Created by:
Ayhan Güler & Kaan Alp
Başlıklar
Compound (COMP) vs Maker (MKR)
Part I
– Blockchain Technologies in Finance –
DeFi Tokens
First of all, if we briefly talk about DeFi, which consists of the words Decentralized and Finance, DeFi is the name given to financial structures that are not connected to any center or authority. One of the most important purposes of DeFi systems is to enable people who do not have access to traditional financial systems to do their financial work. About 1.7 billion people around the world do not have access to the traditional financial system, namely banking transactions. DeFi systems aim to reach these people, whom the current financial system cannot reach. Thanks to DeFi, decentralized exchanges have emerged. Borrowing and lending transactions between users without the need for any authority, and users’ getting loans by using their coins as collateral have also been possible thanks to DeFi.
Compound and MakerDAO projects are among the first and most important projects in the field of DeFi. Compound is a project built on Ethereum that brings together depositors and loan seekers. MakerDAO, on the other hand, is a project built on Ethereum, just like Compound, where users can create credits on their own. These two projects have their own COMP and MKR tokens. Both these tokens are mainly used as governance tokens. Let’s take a closer look at these two projects and their tokens.
The Teams
Compound
Compound is a product of Compound Labs. Compound Labs is an open-source software development company that creates tools, products, and services for the DeFi ecosystem. Founded in 2017 by Robert Leshner and Geoffrey Hayes, there are currently 17 people in the team of the company. The majority of the team consists of experienced engineers. Robert Leshner, founder, and CEO of Compound Labs is a former economist and founder of two software startups. Along with Geoffrey Hayes, co-founder and CTO of the company, they have worked in high-profile roles at Postmates, an online food delivery service. Compound has raised a total of $33.2M in funding over 3 rounds and Compound is funded by 19 investors. Among these investors there are notable venture capital firms such as Andreessen Horowitz, Polychain and Coinbase Ventures.
MakerDAO
MakerDAO was created in 2015 by Rune Christensen, a Danish entrepreneur. After graduating from the University of Copenhagen, Christensen studied international business at the Copenhagen Business School. Prior to MakerDAO, he founded and managed the Try China international recruiting company. There was also a developer team called MakerDAO Foundation, which implemented the decisions made by the MKR holders, which is the governance token. However, MakerDAO, a project that aims to be completely decentralized, has become completely decentralized after the developer team left the usage rights of their MKR tokens to MKR holders. On July 20, 2021, Rune Christensen announced the full decentralization of MakerDAO. MakerDAO has raised a total of $79.5M in funding over 7 rounds and MakerDAO is funded by 22 investors. Among these investors there are notable venture capital firms such as Paradigm and Dragonfly Capital Partners.
About
Compound
We can say that Compound is the reflection of classical banking logic on the blockchain. It has the same logic as banks give the money deposited by the depositors to the needy as loans. However, unlike conventional banks, it does this by bringing users together in an environment of trust, thanks to smart contracts, without the need for any authority or center. So if we are to make a clear definition, Compound is an ERC-20-based DeFi, open accessible smart contracts system. Compound provides convenience for cryptocurrency loan transactions. Compound allows users to deposit Ethereum tokens into lending pools for access by borrowers. Lenders then earn interest on the assets they deposit. Buyers, on the other hand, use these cryptocurrencies as loans for a little more than this interest. The excess amount in question is the commission that Compound receives from this transaction, and it is much less than the commission that banks receive. COMP is the cryptocurrency used for the govern of the Compound governance system. Holders of the COMP cryptocurrency vote for changes and updates to the Compound protocol.
MakerDAO
The MakerDAO protocol allows anyone with ETH, or other crypto-assets, and a crypto wallet to lend themselves money in the form of a stablecoin called DAI. DAI is not pegged to any real-world asset and its value is mostly equal to $1. Being a decentralized stable coin, it is different and interesting from many other stable coins. As long as the collateral deposited by the user meets the debt received from the system, the user can use this DAI as much as he wants by paying a certain interest. At any time later, they can buy DAI from the exchange and pay off their debts and get back their initial deposit. There are two cryptocurrencies on the MakerDAO platform, one is the stable coin I just mentioned, DAI, and the other is the governance token, Maker (MKR). The Maker cryptocurrency is used to keep the price stable in DAI cryptocurrency transactions and to have a say in the governance of the DAI platform. Important decisions such as interest rates are determined by MKR holders. MKR is used in the production of DAI and this amount of used MKR is burned. Due to the decrease in the number of tokens, the demand for the DAI cryptocurrency is also reflected in the MKR cryptocurrency.
