that store the private key to your coins offline.

Today, there are two leading hardware manufacturers to choose from – Ledger and TREZOR. Both companies have different models of hardware wallets that will get the job done.

If you want deeper insights on specific models, you can read my Ledger Nano X review or my TREZOR Model T review.

Compound Software Wallets

Compound (COMP) is a cryptocurrency that can be stored in software wallets, which are digital wallets that are accessed through an application or web browser. Here are some popular software wallets that support Compound:

Coinbase Wallet: Coinbase Wallet is a mobile wallet app that supports Compound and several other cryptocurrencies. It allows users to buy, store, and manage their COMP, and also provides access to decentralized applications (dapps) that are built on the Ethereum blockchain.
MyEtherWallet (MEW): MyEtherWallet is a web-based wallet that supports Compound and several other Ethereum-based tokens. It is an open-source wallet that provides users with a high level of security and flexibility.
Trust Wallet: Trust Wallet is a mobile wallet app that supports Compound and several other cryptocurrencies. It is a secure and easy-to-use wallet that provides users with access to dapps and a built-in DEX for trading cryptocurrencies.
Metamask: Metamask is a browser extension wallet that supports Compound and several other Ethereum-based tokens. It provides users with a user-friendly interface for managing their COMP and other cryptocurrencies and also provides access to dapps.

It is important to note that software wallets are connected to the internet, which can make them more susceptible to hacking and other security risks. It’s important to use a reputable software wallet and follow best practices for securing your wallet, such as using two-factor authentication and keeping your private keys safe.

Hardware wallets cost money, so if you’re not sure how serious you are about cryptocurrencies and just want to get a taste of what they feel like, perhaps you would be better off starting with a software wallet.

Payment methods:

Credit/debit card

Buy Compound through Crypto.com

Crypto.com is a cryptocurrency exchange company based in Singapore. As of May 2022, the company reportedly had 50 million customers and 4,000 employees. The exchange issues a token, Cronos. The company was initially founded in Hong Kong by Bobby Bao, Gary Or, Kris Marszalek, and Rafael Melo in 2016 as “Monaco”. In 2018, the company was renamed as Crypto.com following a purchase of a domain owned by cryptography researcher and professor Matt Blaze. Domain sellers valued the domain at US$5–10 million.

Buy Compound through Binance

Binance is a cryptocurrency exchange which is the largest exchange in the world in terms of daily trading volume of cryptocurrencies. It was founded in 2017 and is registered in the Cayman Islands. Binance was founded by Changpeng Zhao, a developer who had previously created high frequency trading software.

Buy Compound through Coinbase

Coinbase is a convenient and cheap way to buy Ethereum and the platform is open to 200+ countries). Coinbase will sell you CRO for a variable fee that depends on your payment method (credit cards have a higher fee than wire transfers), order size and market volatility. Here’s how you buy Ethereum on Coinbase: Open a Coinbase account Add your payment method (Credit card or bank account) Go to “Buy/Sell” and select the amount of Ethereum you desire Click “Buy Cronos”

Buy Compound through Bitfinex

Bitfinex is a cryptocurrency exchange owned and operated by iFinex Inc registered in the British Virgin Islands.Their customers’ money has been stolen or lost in several incidents, and they have been unable to secure normal banking relationships. Bitfinex was founded in December 2012 as a peer-to-peer Bitcoin exchange, offering digital asset trading services to users around the world. Bitfinex initially started as a P2P margin lending platform for Bitcoin and later added support for more cryptocurrencies.

Buy Compound through Kucoin

Kucoin is a global cryptocurrency exchange for numerous digital assets and cryptocurrencies. Launched in September 2017, KuCoin has grown into one of the most popular crypto exchanges and already has over 8 million registered users from 700+ countries and regions. According to Alexa traffic ranking, KuCoin’s monthly unique ranking is in the top 5 globally. Known as the “People’s Exchange”, KuCoin operates in Seychelles, providing users with multi-language and 24/7 customer service. Meanwhile, KuCoin has established local communities all over the world in South Korea, Japan, Spain, Italy, Vietnam, Turkey, Russia, India, and other regions, providing users with the most local services. Currently, 1 out of every 4 crypto holders in the world is with KuCoin.

Step 3 – Withdraw Your Compound (COMP)

Once you decide on an exchange, open an account and buy your Compound. Make sure to withdraw the Compound from the exchange to your personal wallet.

Never leave coins on an exchange, as you risk losing them all if that exchange gets hacked or shuts down (which has happened in the past) and always double check address before send coins because you can send the coins to wrong address .

OVERVIEW

Who Are the Founders of Compound?

Compound was founded in 2017 by Robert Leshner and Geoffrey Hayes, both of whom previously worked in high-profile roles at Postmates — an online food delivery service. The two continue to hold executive positions at Compound Labs, Inc — the software development firm behind the Compound protocol, with Leshner currently serving as CEO, while Hayes is the CTO.

Though both founders have experience founding successful companies, Robert Leshner, in particular, has been particularly active in helping to grow the blockchain space, and has publicly invested in popular crypto platforms including Argent Wallet, Opyn, and Blockfolio.

The Compound team now comprises over a dozen individuals — almost half of which work as engineers.

What Makes Compound Unique?

Compound (COMP) is a decentralized finance (DeFi) protocol that allows users to lend and borrow cryptocurrencies in a decentralized manner. What makes Compound unique is its algorithmic interest rate model, which adjusts interest rates automatically based on the supply and demand of each cryptocurrency.

Here are some of the key features that make Compound unique:

Algorithmic Interest Rates: Compound’s algorithmic interest rate model adjusts interest rates in real-time based on the supply and demand of each cryptocurrency on the platform. This means that interest rates are not fixed and can fluctuate depending on market conditions.
Decentralized Governance: Compound is governed by its community of token holders, who have the power to vote on changes to the protocol. This decentralized governance model ensures that the platform is run in a transparent and democratic manner.
Collateralization: Borrowers on the Compound platform must collateralize their loans with cryptocurrencies that are supported on the platform. This ensures that the platform has sufficient collateral to cover any defaults and reduces the risk of default for lenders.
Programmability: Compound is built on the Ethereum blockchain and is fully programmable, which means that developers can build their own applications and integrations on top of the platform.
Wide Range of Supported Assets: Compound supports a wide range of cryptocurrencies, including stablecoins like USDC and DAI, as well as other popular cryptocurrencies like Ether (ETH) and Basic Attention Token (BAT).
Flexibility: Unlike traditional lending platforms, Compound allows users to lend and borrow cryptocurrencies on their own terms, with no minimum or maximum amounts and no fixed terms.

All of these features make Compound unique and contribute to its growing popularity as a leading DeFi protocol in the cryptocurrency space.

According to Compound, the majority of cryptocurrencies sit idle on exchange platforms, doing nothing for their holders. Compound looks to change this with its open lending platform, which allows anybody who deposits supported Ethereum tokens to easily earn interest on their balance or take out a secured loan — all in a completely trustless way.

Compound’s community governance sets it apart from other similar protocols. Holders of the platform’s native governance token — COMP — can propose changes to the protocol, debate and vote whether to implement changes suggested by others — without any involvement from the Compound team. This can include choosing which cryptocurrencies to add support for, adjusting collateralization factors, and making changes to how COMP tokens are distributed.

These COMP tokens can be bought from third-party exchanges or can be earned by interacting with the Compound protocol, such as by depositing assets or taking out a loan.

How Many Compound (COMP) Coins Are There in Circulation?

Like many digital assets, only a fixed number of COMP tokens will ever come into existence. The total supply is capped at 10 million COMP and as of writing, less than a third are in circulation (~3.3 million).

Out of these 10 million tokens, just over 4.2 million tokens will be distributed to Compound users over a 4-year period. The second biggest allotment (almost 2.4 million COMP) goes to the Compound Labs, Inc shareholders, whereas 2.2 million tokens will be distributed to the Compound founders and current team with a 4 year vesting schedule.

Finally, 775,000 COMP are reserved for community governance incentives and the remaining 332,000 tokens will be allocated to future team members.

The exact rate of COMP emission is subject to change over time, as voters are able to increase or reduce the emission rate by passing a proposal through community governance.

How Is the Compound Network Secured?

Everything on Compound is handled automatically by smart contracts, which act to mint cTokens after Ethereum and ERC20 assets are deposited, and allow Compound users to redeem their stake using their cTokens.

The protocol enforces a collateralization factor for all assets supported by the platform, ensuring each pool is overcollateralized at all times. If the collateral falls below the minimum maintenance level, it will be sold to liquidators at a 5% discount, paying down some of the loan and returning the remainder to an acceptable collateralization factor.

This arrangement helps to ensure borrowers maintain their collateral levels, provides a safety net for lenders, and creates an earning opportunity for liquidators.