Compound launches its governance token

Compound launches its governance token - compound token governanceThe decentralized finance platform (DeFi) Compound grows and decentralizes itself

"My personal belief is that no one would use bitcoin if it were managed by the Bitcoin Corporation," said Robert Leshner, founder of Compound. "Its power comes from the fact that nobody really controls it."

In this spirit, Compound today launches the testnet of its experimental governance platform, complete with a trial version of its COMP governance token. Created in late 2018, Compound has remained stable as one of the three best DeFi dapps on Ethereum.

Compound currently offers loans in eight different assets (including BTC, ETH and ZRX) and covers approximately 15% of the amount of ETH in circulation in the DeFi, which currently stands at around one billion dollars. "This has always been our plan," said Leshner.

"We are one of the few companies that are paving the way for the idea of ​​continuous and progressive decentralization". The company will tokenize the dapp, but will not do it to raise more money. Its staff, founders and investors will get a share of the tokens and another share will be distributed on Ethereum using logic that the company is not yet revealing. At that point, token holders will run Compound, not the company.

It should be stressed that those who have invested the most in Compound to date, will have a lot of influence and at the beginning, most likely, there will be a large concentration of tokens in the hands of the people closest to the company.

How it works

Anyone will be able to propose changes to Compound, but to vote will need to cover at least 1% of the total amount of tokens in circulation. This may seem like a great deal, however you can participate by proxy.

In this case it would not be necessary to own 1% of the total offer, but it would be sufficient to collect the support of a group of users whose total tokens cover the 1% requirement. Leshner called this rule an antispam measure.

Initially the quorum will be 4%. The vote will last three days. Once approved, the change to the code will not take effect for another two days, to give Compound users time to close their positions if they think the change is contrary to their interests.

When the governance system comes into operation for the first time, it will only be in the hands of supporters and the Compound team. Once everything works, the company will make a token distribution to the public.

The hope is that more people involved will allow the app to expand faster but also to do it safely. Invest in the Compound COMP token, from now on, it will be a way to become part of an active community that chooses its own rules and makes use of the skills of an entire universe of users.

"By distributing governance, in a sense it leaves room for more creativity and community improvement much more than we could do alone," said Leshner.