Compound’s COMP token has been the talk of the town following its price rally. However, this price rally seems to be a nine days’ wonder as the token was seen plummeting by 30 percent.
COMP Token A Nine Days’ Wonder?
The lending and borrowing platform is the brightest shining beam of the DeFi spectrum. While Maker had been the face of DeFi for a very long time, Compound recently dethroned the Maker platform. Compound stirred the entire crypto-verse after the newly released governance token recorded a massive price surge.
The COMP token’s price rally steered several into the DeFi space. The token was trading at a low of $92.68 on 16 June 2020 and soared up to a high of $372.27 on 21 June 2020. The crypto community lauded the asset for its upward trajectory. Several speculated that the token’s price movement was fueled by Coinbase. San-Fransico based cryptocurrency exchange, Coinbase was one of the first cryptocurrency exchanges to announce its support for the COMP token. However, it seems like COMP turned out to be extremely volatile.
After recording multiple highs, the price of the COMP token was seen going downhill. Just yesterday, the token was trading at $338.22, however, at the time of writing, the price of the governance token stooped down to $215.54. Additionally, the token recorded a 30.2 percent drop in its price over the past 24-hours.
Compound’s DeFi Dominance
Compound dethroned the Maker protocol as it locked more value than the latter. Despite being number one in the DeFi space, the total value locked in Compound began to plummet. After locking a high of $608.714 million, at the time of writing, the platform locked only $570 million and had witnessed a 3.40 percent dip in the last 24-hours.
The total Bitcoin [BTC] and Ether [ETH] locked in Compound also followed suit as the figures were seen descending.
Additionally, Su Zhu, the CEO of Three Arrows Capital commented on the fervor around the DeFi space. His tweet read,
I think DeFi protocols need much longer cooling off periods for proposing any amendments to how they work, to defend against centralization capture as well as corp-raiding attacks
— Su Zhu (@zhusu) June 23, 2020
Su Zhu pointed out that the Maker approach to governance is comparatively safer than Compound despite it being more conservative. He further suggested that the latest proposals that are part of the governance poll combine unrelated concepts. He detailed,
“…the COMP issuance speed and the reserve requirements of some coins. These have nothing to do with each other and should be voted on separately.”‘
As of today, a total of 28,243 COMP tokens were already distributed while a total of 4,201,705 still resides in the platform.