Today, the Compound (COMP), price has jumped 10% at a moment when most cryptocurrencies are bullish. Bitcoin’s three-month high was a good example.
Compound traded at $143.91, up 10.19% from $148.10 at the time of writing. This is a slight pullback after a high of $148.10.
So why is the price of a coin so high? This article examines the reasons behind the current Compound rally.
What is Compound (COMP), and how can it be used?
Compound (COMP), in its simplest form, is Compound’s native token. Compound is a DeFi lending protocol that allows users to get crypto loans and earn interest by donating their crypto assets.
Why is the Compound Price on the Rise?
The two main factors being attributed to the current surge in the price of Compound coin are the recent protocol upgrade announcement and the community’s response to the announcement.
Announcement about protocol upgrade
Realizing that its reward distribution system has a negative affect on the COMP prices, the platform came up with a protocol upgrade. This will allow the protocol to grow instead of selling off rewards that do not benefit the token holders or users.
The new program began by halving the existing rewards. If the community votes, it may also eliminate COMP farming.
@compoundfinance Proposal 92: COMP Rewards Adjustments – Kickstart Rewards: Step One
This proposal is the first step towards launching the new rewards program – existing rewards are being cut by 50%.https://t.co/bQdxqskr7g
— tylerether.eth (@tylerether) March 18, 2022
The new proposal will be accepted by the community
The new proposal seems to have widespread acceptance from the community. A majority believe the cut-off of 50% will reduce inflation that was previously experienced in the network.
Investors were in a hurry to buy more tokens as they believed that an upgrade would result in a price increase.