{"id":429342,"date":"2020-07-02T20:00:16","date_gmt":"2020-07-02T20:00:16","guid":{"rendered":"https:\/\/wncen.com\/?p=429342"},"modified":"2020-07-02T19:16:46","modified_gmt":"2020-07-02T19:16:46","slug":"bearish-hot-defi-token-compound","status":"publish","type":"post","link":"https:\/\/wncen.com\/news\/bearish-hot-defi-token-compound\/","title":{"rendered":"Why This Options Trader is Bearish on the Hot DeFi Token Compound"},"content":{"rendered":"

Decentralized finance<\/a> has become the talk of the cryptocurrency market in 2020. The most recent buzz phrase surrounded in hype is “yield-farming,” and at the center of it, a DeFi token called Compound (COMP).<\/p>\n

But what exactly is Compound and yield-farming, and if it’s such a hot topic, then why is one options trader so bearish on the token?<\/p>\n

What is Yield-Farming? Learn About The Latest Craze in Decentralized Finance<\/h2>\n

It was the DeFi craze of late 2019 that helped the cryptocurrency market find a bottom. From the start of 2020 to around mid-Feb, Bitcoin rallied, bringing the rest of the market with it.<\/p>\n

Ethereum outperformed the leading cryptocurrency by market cap, namely due to the growing amount of ETH locked up<\/a> in decentralized finance applications.<\/p>\n

Investors feverishly buying up the Ethereum supply to lock it away in applications caused the asset to grow over 100% before Black Thursday erased all gains.<\/p>\n

While prices have not returned to previous highs, the frenzy around DeFi certainly has.<\/p>\n

Related Reading | Fund Manager: DeFi Will Propel Ethereum To $1 Trillion Market Cap<\/a><\/strong><\/em><\/p>\n

But Ethereum isn’t taking the center stage anymore. Tokens living on its protocol aimed at different forms of DeFi have stolen the limelight. In particular, Compound (COMP) has become the hottest cryptocurrency token around.<\/p>\n

When it comes to DeFi, Compound in less than month captured a lion’s share of the market share, even beating out Maker and other top DeFi altcoins.<\/p>\n

Compound can be used for something called yield-farming. It’s a new trend taking crypto by storm. Yield-farming leveraging a DeFi product or service to farm interest rewards by lending out other crypto tokens. In one example, someone was able to earn 45% APY by leveraging their Basic Attention Tokens using Compound<\/a>.<\/p>\n

Not only did Compound spike, but so did many of the assets that can be used to leverage for yield farming also saw rallies recently.<\/p>\n

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1\/ I'm short on $COMP<\/a>, the fundamentals of the 'governance', given the public information, don't make too much sense today. <\/p>\n

Won't be surprised to see it fall below $100 unless a revenue model is proposed soon. – Read full thread..<\/p>\n

— TS \u26a1\ufe0f (@thetaseek) July 2, 2020<\/a><\/p><\/blockquote>\n