What is the COMP token and how does it work?
The COMP token is the native token of the Compound protocol, an open-source, decentralized protocol that enables users to lend and borrow cryptocurrencies.
The COMP token was created to incentivize users to provide liquidity to the Compound protocol and to reward users for their contributions. The COMP token is a governance token that allows holders to vote on proposals that will shape the future of the Compound protocol. The COMP token also serves as a reward for users who provide liquidity and borrow from the Compound protocol.
When users lend or borrow from the Compound protocol, they are rewarded with a portion of newly minted COMP tokens. This process is known as “COMP staking” and it helps ensure that there is always enough liquidity in the system. The COMP token also serves as a medium of exchange within the Compound ecosystem.
Users can use their COMP tokens to pay fees when borrowing or lending on the platform, or they can use them to purchase other assets within the ecosystem.
