COMP is now available as collateral on FiRM, the first of our collaborations with Compound Finance.
What is COMP?
COMP is the native governance token of Compound Finance. As an early pioneer in DeFi, Compound Finance has demonstrated resilience and adaptability, especially through significant market shifts and regulatory landscapes. COMP tokens enable holders to propose and vote on key protocol changes, thereby maintaining a decentralized governance model that has become a benchmark in the DeFi space.
How does COMP represent a strategic opportunity for FiRM?
Integrating COMP into FiRM presents a strategic opportunity for Inverse Finance. It taps into a dedicated community of Compound users who are actively involved in governance. Furthermore, by offering a unique feature where users retain their governance rights even when their COMP tokens are used as collateral, FiRM differentiates itself from other lending platforms. This approach not only enhances user engagement but also strengthens the governance propositions of both Inverse and Compound Finance.
DYOR: Understanding Risks and Rewards
Before diving into COMP or any DeFi product, conducting thorough research is imperative. Consider the following:
A technical risk assessment conducted by RWG, accessible here, highlights the viability of integrating COMP into FiRM.
Governance: Compound Finance operates under a decentralized governance model facilitated by COMP tokens. This model ensures that protocol changes are community-driven, with proposals and voting conducted transparently on-chain. This decentralization aligns with FiRM’s principles and enhances the governance framework of the integrated platform.
Oracles and Market Implementation: The Chainlink COMP/USD price feed, available on Mainnet ensures reliable and accurate price data. No advanced oracle implementation is required, leveraging Chainlink’s robust infrastructure to mitigate risks associated with price feed inaccuracies.
Liquidity and Trading Volumes: COMP has limited on-chain liquidity but substantial off-chain liquidity, with trading volumes predominantly occurring on CEXs. The token’s trading volumes and liquidity patterns reflect a stable and engaged market, essential for maintaining collateral value and ensuring smooth market operations. Current trends indicate a strong baseline of trading activity, providing a reliable environment for the introduction of COMP collateral within FiRM.
Security and Audits: Compound Finance has undergone multiple audits from reputable firms such as OpenZeppelin and Trail of Bits. These audits, combined with an active bug bounty program, underscore the protocol’s commitment to security and resilience. Historical incidents have been addressed transparently, with measures taken to prevent future vulnerabilities and restore value to affected users.
The RWG’s evaluation resulted in a Total Asset Score (TAS) of 5.91/10 for COMP, reflecting its strong market capitalization, equitable distribution, and moderate price volatility. While on-chain trading volumes are lower compared to other assets, the comprehensive liquidity across CEXs and the robust governance framework significantly bolster COMP’s risk profile.
How Do I Deposit and Borrow Against COMP In FiRM?
To leverage COMP within FiRM, follow these steps:
Deposit: Head to inverse.finance and open the FiRM webpage, navigate to the deposit section, and select COMP as your collateral.
Borrow: With COMP as collateral, you can borrow DOLA against it. The terms are fixed-rate, providing predictability and stability. Read more here.
Manage Your Borrowing: Keep an eye on your loans, adjust as necessary, and ensure compliance with the platform’s requirements to avoid liquidations.
As you explore the potential of COMP within the FiRM ecosystem, leverage the wealth of resources available, including Compound’s detailed documentation, community forums, and governance updates. This due diligence will equip you to make informed decisions aligned with your financial strategies and risk tolerance.
