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In the recovering marker, some cryptocurrencies outperformed not only other altcoins but also their investors’ expectations, and one of them was Compound [COMP]. The DeFi Lending protocol token marked a massive rise, provoking investors to make equally massive moves. Compound impresses… The reason why this altcoin has impressed investors is due to its native token […]
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Among the market’s top-50 altcoins, the following DeFi tokens – SUSHI, AAVE, UNI, COMP, and MKR – are positioned for double-digit growth in the near-term based on their price action YTD. In fact, the 24-hour trade volume for these tokens seemed to be indicative of the hike in liquidity too.
According to top-tier trade volume data from CryptoCompare, among the altcoins that have made double-digit gains over the last few trading sessions, DeFi protocols made up over 50%. However, investing directly in protocols may not be as ideal as investing in ETFs considering metrics such as an increase in valuation and returns.
There has been an upward trend in the investment inflows into DeFi protocols and ETFs, however, the hike in total AUM has been relatively slower than it was back in January or February 2021.
Data Source: CoinGecko
The activity of traders in DeFi protocols and ETFs is up, especially since Elon Musk’s tweet on DeFi less than a week ago. Here, it’s important to note that the volatility of returns on DeFi protocols is a double-edged sword to the retail trader. Returns can either push an asset north by double digits or drop it below its previous ATH within a week or over an even shorter time frame.
The most effective to navigate this volatility and its impact on unrealized profits and losses is to invest in ETFs. The performance of top DeFi ETFs relies on the following metrics,
Source: CoinGecko
The performance of the top three DeFi indices is indicative of the 10x growth of DeFi that is expected over the following weeks as investment inflows increase and Bitcoin remains rangebound below $60,000.
Besides, Ethereum’s increasing correlation with Bitcoin, which has exceeded 80% of late, is conducive to the rangebound price action of both assets and allows room for DeFi protocols and ETFs to offer higher returns with high volatility. For over 14 DeFi index tokens, there are $204M in AUM in DeFi currently. Besides, the said figure is only 0.5% of the TVL.
Based on the market barometer and data on top-3 indices, the key metrics are valuation, fund fees, and fee structure. Though the DeFi market cap has grown by over 5000% in the past year, not all traders care to watch their portfolio at all times. The strategy of passive DeFi investing, investing in a fund instead of the protocols, is relatively cheaper for an ETF like DEFI5.
Exposed to DeFi Blue chips, it is relatively cheaper and profitable to buy Uniswap rather than minting it, and the same goes for other assets in DEFI5. These popular DeFi ETFs are set to explode if the activity in high volume markets on spot exchanges continues following the same trend.
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Compound (COMP) price has advanced from $331 above $570 since the beginning of February, and the current price stands around $404. This cryptocurrency’s trend still remains bullish, but if the price falls below $300, it would be a firm “sell” signal and a trend reversal sign.
The cryptocurrency market is losing its value this trading week, the price of Bitcoin went below $45000 support today, and the price of Compound (COMP) also remains under pressure.
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Compound is a decentralized, blockchain-based protocol that allows its users to lend and borrow cryptocurrencies. The main characteristic of Compound includes the benefits of blockchain in a rapidly expanding DeFi ecosystem, and there are lots of cryptocurrencies that can be lend or borrow on this protocol.
Some important names include: Ether (ETH), Basic Attention Token (BAT), USD Coin (USDC), Ox (ZRX), Tether (USDT), Wrapped BTC (WBTC). COMP token is the native token of this blockchain, and it is essential to say that it is distributed to all lenders and borrowers on this protocol every day.
Compound is an entirely self-governed blockchain, and anyone who owns at least one token can vote on proposals to change something. In other words, every COMP token represents one vote, and regardless of whether you are lending or borrowing, you first have to lock in crypto with Compound.
Grayscale has reported this Friday that it is exploring a new round of potential investments in various digital assets. The firm is seeking new ways to bring value to its customers, and according to the official press release, Compound (COMP) has a place on this investment list.
“We’re eager to expand our product offerings to serve our investors better. The digital currency universe is constantly evolving, and we seek to identify bold, interesting, and innovative opportunities that satisfy our investors’ demand for differentiated exposure to this burgeoning asset class,” said Grayscale CEO Michael Sonnenshein.
The important resistance levels are $450 and $500; $350 and $300 represent strong support levels. If the price jumps above $450, it would be a signal to trade cryptocurrency, and the next price target could be around $500.
On the other side, if the price falls below the $300 support level, it would be a firm “sell” signal and possibly a trend reversal sign.
Compound (COMP) price has advanced from $331 above $570 since the beginning of February, and the current price stands around $404. If the price jumps above $450, the next price target could be around $500, but if the price falls below the $300 support level, it would probably be a trend reversal sign. Grayscale is seeking new ways to bring value to its customers, and according to the official press release, it has Compound (COMP) on the list of potential investments.
Top decentralized finance (DeFi) coins are sliding lower despite strength in the Ethereum price.
Data from Uniswap indicates that against the U.S. dollar, coins such as UNI, Compound’s COMP, and Yearn.finance’s YFI, have slid lower by 1-5% in the past 24 hours.
This slight move lower in the price action of these coins adds to an overall trend of consolidation seen in the DeFi market over the past week. After a strong breakout in January, which transitioned into early February, the DeFi market has cooled fairly rapidly.
The DeFi market is stumbling as key market players fail to react positively to Ethereum’s push to new all-time highs.
Coins such as UNI, SNX, and COMP are sliding lower against Ethereum, and in some cases, against the U.S. dollar.
This consolidation appears to be a result of capital cycling back into Ethereum itself and other layer-one blockchain coins, such as Binance Coin (BNB) or Cosmos (ATOM).
Image below from CoinGecko, showing the performance of the top 13 DeFi coins over the past few days and weeks.
While the short-term health of the DeFi market may look grim, the decentralized finance narrative gained steam last week.
The St. Louis Federal Reserve, a branch of the American central bank, published a report indicating that DeFi could lead to a “paradigm shift in the financial industry.”
The author of the report, a blockchain-focused professor at the University of Basel, elaborated on the matter:
“DeFi has unleashed a wave of innovation. On the one hand, developers are using smart contracts and the decentralized settlement layer to create trustless versions of traditional financial instruments. On the other hand, they are creating entirely new financial instruments that could not be realized without the underlying public blockchain.”
While this was not a direct endorsement by the Federal Reserve, the thesis that DeFi will disrupt finance in a positive manner has gained steam over recent weeks and months.
The general idea is that because blockchain systems are relatively open compared to traditional systems, DeFi should garner more value in the long run.
Featured Image from Unsplash Chart from TradingView.com Price Tags: UNIUSD, UNIBTC, COMPUSD, COMPBTC Uniswap, Compound, Other DeFi Coins Are Slipping Lower
On Jan. 30 Uniswap (UNI) and Compound (COMP) both rallied to new all-time highs as the entire DeFi sector continued to heat up. UNI soared to a new all-time high at $19.93 and COMP price did the same as it briefly traded at $340.Â
In the past 30 days the entire decentralized finance sector has been in a strong uptrend and data from DeFi Pulse shows the total value locked has soared from $16.43 billion on Jan. 2 to a new all-time high at $27.67 billion on Jan. 30.
The surge in COMP price follows the recent release of a new governance module and upgrade to the comp.vote interface which now allows community members to save on gas fees by voting by signature instead of on-chain transactions.
This week’s controversy surrounding investment brokerages halting the markets for GameStop and AMC stock has presented DeFi and crypto exchanges as a possible alternative to the centralized traditional finance sector.
In a tweet, Compound founder, Robert Leshner said the recent developments showed that “the long-term answer” to the time it takes for trades to settle with the Depository Trust & Clearing Corporation (DTCC), “is for markets to run on blockchains.”
Leshner said:
“Instant settlement would eliminate most of the complexity, cost, and capital requirements which plague T+2 settlement. Robinhood wouldn’t have credit obligations, or the need to turn against their own customers.”
Uniswap’s grants program was unveiled on Jan. 20 as a way to help expand the exchange’s ecosystem.
Developers interested in participating now have a chance to submit a proposal and receive funding for the development of a project that adds value to the overall platform. According to Uniswap’s Twitter feed, there were “40 grant submissions to @uniswapgrants in the 14 days since applications opened up.”
Since the release of the grants program, the price of UNI has increased 160% from $7.10 on Jan. 21 to its current price of $18.51. Uniswaps rising TVL, daily transaction volume and investor’s excitement over the upcoming v3 launch are additional factors backing UNI’s surge to a new all-time high.
Image Credit: Refer to Source
Author: Refer to Source Cointelegraph By Jordan Finneseth
Compound Labs released a white paper providing details of its plans to launch an application-specific blockchain known as Compound Chain. According to the white paper, Compound Chain provides money market services through a wide range of networks.
Robert Leshner, Compound founder, revealed that the firm wants a blockchain that will provide the right framework for Compound (COMP).
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“We want to announce the designs for a blockchain that can scale Compound over the next century,” he said, adding that there is no timeline for that to happen but it’s ready for a testnet now.
The new white paper was prepared by Leshner and lab staffers Max Wolff, Jared Flatow, and Geoffrey Hayes. They also mentioned three problems of the present Compound on Ethereum (ETH), which includes all supported assets sharing the risk of each supported asset, failure to serve assets on other chains, and the high cost of gas. As a result of these issues, the team hopes that the new tool could bring more assets into the compound from different ledgers.
The team behind money market protocol Compound has released a white paper detailing Compound Chain, a new tool they say could bring more assets into the protocol from numerous ledgers.
Based on the announcement, Compound Chain was described as “a distributed ledger capable of transferring value and liquidity between peer ledgers.”
It means users can lend or borrow cross-chain assets through different blockchains such as Tezos (XTZ) and Polkadot (DOT) in the protocol.
The blockchain will also use is a native token which is called CASH, and valuable for the payment of transaction fees. The whitepaper also revealed that Compound Chain will not be limited as a stand-alone distributed ledger. It will solve issues and proactively prepare for the quick adoption and growth of digital assets.
The last week or so brought a major price increase for the cryptocurrency market, even allowing Bitcoin to hit $19.1k for a brief moment. However, Thursday, November 26th, started a strong correction that caused many coins to lose as much as 10% of their value, which also had significant consequences on the stablecoin markets.
As the crypto market started seeing price drops on Thursday morning UTC, traders, as always, rushed to exit. Most of them just wanted to exchange their coins for stablecoins, and wait for the price crash to end, so that they can buy Bitcoin again.
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However, this new crash had an unexpected effect on stablecoin Dai (DAI), which briefly saw its price surge from $1 to $1.3.
Not only that, but this happened only on two exchanges — Uniswap and Coinbase. The stablecoin managed to remain stable on many other major platforms, such as Bitfinex or Kraken.
Many started wondering why did DAI behave like this on Coinbase and Uniswap, but not on other platforms, which led to the realization that both of these exchanges are used by Compound’s Open Price Feed oracle.
Coinbase acts as the oracle’s baseline, while Uniswap behaves as an anchor and sanity check. However, at the time when everyone started rushing out from the market, Uniswap failed in its function, and it started posting a higher price than normal.
One thing to note is that Compound’s liquidation this morning hit $89 million, with $52 million coming from DAI. One particular liquidation stood apart, as it contained 46 million DAI repaid.
Sam Priestley, a known DeFi researcher, noted that the liquidation was done on a COMP farmer who used DAI and USDC collateral for powering recursive borrowing in these same currencies. As a result, the account ended up below the liquidation threshold due to the DAI price increase.
As a result, the liquidator seized $50 million in cDAI, while returning only $46 million. Basically, the liquidator earned $4 million. The liquidator issued four other transactions, which removed an extra $6 million in debt.
The leading crypto exchange, Binance, published a new announcement earlier today, revealing that it has enabled Cross Margin trading for another new asset. The asset in question is a DeFi token Compound (COMP), which currently has two Cross Margin pairs.
Cryptocurrency exchange Binance has been among the first to start recognizing the potential of DeFi when it started to blow up, earlier this year. The exchange made several attempts to enter the DeFi sector and become an early mover, expecting the surging prices and DeFi’s constantly-growing popularity.
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It even launched Binance Smart Chain in order to attract developers and users alike, as well as anyone else interested in decentralized finance.
Now, the exchange continues to make DeFi more available by adding Cross Margin assets, with the newest one being Compound (COMP).
According to Binance’s announcement, Compound Cross Margin trading was just enabled earlier today, with two Cross Margin pairs at this time — COMP/USDT and COMP/BTC.
Cross Margin trading is popular due to several reasons, such as the margin bein shared among the user margin account. Each user is allowed only one Cross Margin account, with all trading pairs available within it. In addition, assets in a cross margin account are shared by all positions.
Binance also explained in one of its guides that Margin Level is calculated ‘according to total asset value and debt in the cross margin account.’
The system is responsible for checking the margin level of the account, and notify the user about the next step, which can be closing positions, or supplying additional margin. In case the liquidation happens, all positions are liquidated.
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