Compound has officially launched its "Lending and Borrowing Mining" distribution event for the governance token COMP, which will continue for four years. By simply participating in lending and borrowing on the protocol, users can earn COMP tokens and subsequently take part in the governance of the protocol. This initiative aims to transform real users of the protocol into stakeholders, fostering collective growth.
Compound is a DeFi protocol built on Ethereum that facilitates抵押借贷 (collateralized lending), similar to a bank's services. Users can deposit their assets into the protocol to earn annualized yields, while borrowers pay interest on the assets they borrow.
Understanding COMP Token Distribution
To grasp Compound's COMP distribution model, it's essential to start with the basics. COMP is a governance token that grants voting rights in the Compound protocol's governance. While it currently focuses on governance, there's no public information regarding分红 (dividends) or回购销毁 (buyback and burn) mechanisms.
Functionally, it resembles Maker's governance token, MKR, though MKR has never been distributed through "mining." These governance tokens are designed with regulatory considerations in mind, potentially avoiding scrutiny from bodies like the U.S. Securities and Exchange Commission (SEC). Notably, the compliant U.S. exchange Coinbase has already listed MKR.
When Does It Start and End?
The distribution of COMP began at approximately 2:20 AM Beijing Time on June 16. Any lending or borrowing activities prior to this time will qualify users to earn COMP from the outset.
With a total supply of 4.23 million COMP and a distribution rate of 0.5 COMP per block, the entire process is expected to take about four years. This extended period may pose challenges, as Compound might find it difficult to adjust its business model during this time. Any economic vulnerabilities in this "lending and borrowing mining" setup could impact the project's overall operations.
How to Participate
Directly Through a Wallet
For users familiar with DeFi, participating is straightforward: use the Compound protocol directly through a supported cryptocurrency wallet. Popular decentralized wallets like Trust, AlphaWallet, imToken, MetaMask, Bitpie, TokenPocket, and Math Wallet are compatible. Smart wallets such as Argent and MYKEY should also support these standard smart contract operations.
MYKEY has even integrated deeply for COMP collection.
Upon visiting the Compound website, new users need to select the deposit function and choose from the supported assets. Existing users can utilize the borrow function to further increase their potential COMP earnings.
Using Third-Party Applications? Not Necessarily Supported Yet
Compound has stated that third-party applications built on its protocol can also earn COMP tokens for their users. However, comprehensive support isn't guaranteed yet. For instance, PoolTogether, a no-loss lottery platform using Compound, has publicly stated that it does not currently support COMP distribution.
PoolTogether users' funds are deposited into Compound's asset pools, with one lucky winner receiving the accumulated yields each period. While these participants should theoretically share in COMP tokens, the current smart contracts don't support it. PoolTogether plans to add COMP distribution support in its V3 update, expected before August.
For other third-party applications, it's best to confirm with official sources before participating.
Tracking and Claiming COMP Earnings
How to View COMP Income?
You can monitor the overall COMP distribution through the official dashboard.
How to Claim COMP After Participation?
COMP tokens aren't automatically sent to users; instead, the protocol holds them to conserve computational resources on the Ethereum blockchain, as constant distribution isn't efficient.
Tokens are transferred to users only when they interact with the Compound protocol—such as through borrowing, lending, or repaying—and when the claimable amount exceeds 0.001 COMP. During these interactions, the protocol "顺手" (conveniently) forwards the accrued COMP to the user.
In short, you don't need to worry about how to get COMP; with every use of Compound, the tokens are automatically transferred to you.
If you prefer to claim COMP manually, you can initiate an on-chain transaction by clicking the "Collect" button. However, claiming small amounts may not be economical, as Ethereum transaction fees (Gas costs) are currently high and likely to remain so, potentially exceeding the value of 0.001 COMP.
Is "Lending and Borrowing Mining" Free?
Compound's "lending and borrowing mining" isn't entirely free; there are implicit costs involved.
For suppliers (lenders), they're essentially exchanging potential earnings from other protocols for COMP. However, since the distribution logic incentivizes both lenders and borrowers, suppliers might still achieve attractive annualized yields initially.
For borrowers, they're trading the interest they pay for COMP. This could lead to an equilibrium where the interest paid is close to or slightly less than the value of COMP earned; otherwise, borrowing would be unprofitable. When "COMP earnings ≥ interest paid," borrowers can potentially arbitrage.
Of course, users can simultaneously lend and borrow to maximize their COMP earnings.
How to Earn More COMP
The quickest way is to use a calculator to estimate potential annualized COMP earnings and costs based on current metrics.
For example: borrowing 1,000 USDT with a COMP production cost of $2.50 each.
As more participants join, parameters will shift significantly, likely reaching an equilibrium where the production cost of COMP aligns closely with the "mining" cost.
Here are some intuitive tips:
- Avoid less popular assets with low borrowing frequency, as they generate less total borrowing revenue and, consequently, fewer COMP tokens.
- Without considering costs, borrowers of the same asset can earn more COMP than suppliers but also bear more risk and expense.
- To maximize COMP income, participate in both lending and borrowing.
👉 Explore advanced yield strategies
Is It Worth Participating?
Compound is the first lending protocol to implement "lending and borrowing mining" for token distribution, marking a milestone for the DeFi ecosystem and representing a novel experiment. However, such "X mining" projects may carry unforeseen risks, particularly financial ones, reminiscent of the unsustainable model seen in FCoin's "transaction mining" trial two years ago. Users considering investing in COMP mining should carefully evaluate potential risks.
For existing Compound users, continuing to use the protocol as usual—as long as lending and borrowing rates remain acceptable—is a reasonable approach. If you view COMP as an additional bonus, there's likely no need for excessive concern.
Frequently Asked Questions
What is COMP used for?
COMP is a governance token that allows holders to vote on proposals related to the Compound protocol. It currently focuses on governance without dividends or buyback mechanisms.
How do I claim my COMP tokens?
COMP is automatically distributed to your wallet when you interact with the Compound protocol (e.g., lending, borrowing, repaying) and when your claimable amount exceeds 0.001 COMP. You can also manually claim them, but note that gas fees may make small claims uneconomical.
Can I participate through third-party apps?
Some third-party apps built on Compound may support COMP distribution, but not all do yet. Always verify with the app's official sources before participating.
What are the risks of participating?
Risks include smart contract vulnerabilities, regulatory changes, and economic imbalances where earning COMP might not offset costs like interest paid or gas fees. Always assess your risk tolerance.
How can I maximize my COMP earnings?
To optimize earnings, consider both lending and borrowing, focus on high-demand assets, and use calculators to model potential returns. Stay updated on protocol changes.
Will COMP value increase over time?
The value of COMP depends on market demand, protocol adoption, and overall DeFi trends. While governance rights could drive value, it's subject to volatility and risk.