COMP is the native token of the Compound protocol – one of the core services in the DeFi ecosystem operating on the Ethereum blockchain.

Its primary purpose is protocol governance. COMP holders gain the right to participate in votes, submit proposals, modify system parameters, and influence the strategic direction of the project. In this sense, the token functions not merely as a tradable asset, but as a governance instrument within a decentralized system.

COMP is not a stablecoin and has no backing in the form of reserves or real-world assets. Its value is shaped by several key factors.

Compound is a major platform that enables users to deposit cryptocurrency into liquidity pools and earn interest, or borrow assets using other tokens as collateral. Activity within the protocol creates demand for governance – and therefore for the COMP token. The more liquidity and users the platform attracts, the stronger the interest in participating in its evolution.

Neither the company nor the developers control the system directly – all significant changes occur through COMP holder voting. This gives the token genuine governance power: holders can adjust interest models, collateral parameters, and add new assets to the protocol. This function creates long-term value that is not tied to physical reserves but to the importance of decision-making rights within the system.

The maximum supply of COMP is capped at 10 million tokens. The fixed supply makes the asset more resistant to inflation. A portion of the tokens was distributed to users, another to the team and early investors, and the remaining supply was allocated as rewards for protocol participation. The hard cap is one of the factors supporting long-term value.

In the early stages, users who interacted with the protocol received COMP as an incentive. This mechanic helped expand liquidity, attract new participants, and strengthen demand for the token. Although the distribution model has evolved over time, COMP’s link to protocol activity remains an important component of its market value.

COMP is listed on most major cryptocurrency exchanges, which makes it both liquid and widely recognized. Its market performance is driven by several factors:

• Growth within the DeFi sector: When decentralized finance expands and attracts capital, governance tokens like COMP often experience increased demand and price appreciation.

• Protocol upgrades and usage metrics: The addition of new assets, growth in collateral, and rising borrowing volumes all increase interest in COMP. Investors seeking to participate in governance frequently accumulate tokens to secure voting power.

• Market volatility: As with most DeFi tokens, COMP can experience sharp price swings during periods of broader market instability.

COMP continues to hold a solid position among the most well-known governance tokens in the DeFi ecosystem. While it may not rank among the largest cryptocurrencies by market capitalization, its relevance remains strong thanks to the importance of the Compound protocol itself and the ongoing demand for decentralized lending platforms.