Compound
Crypto Overview
Project Overview
Compound is a decentralized finance (DeFi) protocol built on Ethereum that enables users to lend and borrow cryptocurrencies. COMP is the protocol's governance token that allows holders to participate in decision-making regarding protocol parameters and upgrades.
Intended Utility
The primary purpose of COMP is to serve as a governance token for the Compound protocol. Token holders can propose and vote on changes to the protocol, including interest rate models, collateral requirements, and protocol upgrades. Additionally, COMP tokens are distributed to users who interact with the protocol as lenders or borrowers.
Actual Utility and Adoption
The token is actively used for its intended governance purpose, with regular community proposals and voting activity. As of 2024, Compound has over $2 billion in total value locked (TVL) in its protocol, demonstrating significant real-world adoption. The development activity remains strong with regular updates and improvements to the protocol.
Token Distribution and Founder Alignment
The initial token distribution allocated 42.3% to shareholders, 22.3% to founders and team, 23.7% to users, and 11.7% to future team members. Tokens were subject to a 4-year vesting period, indicating a long-term commitment from the founding team. The project demonstrates strong transparency in its operations and development focus.
Revenue Model Analysis
The core protocol generates revenue through lending and borrowing activities, which involve interest-based transactions. While the governance token itself doesn't directly participate in these interest-bearing activities, it derives its value from the protocol that facilitates riba-based transactions.
Crypto Impact
To assign a comfort level investing in Compound from a halal perspective we need to determine whether it has a net positive or negative impact.
Towards this end, the table below is used to tally all the positive and negative considerations our members can think of related to Compound.
If you don’t see something that should be listed, positive or negative, feel free to submit your own contribution using the button “Contribute”.
We will review your contribution for accuracy before publication.
Importantly, you can review listed contributions and vote on which one you think has the greatest impact, positive or negative.
You only have one vote per asset so use it wisely.
You can change your vote if you change your mind.