Compound surpasses Maker to become the project with the highest market value in DeFi: the DeFi drama begins
Editor's Note: This article comes fromBlue Fox Notes (ID: lanhubiji), reprinted by Odaily with authorization.
Editor's Note: This article comes from
Blue Fox Notes (ID: lanhubiji)
, reprinted by Odaily with authorization.
As of the writing of Blue Fox Notes, the trading price of COMP on Uniswap is 0.434244ETH.
According to the total token volume of COMP, and according to the current price of ETH230 USD, its overall market value (including uncirculated tokens) reached 998,761,200 USD, ranking first in the market value of DeFi, exceeding the market value of Maker token MKR (as of Blue Fox Notes At the time of writing, the market value of Maker was $540,726,781.) Even in terms of the market value of circulating tokens, Compound has currently issued 5,770,890 tokens, and its market value has reached $576,374,102, surpassing Maker to become the No. 1 market value of DeFi.
What made this miraculous scene? Liquidity mining of COMP.
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2017 is the era of crowdfunding, but the crowdfunding model has many disadvantages, and the tide will ebb accordingly. 2020 has turned to the era of liquidity mining. What is Liquidity Mining? Liquidity mining is mainly to obtain incentives for project governance tokens by providing liquidity for DeFi projects.
COMP is Compound's governance token, an ERC20 token that allows holders to delegate tokens to others to vote. Any token holder can participate in the governance of Compound. As long as you have 1% of the entrusted tokens, you can initiate governance proposals, including adding new assets, changing the parameters or variables of various agreements such as interest rate models. At the same time, Compound also stipulates that proposals are not suggestions for implementation, but executable codes. There is a three-day voting period for the proposal. If the proposal receives a majority of votes and not less than 400,000 votes, it can be implemented after 2 days.
COMP is not only a governance token, but a token that captures its business value. All borrowers and lenders on Compound have the opportunity to receive a distribution of COMP tokens. The total amount of distributed tokens is 4,229,949. These COMP tokens are put into the Reservoir contract, and 0.5 COMP is transferred out of each block into the agreement for distribution, that is, about 2,880 COMP can be distributed to users every day. These COMP tokens are allocated to all money markets, and the amount of allocated tokens is proportional to the interest accrued in that money market. Then, in a single market, 50% of the tokens are allocated to lenders and 50% to borrowers.
As of the writing of Blue Fox Notes, the amount of tokens that can be distributed by COMP
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It can be seen from the figure that the vast majority of tokens are allocated to the USDC and USDT markets, and the USDC and USDT markets receive 90% of the COMP token distribution. The current market demand is not btc or eth, but stable currency.
With COMP, Compound can have more cards to play. For example, under certain circumstances, especially in the early days, when users borrow money on Compound, not only do they not spend money, but they can also make money. This means that users can not only use encrypted assets on Compound for free, but also earn money. The secret here is the existence of COMP. As the price of COMP rises, the purpose of people borrowing money is not because they need money, but because they can earn COMP.
The higher the price of COMP, the stronger the incentive for users to save and borrow money. The daily allocation of COMP is about 2,880. According to the price of Blue Fox Notes at the time of writing, the value of the daily allocation of tokens is as high as 287,643.2256 US dollars, far exceeding the daily interest paid. This means that the interest paid on borrowing money is less than the return on borrowing money.
As the price of COMP rises further, people will provide more liquidity based on income calculations. It is expected that the amount of locked assets and loans of Compound will increase significantly in the future, and at the same time, it will also generate larger interest income, which in turn will further increase Push up the price of Compound. Of course, once the income of COMP drops, it may lead to a decline in the volume of lending business. Whether Compound can continue its business growth is also worthy of attention.
Maker’s MKR: There’s Big Upside
Governance tokens represent the community's right to govern the project, can determine the development direction of the project, and can also capture the benefits of the project itself. Compound's model can be said to be version 2.0 of governance tokens. Governance token version 1.0 was created by Maker. Maker's MKR token distribution does not have a mining process. The distribution of MKR has nothing to do with the generation of DAI, the holding of DAI, and the use of DAI. Although MKR can also capture part of its business income, the current level of capture is not the focus of its concern, and its focus is to expand the issuance of DAI and the use of DAI.
However, for Maker, MKR can not play as many cards as Governance Token 2.0. Governance Token 2.0 such as COMP, BNT, etc., they have the opportunity to bind the issuance of tokens and business development together. Of course, Maker can also do this, but this requires the resolution of the MKR administrator to pass. That is, in the future business development process, MKR can issue more, and the additional issue is related to the generation, holding, and use of DAI. In order to take care of the interests of MKR holders before additional issuance, MKR holders who participate in the ecology can also be rewarded, for example, holders who participate in MKR locking or voting are rewarded for additional issuance of MKR.
MKR has not fully explored the value of its project fundamentals. Judging from the current loan volume, Maker occupies about 70% of the market share, Compound occupies about 10% of the market share, and other projects occupy about 20%. From this perspective, MKR has not been deeply integrated with its fundamentals, and its token economic mechanism still has room for improvement. If MKR can improve its token economic mechanism, it has the opportunity to surpass Compound to become the No. 1 project in DeFi market value, and the value of MKR will also be greatly improved.
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Uniswap will issue coins in the future
