Compound, a veteran DeFi leader, doubled in value in a week. What happened behind the scenes?
Compound, a DeFi veteran, doubled in value in just a week. What caused this surge?
Is DeFi back with institutional investors?
From June 17th to June 30th this year, Compound, as the leader of DeFi 1.0, rose from 27 USDT to a high of 59.5 USDT. Especially from June 25th to June 30th, the maximum increase was about 100%. As shown below:
Compound is an algorithm-based collateral lending protocol that provides users with floating rate deposits and lending services. As the leader of DeFi 1.0 and a cornerstone of DeFi Lego, Compound has been sought after by capital, but it is still worth exploring when it doubles in a week during a period when the market direction is not clear. We have found the following four reasons:
1. On June 17th, Compound officially published an article titled “The Compound Protocol Belongs to the Community” on Medium, which explains that Compound has launched an on-chain system that freely distributes COMP tokens to protocol users, realizing community governance. This kind of empowerment to the community greatly promotes Compound users’ support for the community, which is also reflected in the secondary market price.
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2. According to Lookonchain Twitter, on June 26th, a user with the address 0x0D5 deposited 3 million US dollars to Binance and withdrew 2.26 million COMP tokens within two hours, suspected of institutional entry. According to the observation of the Twitter blogger Yu Jin, on June 29th, the same user with the address of 0x0D5 withdrew a total of 170,000 COMP from Binance. Through the observation of these two on-chain analysis bloggers, it also indicates or implies to some extent that institutions are entering the market.
3. On June 29th, Compound founder and CEO Robert Leshner announced the establishment of a new company, Superstate, which aims at the current hot field of RWA. They are committed to buying short-term US Treasury bonds and putting them on the chain, making secondary records through blockchain, and directly trading the ownership shares of the fund on the chain. At the same time, Compound announced that the new CEO Jayson Hobby took office, who worked at well-known companies such as Coinbase and Uber. If it is placed in many other projects, the CEO’s entrepreneurship is considered a negative behavior, but due to the possibility of linkage with Compound in business for the founder’s new entrepreneurial project, plus the new CEO’s resume is more exciting, they may all become the driving force for the rise.
4. The first three points are reasons why Compound may rise due to recent related developments, but the impact of the cryptocurrency market environment should not be ignored. The recent rebound of mainstream coins such as BTC and ETH is conducive to driving the rise of high-quality blue-chip projects, which also needs to be taken into consideration.
However, Odaily Star Daily also issues a risk warning: the recent increase in prices of Compound and other leading projects in the subdivision field, users should be cautious about chasing high prices, and DYOR.