[Crypto] Compound Definition, What is COMP?

Crypto is Bitcoin, that's about the thinking of the public who are new to crypto digital assets. There are many types of Crypto assets, one of which is compound type abbreviated as COMP. Curious about COMP Type Cryptocurrency?

Compound exists when the Ethereum blockchain is published, people use the Ethereum Blockchain to modify the coin they want to create one of the coins created from the Blockchain is COMP. Comp's creator is Robert lasher.

This time we'll talk :

Compound definition, What is COMP?
Why use compounds?
Benefits of Compound

Compound Definition, What is COMP?

Compound is a token resulting from the Innovation of the Ethereum blockchain network that serves as a crypto asset loan. As a guarantee, owners of other cryptocurrency coins must deposit the cryptocurrency to be locked by the protocol.

Let's take for example when in the bank, you will usually get annual interest when you have deposited some money to the bank. Compound is like that, the protocol owned by Compound provides offers to users to store various types of crypto and will get an interest bonus.

The application of Smart Contract Compound is very special, crypto assets owned by users cannot be withdrawn or sent balances by other parties even compound parties. Users can withdraw their digital assets even if the assets are already locked by the protocol.

Users can withdraw funds of about 60%-70% of the total crypto assets deposited. The interest profit reaches 10% for the reserve and 90% of the total deposit will be given back to the user.

The original token produced by the Compound is cToken. cToken is produced when there are users depositing crypto compounds or other cryptos other than compounds such as DOGE, ETH, BTC. For example, when you deposit a crypto Doge then what comes out as a flower is cDoge.

Read : Definition of UniSwap, What is Token UNI ?

Advantages of Crypto Compound

Negotiating transaction terms is no longer required due to the presence of compounds. Instead borrowers and suppliers can interact directly through protocols that take guarantees and interest rates.

The advantages and advantages that exist in other compounds are that the parties who make transactions cannot hold their respective funds, but the funds stored in the smartcontract system are called liquidity pools.

Interest will be given when the withdrawal and deposit process occurs, additional interest for comp token owners, they will get the right in the form of authority to adjust the interest rate.

Another one, the value of cryptocurrencies is volatile including COMP. Prices may change depending on the volume of transactions made at that time. By meaning, the comp transaction value will be calculated based on the latest COMP price.

Read : [Crypto] What is Chainlink, Definition of Link Token

No different from other types of investments, you who want to start jumping into the world of crypto must know the risks.