The market is seemingly crashing back to Earth after Coinbase Pro listing sent Compound Governance Token (COMP) prices up more than 100%. The COMP coin is the native token of the popular decentralized finance (DeFi) protocol Compound.
Data and analysis show that the token has suffered heavy losses after its explosive first day of trading on Coinbase. After soaring as high as $427 on Coinbase Pro on June 23, COMP has crumbled back below $250 in less than 8 hours of the local high.
With less than 25% of COMP’s whole supply currently in circulation, the aggressive price swings were powered by relatively thin volume. It posted $24.5 million in trade over 24 hours.
Despite that steep fall in price, COMP is still representing around 36.5% of the total DeFi market cap. Its market capitalization is currently about $2.3 billion according to DeFiMarketCap. The growing hype around DeFi ‘yield farming’ has shifted attention to COMP. Most of the yield farmers have decided to earn COMP tokens by lending other crypto assets.
COMP’s Surge And Volatility
Although COMP hovered around $140 and $180 in the first day of trading on Poloniex on June 18, the news about the forthcoming Coinbase Pro listing made the prices to double in a few days. COMP was trading at $380 on June 21.
The token’s prices bounced off at $220 the next day before recovering to test resistance above $350 on Poloniex together with the Coinbase Pro listing on June 23.
Compound Still Tops DeFi Rankings
Compound features a decentralized lending protocol that normally pays its native ERC-20 to both borrowers and lenders. COMP is currently representing claims on futures interest paid out via the protocol. But, demand for the token has seen Compound rise to the top and becomes the top-ranked DeFi project by assets under management (AUM).
Based on a report by DeFiPulse, Compound at the moment represents $592 million in locked funds. That amount translates to over 38% of the DeFi sector’s total AUM. Currently, at least 20% of the market capitalization of major stablecoin USD Coin (USDC) is locked in the Compound Protocol.
Almost 26,650 COMP tokens have been distributed of the 4.23 million tokens allocated to users today. The DeFi users’ share translates to about 42% of the token’s cumulative supply. Historic data shows that 2,880 tokens are issued daily, with about 0.5 COMP distributed for every Ethereum (ETH) block mined.
Generally, 22.25% of COMP’s supply has already been allocated to the project’s team and founders subject to a 4-year vesting period. Another 24% has been allocated to Compound Labs shareholders who include Andressen Horrowitz and Coinbase Ventures.