Compound (COMP) Vs. Celo (CGLD): The Battle For DeFi Supremacy

Compound and Celo are two projects that add value to this sector.

In 2020, DeFi platforms had a breakout year. Cryptocurrency enthusiasts championed these platforms, which fueled a general market rally in the latter half of the year. DeFi platforms continue to show remarkable diversity in a fast-moving world.

About Compound (COMP)

Smart contracting was a watershed moment in the blockchain space. It powers decentralized financial innovations ranging from lending and borrowing to trading and insurance. Among one of the earliest financial dApps on Ethereum was Compound.

Compound is a decentralized financial protocol on Ethereum that seeks to streamline finance for lenders and borrowers. The two sides of the financial equation can interact on fairer terms in a transparent and secure network.

This utility is possible through shared liquidity pools and smart contracts. Smart contracts eliminate the need for third-party intermediaries. In turn, liquidity pools leverage smart contracts to make this duality possible. With smart contracts, lenders can pool their assets, which in turn enables borrowers to access them electronically without paperwork.

Smart contracts match borrowers with available loans and determine interest rates. The borrower has to put up collateral into the Compound ecosystem to access loans. While borrowers need to over-collaterize their loans and repay back the principal amount and interest, lenders from anywhere in the world earn interest by supplying their assets to the shared liquidity pool.

Promoting Financial Inclusivity

The beauty of crypto lending is automatic verification. Traditional bank lending is often inaccessible because of the bottlenecks and stringent creditworthiness requirements that traditional banks place on ordinary people.

However, DeFi platforms like Compound promote financial equality and inclusion. Unlike traditional banks with credit scores and other criteria that may act as barriers, Compound borrowers can access more loans by building up their collateral. Furthermore, there are no minimum lending or borrowing amounts.

Lenders can earn interest for supplying their assets to a shared liquidity pool(s) and earn interest. The collateral value should not go below a specific limit relative to the loan for borrowers. These automatic rules rely on smart contracts to ensure that all parties have a functional and fair system.

COMP is the native token of the network. The development team limited the supply of these tokens to ensure that it retains decent exchange value. COMP holders assist in network governance. Token holders also propose improvement proposals, on which the rest of the community gets to vote.

Compound tokens are ERC-20 standard. This specification is helpful because this standard is widely interchangeable and compatible with most wallets. The prominent faces behind the project include Robert Leshner, the CEO, and Geoffrey Hayes, the CTO.

Exploring CELO

Fintech platforms have a growing footprint in finance. Celo aims to provide a convenient and straightforward channel for global crypto payments. Accordingly, such ease and access are through promoting mobile payments. This tool can become a bridge for communities worldwide still without critical financial services.

Smartphones are one of the most prominent technological innovations of the 21st century. They brought connectivity to the world, allowing access in the palms of billions of users’ hands. In turn this helped drive financial inclusion accelerated by internet penetration. In 2020 alone, the total value of payments made exceeded $500 billion. The Celo platform aims to leverage smartphones’ reach for a swift and global payments infrastructure.

Cryptocurrency can seem complex to many. Concepts like wallet addresses are vital for security but further mystify this nascent sector; Celo aims to make payments as simple as possible. The goal is to make it easy for anyone with a smartphone to access DeFi services regardless of their geographical location. As a result, Celo is deployed as an interoperable, mobile-first and environment-friendly blockchain that’s building a global payment financial infrastructure.

Using CELO

The user opens a Celo account on their phone to start the process. This setup links their phone number to a specific address. Accordingly, the network stores a cryptographic hash of their phone number on the blockchain.

This project has two tokens to operationalize the place. One is a stablecoin, Celo Dollars, and the other is a governance token, Celo Gold (CELO). CELO traded for approximately $3.5 on a circulating supply of 367 million tokens at press time.

Celo intends to be the “WhatsApp for money.” WhatsApp has done wonders for communication, enabling people from every corner of the world to link seamlessly. The prominent faces behind this project are three co-founders: Sep Kamvar, Rene Reinsberg, and Marek Olszewski. They all have impressive tech backgrounds with the expertise to match.

Users who hold Celo Gold help in governance. They contribute to network security as validators and vote on project decisions.

The Big Picture

Of the two, Compound seems to hold more prominence. Their niche of crypto lending and borrowing is a more robust market for crypto platforms. Celo faces stiff competition from Fintech payment applications and has a more challenging climb. However, should it manage to penetrate even a percentage point of this market, the upside can be tremendous.

Compound and Celo are both parts of the same revolution. The impact that decentralized finance will have on the financial status of millions if not billions of people is only beginning to show. Their success is part of a broader trend in attaining fairer and more transparent financial systems for global commerce.

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