Here’s why Ethereum’s Compound (COMP) price up today

It has been a tough few days for the cryptocurrency market. Bitcoin and Ethereum are both down about 5% over the past 24 hours, plummeting as gold and the U.S. stock market fall in a pattern not seen in weeks. However, several cryptocurrencies are holding their prices substantial. One of these is the Ethereum-based Compound (COMP) price with a 7% gain over the past 24 hours, rising to $ 190 and as high as $ 210 on decentralized exchanges.

heres-why-ethereums-compound-comp-price-up-today

COMP/USD 4-hour chart | Source: TradingView

Why does COMP price increase when major cryptocurrencies fall in price?

The key factor behind the Compound’s growth over the past 24 hours is the launch of a new DeFi cryptocurrency called YAM for the Yam protocol. YAM is a pseudo-stablecoin that has an elastic supply that can increase and decrease depending on market conditions to try and achieve a market value of $ 1.

Yam is an experimental Ethereum-based DeFi protocol that is attempting to meld the concepts of yield farming, governance, and price elasticity.

As the blog post announcing the launch of the project reads:

“Yam is an experimental protocol mashing up some of the most exciting innovations in programmable money and governance. Built by a team of DeFi natives, it features: an elastic supply to seek eventual price stability, a governable treasury to further support stability, fully on-chain governance to enable decentralized control and evolution from Day 1, and a fair distribution mechanism that incentivizes key community members to take the reins of governance actively.”

The only way that YAM is currently purchased is to buy it through Uniswap pools or decentralized exchanges or deposit eight Ethereum-based crypto-assets into the Yam protocol. These eight assets are COMP, LEND, LINK, MKR, SNX, WETH, YFI, and ETH / APML Uniswap v2 LP tokens.

As Compound is a coin to “farm” the cryptocurrency, demand for the asset has picked up, supported the ongoing price increase. The other seven cryptocurrencies being used to generate YAM are also up over recent hours, responding to a spike in demand.

Is COMP valid in the long term?

While COMP goes up to $ 190 ~ 200, some people don’t think the property is valuable in the long run. One trader remarked that considering the fundamentals of the protocol, Ethereum-based assets should only be worth around $ 50:

“I’m short on $ COMP, the fundamentals of the ‘governance’, given the public information, don’t make too much sense today… IMHO, the fair value of the token (assuming similar long term profitability as other crypto AUM businesses) should be at around $ 50 today.”

However, this could change as Yam has made a more significant impact on the DeFi industry.

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