Compound prices rose sharply on Tuesday as demand for DeFi tokens rebounded. The COMP token was trading at $42.75, about 65% above the weekend’s lowest level. Its market capitalization has risen to more than $290 million.
Why is Compound going up?
Compound is one of the largest decentralized finance (DeFi) platforms in the world. According to DeFi Llama, the platform has over $2.87 billion in total value locked (TVL), making it the 8th largest platform in the industry.
Compound is primarily a lending protocol. People deposit their cryptocurrency into the network and earn interest on it. That interest comes from its lending services, which means it uses the same model as banks.
Some of the most popular supply tokens in Compound are Aave, Basic Attention Token, Dai, Ether, and Compound Governance Token.
COMP is the governance token of the ecosystem. It simply allows people to participate in the governance of the platform through decision making. For example, they can vote on whether to join another chain like Solana or how to adjust risk in the network. According to its platform, the top addresses in its governance platform are Polychain Capital, Bain Capital Ventures, a16z, and Gauntlet.
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The most recent approval vote is for new collateral assets such as cUSDC, cLINK, cSUSHI, cAAVE, and cYFI. The goal is to adjust the weights and set parameters to maintain the overall risk of the protocol during the current market sell-off.
Compound prices are rising after Celsius funneled $10 million to the platform. The company, which is now experiencing an existential crisis, made the payment as it tried to make a comeback. It has suspended payments to clients while working with restructuring specialists.
Compound Price Forecast
The daily chart shows that COMP prices have been in a strong bullish trend for the past three consecutive days as demand rises. It is now trading at $43.8, well above last week’s lowest level. It remains below the 25-day and 50-day moving averages, while the MACD is below neutral.
Therefore, Compound price remains bearish at this stage. This rebound may be part of a dead cat rally, which is usually a temporary rebound after a strong decline. Therefore, the coin may drop below $35 in the coming days.