Compound (COMP) price has surged 10% today at a time when the majority of cryptocurrencies are bullish with the likes of Bitcoin reaching three months high.
At the time of writing, Compound was trading at $143.91 up 10.19% after a slight pullback from a daily high of $148.10.
But why is the coin price skyrocketing? This article focuses on the factors behind the current Compound rally.
What is Compound (COMP)?
In a nutshell, Compound (COMP), is the native token of Compound, a DeFi lending protocol where users can get crypto loans or earn interest by offering their crypto assets to the platform for it to lend them out to others.
Why is Compound price rising?
The two main factors being attributed to the current surge in the price of Compound coin are the recent protocol upgrade announcement and the community’s response to the announcement.
Announcement on protocol upgrade
After realizing that its reward distribution program has a negative effect on the COMP price, the platform has come up with a protocol upgrade that will help in the growth of the protocol instead of selling off the rewards without necessarily benefitting the existing token holders and users.
The new program kicked off by reducing the existing rewards by half and it will also probably end COMP farming though depending on how the community votes.
@compoundfinance Proposal 92: COMP Rewards Adjustments – Kickstart Rewards: Step One
This proposal is the first step towards launching the new rewards program – existing rewards are being cut by 50%.https://t.co/bQdxqskr7g
— tylerether.eth (@tylerether) March 18, 2022
Community to embrace the new proposal
The community seems to embrace the new proposal with a majority saying that the 50% cut-off will reduce the rampant inflations that have been experienced in the network before.
There was actually a rush by investors to purchase more tokens since the majority believe that the upgrade will lead to a price hike.