Compound (COMP)
The Compound Governance Token, commonly referred to as COMP, is an integral part of the Compound Finance ecosystem. It serves as a governance token that empowers holders to participate in the decision-making processes of the Compound protocol. This token is a cornerstone of decentralized finance (DeFi) governance, allowing holders to influence and propose changes to the protocol directly.
Overview of Compound Finance
Compound Finance is a decentralized lending protocol on the Ethereum blockchain. It allows users to lend and borrow various cryptocurrencies, utilizing smart contracts to automate these transactions. The protocol operates without the need for a traditional financial intermediary, providing a more open and accessible financial system.
Role of COMP in Compound Finance
COMP is designed to facilitate decentralized governance within the Compound ecosystem. As a governance token, it enables holders to have a say in the protocol's future direction. This is achieved through a decentralized voting process, where COMP holders can propose and vote on changes to the protocol.
Ticker | COMP |
Category | Decentralized Finance (DeFi) |
Website | https://compound.finance/governance/comp |
@compoundfinance | |
Contract Addresses | |
---|---|
ethereum | 0xc0...88Copied! |
base | 0x9e...e0Copied! |
near-protocol | c0...arCopied! |
polygon-pos | 0x85...5cCopied! |
arbitrum-one | 0x35...deCopied! |
harmony-shard-0 | 0x32...58Copied! |
avalanche | 0xc3...37Copied! |
binance-smart-chain | 0x52...e8Copied! |
energi | 0x66...63Copied! |
sora | 0x00...2cCopied! |
Governance mechanism
Governance within the Compound protocol is a democratic process that allows stakeholders to participate actively in the protocol's evolution. The governance mechanism is structured to ensure that decisions reflect the collective interests of the community.
Voting rights and delegation
One of the key features of the COMP token is its ability to delegate voting rights. Token holders can delegate their voting power to any Ethereum address, be it their own, another user's, an application, or a DeFi expert. This delegation system ensures that even those who do not directly own COMP can participate in governance if they receive delegated voting rights.
Proposal process
To propose a governance action within the Compound protocol, an address must have at least 1% of the total COMP supply delegated to it. This threshold ensures that proposals have a significant level of support before being considered. Governance actions can range from simple changes, such as adjusting interest rates, to more complex modifications like integrating new assets into the protocol.
Types of governance actions
The Compound protocol allows for various types of governance actions, including:
- Adding support for new assets: Proposals can introduce new cryptocurrencies to the lending and borrowing markets on Compound.
- Adjusting collateral factors: Changes to the percentage of an asset's value that can be borrowed against.
- Modifying interest rate models: Alterations to how interest rates are calculated for different assets within the protocol.
- Parameter adjustments: Changes to any modifiable parameters within the protocol that the current administrator can control.