Compound coin price prediction: What’s next for COMP?

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Is Compound coin a good investment? What will happen to COMP in the future?

Compound coin logo on a stock price graphic                                 
Compound coin price predictions can be affected by overall sentiment in DeFi markets – Photo: Shutterstock
                                

Contents

There has been a lot of talk about Compound (COMP), but what might happen to it in the future? To find out, we’re going to take a look at a Compound coin price prediction.

First, though, let’s look at exactly what the Compound coin is, what it is used for and how it works.

One of the goals of any cryptocurrency is for it to be used like a fiat currency. The ability to carry out everyday purchases in crypto is the dream for anyone who sets up an online currency. But there are also other areas in which fiat currencies excel, such as financing projects through loans. If we could use crypto to make and receive loans, a world of possibilities could open up.

Entrepreneurs Geoffrey Hayes and Robert Leshner saw this potential gap in the market. In 2017, they teamed up and created Compound, which allows cryptocurrencies to be loaned. They officially launched the system in January 2018.

Leshner, who serves as the project’s CEO, said at the time: “As it currently stands, just about the only thing you can do is move your assets off exchanges (where they are vulnerable to hacks and losses) and into your own control. And then... wait until you’re ready to sell.”

Later in 2018, Compound raised $8.2m from venture capital companies including Andreessen Horowitz and Bain Capital Ventures. The following year, CoinTelegraph reported that Compound had raised a further $25m in seed funding.

How does Compound work?

Graphic of Compound COMP coin and logo with a pile of coins
Compound (COMP) is used to enable crypto loans – Photo: Shutterstock

The protocol enables people to deposit their cryptocurrency into a pool, which is used to make loans. People who make deposits earn interest based on the amount they put in.

Perhaps more interestingly, they also receive something called a cToken, which can be transferred or traded to anyone at any time. The cToken represents the cryptocurrency that has been deposited. The system runs on Ethereum.

Everything on Compound is automatic, meaning that people can withdraw their deposits at any time. Lenders can take out a loan, in another cryptocurrency, up to the value of their deposit. If the value of the cryptocurrency borrowed goes up and becomes worth more than the cryptocurrency deposited, borrowings can be liquidated. If that happens, other users can repay a portion of what is outstanding in return for a share of the collateral, at a discount based on the current market price.

Compound is the world’s 93rd-largest crypto by market cap, and the 25th-largest DeFi protocol with a total value locked of around $3.09bn, according to CoinMarketCap and DefiLama.

How does the Compound application attract users?

Compound attracts users with its own native governance token, COMP. If you use the Compound system in any way, whether borrowing, repaying or withdrawing, you can earn COMP.

People who own COMP have voting rights regarding the system’s protocol and can assign those rights to someone else. The token was launched on 16 June 2020.

From the Compound whitepaper

The Compound: The Money Market Protocol whitepaper was published by Robert Leshner and Geoffrey Hayes in February 2019.

It states: “The market for cryptocurrencies and digital blockchain assets has developed into a vibrant ecosystem of investors, speculators, and traders, exchanging thousands of blockchain assets. Unfortunately, the sophistication of financial markets hasn’t followed: participants have little capability of trading the time value of assets.”

The document introduces a decentralised system for “the frictionless borrowing of Ethereum tokens without the flaws of existing approaches, enabling proper money markets to function, and creating a safe positive-yield approach to storing assets”.

But what about COMP?

What has COMP done? And can you use the Compound coin price history to make a Compound coin prediction? Let’s take a look.

COMP launched at $78.58. The DeFi token was popular, hitting $336.22 a few days after its launch on 22 June 2020. After that, it sank slowly downwards, with the Compound coin price hovering somewhere between $100 and $150 for much of the rest of the year, except for a brief surge in late August and early September when it reached a high of $256.35. It touched a low in November 2020 at $87.36. A slight recovery saw it pass $100 later that month.

Things changed in 2021. COMP hit a high of $535.29 on 6 February and experienced peaks and troughs until late April. It stood at $475.97 on 20 April and then rallied, reaching an all-time high of $854.45 on 12 May 2021, a rise of more than 79.5% in the space of 22 days.

But COMP was hit by the crypto crash of late May, dropping to $344.54 on 24 May 2021 and losing just under 60% of its value in 12 days. A partial recovery occurred on 6 September 2021, taking the coin’s price to $508.91, but it did not last. 

The general downward trend continued into the fourth quarter of 2021, as macro headwinds threatened the already volatile market with a crypto winter. In October, the price of COMP plunged after a fault in the code was exploited by a hacker, exposing a critical vulnerability in the protocol. The descent continued, and on 7 March 2022, COMP hit a new 16-month low of $98.38.

A marketwide crypto crash in May and June 2022 saw the token plummet further. Even the heavyweight Bitcoin fell below the $20,000 mark for the first time since December 2020, and the total value of the crypto market dipped below $1trn. Compound was in no way immune to the market downturn, and the token went into freefall.

Exacerbated by the long-running bear market and marketwide crash, the token met an all-time low of $26.41 on 18 June. In the coming weeks, there was some relief and the token closing the month of June at $46.98, and July at $57.26.

On 12 August and at the time of writing, the token was trading at $64.02, with 7.2 million coins in circulation (72% of total supply), the crypto generated a market cap of around $461m.

What of the future?

What does the average COMP coin price prediction look like? And what should we look out for when making a Compound coin price prediction for 2022 and beyond?

Crypto price predictions are often affected by general sentiment in the DeFi markets – all governance tokens are prone to suffering downturns and surges. The value of DeFi tokens is particularly sensitive to price reductions in the event of a security breach. If you decide to explore what COMP has to offer, remember that sentiment can shift quickly – so there may be times when this governance token lags behind Bitcoin during explosive periods of price growth.

Another threat to COMP’s success is that new DeFi protocols are emerging all the time. In a competitive market where crypto enthusiasts are continually on the lookout for the biggest gains, a younger upstart could easily wrest market share away from Compound – and in some cases, all it takes is a couple of days for a protocol to surge up the rankings.

Making a Compound crypto price prediction

WalletInvestor makes a bearish projection, suggesting the Compound coin price could be $3.46 in a year’s time.

DigitalCoinPrice, on the other hand, suggests an upswing in September, when the coin could be worth $95.29. The site suggests the token will be worth $85.38 by the end of the year, and gives an average Compound coin price prediction of $95.26 in 2023 and $89.96 in 2024. The site’s Compound coin price prediction for 2025 is $124.37, but it thinks COMP may then recede to $112.27 in 2026.

After that price point, the coin is expected to continue a general year-on-year increase, with a Compound coin price prediction for 2030 at $293.77. 

PricePrediction.net is also hopeful for the future of the token, suggesting a maximum price of $77.73 in 2022. The site forecasts an average value of $229.49 in 2025 and $1,486.18 in 2030.

Of course, it is important to stress that forecast sites are often wrong in their predictions. That is why it is essential to do your own research before investing.

FAQs

Is Compound coin a good investment?

Many forecasters seem to think COMP will go up, but predictions are not set in stone. You should always remember to do your own research and understand that the value of your investment can go down as well as up.

Never invest more than you can afford to lose.

What will Compound be worth in 2025?

DigitalCoinPrice suggests that COMP could reach $124.37 in 2025, while WalletInvestor forecasts volatility, with values ranging between $1 and $3 throughout the course of the year. Bear in mind that unforeseen events could change the markets at any time over the next three years.

How to buy Compound coin

COMP is available on numerous exchanges. Remember to do your research before investing, and do not invest more than you can afford to lose.

Further reading

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