Compound [COMP]: With a 103% rally to its credit, here’s how the token still manages to disappoint many 

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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 COMP’s per­for­mance, and the rea­son it has dis­ap­point­ed many can be traced back to the protocol’s performance.

First­ly, although COMP was one of the few­er alt­coins to start ral­ly­ing lat­er than its com­padres, it still man­aged to reg­is­ter a rise of 103.3% in the span of just a week trig­gered by the broad­er market’s bull­ish cues.

Com­pound price action | Source: Trad­ingView – AMBCrypto

What’s to be not­ed, though, is that COMP hold­ers are a volatile bunch of investors, and this has been ver­i­fied over and over again as back in May, towards the end of the month, these same investors dumped about 200k COMP worth about $29 million. 

Fol­low­ing that prece­dent, in the last sev­en days, the same dura­tion as COMP’s ral­ly, these investors bought back $25 mil­lion worth of COMP tokens with no regard for a pos­si­ble retracement.

Com­pound investors buy­ing | Source: San­ti­ment – AMBCrypto

The rise, com­bined with the buy­ing, also improved Compound’s mar­ket val­ue by almost 21%, pro­vid­ing its investors some sem­blance of a recovery.

Com­pound mar­ket val­ue | Source: San­ti­ment – AMBCrypto

Yet disappoints…

Mov­ing on to the part where the token dis­ap­points. As a Lend­ing Dapp, Com­pound has been observ­ing far more depre­ci­a­tion than its competitors. 

The Loan to Val­ue (LTV) ratio, which cal­cu­lates the ratio of all the amount bor­rowed by users to the amount deposit­ed onto the pro­to­col, cur­rent­ly stands at ‑13%, the low­est for Compound. 

The same LTV for AAVE is at 95%, and in the case of Mak­er DAO, the LTV is at 225%. This is because the total mon­ey loaned through Com­pound has been on a steady decline along with the deposits.

Com­pound LTV ratio | Source: Dune – AMBCrypto

In the case of the oth­er two Lend­ing Dapps, deposits have tak­en declined con­sid­er­ably, but loans were not as severe­ly hit, there­fore keep­ing their per­for­mance above par.

Thus, Com­pound needs to lure users back, to not only deposit but also bor­row on the pro­to­col, as its ral­lies can only take the Dapp so far.

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