Compound – the sector-leading lending protocol – is experiencing new paradigms as a result of its COMP token distribution. Since its start on Monday, Compound’s TVL has spiked more than $300M, putting it on track to take the top position on DeFi Pulse should this growth continue.
Perhaps what’s most interesting about this trend is that the vast majority of liquidity is coming from other DeFi protocols, including the likes of centralized counterparts like Nexo. To summarize, liquidity protocols are taking their user’s capital and putting it to work in Compound, all on the assumption that the COMP earned from yield farming will continue to outperform standalone lending returns.
Nexo pumped in another $28.4m to Compound 30 mins. This farm is so harvested…
They have deployed 59.5m to farm $COMP so far.
— Arthur (@Arthur_0x) June 19, 2020
As traders race to farm the hottest new governance token, we’ve seen projects like InstaDapp design “COMP Maximization” strategies that encourage people to take out leverage on stablecoins using Flash Loans.
While it’s mostly been bells and whistles so far, we’re