Compound Governance Token (COMP), the native token to the popular decentralized finance (DeFi) protocol Compound, has suffered heavy losses after its meteoric first day of trading on Coinbase.
After trading as high as $427 on Coinbase Pro on Tuesday, COMP has fallen back below $250 within 8 hours of the local high. With less than one-quarter of COMP’s entire supply currently circulating, the aggressive price swings were driven by relatively thin volume — posting $24.5 million in trade over the past 24 hours.
Despite the sharp decline in price, COMP still represents 36.5% of the total DeFi market cap with over $2.3 billion according to DeFiMarketCap.
Increasing hype surrounding DeFi ‘yield farming’ has focused attention on COMP. Many yield farmers have sought to earn COMP tokens by lending other crypto assets.
COMP’s big rise and volatility this week
While COMP oscillated between $140 and $180 during its first day of trade on Poloniex during June 18, news of the forthcoming Coinbase Pro listing saw prices more than double in just a few days — with COMP trading for $380 on June 21.
Prices bounced off support at $220 the following day before recovering to test resistance above $350 on Poloniex alongside the Coinbase Pro listing on June 23.
COMP/USDT on Poloniex, 1HR: TradingView
Compound tops DeFi rankings
Compound comprises a decentralized lending protocol that pays its native ERC-20 to both borrowers and lenders.
With COMP representing claims on futures interest paid out through the protocol, demand for the token has seen Compound emerge as the top-ranked DeFi project by assets under management (AUM).
According to DeFiPulse, Compound currently represents $592 million in locked funds, or more than 38% of the DeFi sector's total AUM. As of this writing, more than 20% of the market cap of major stablecoin USD Coin (USDC) is locked in the Compound protocol.
As of this writing, approximately 26,650 COMP tokens have been distributed of the 4.23 million tokens allocated to users. The users’ share represents 42% of the token’s total supply. 2,880 tokens are issued each day, with 0.5 COMP being distributed per Ethereum (ETH) block mined.
22.25% of COMP’s supply has been allocated to the project’s founders and team — subject to four-year vesting, and 24% has been allocated to Compound Labs shareholders — including Andressen Horrowitz and Coinbase Ventures.