- Compound Finance published a proposal seeking community votes on whether to increase the wETH supply in its Comet market
- COMP’s price declined severely in the last month
DeFi lending platform Compound Finance [COMP] has sought votes from its community members on a proposal to increase the supply cap for wrapped Ether (wETH) in its Comet USDC market (cUSDCv3) on the Ethereum mainnet.
Comet, the third version of Compound Finance, is commonly referred to as Compound V3. It was launched in August as Compound Finance’s first multi-chain deployment, designed to support EVM-compatible networks.
In an earlier proposal filed by Paul J. Lei, he had advised that the wETH supply cap on the cUSDCv3 be increased in light of “current market conditions.”
“Given the market conditions and ETH’s supply being close to its current cap on Compound III, we support doubling ETH’s supply cap to allow for organic growth in the market.”
Compound’s proposal sought community votes for a 100% increment of the wETH supply cap from 75,000 wETH to 150,000 wETH and the deployment of a new implementation of Comet using its newly configured parameters.
As of this writing, TVL on Comet stood at $227.99 million, per data from DefiLlama, growing by over 2000% since its launch in August.
Compound Finance needs propping up
COMP traded at $37.42 at press time. Still languishing under the impact of FTX’s collapse, COMP’s price was down by 22% in the last month, data from CoinMarketCap revealed.
Since the FTX debacle started, COMP’s daily trading volume also fell by over 55%. With $15.78 million worth of COMP tokens traded in the last 24 hours, trading volume was down by 15% within that period.
As COMP’s price declined in the last month, the count of large key addresses that held between 10,000 to 1,000,000 COMP tokens also fell. According to data from Santiment, the number of this cohort of COMP investors was 105 at press time. A month ago, this stood at 110.
Interestingly, while the whales have gradually let go of their holdings in the last month, shrimps and sharks have done just the opposite. On-chain data showed that despite the consistent decrease in COMP’s price in the last 30 days, holders of one to 10,000 COMP tokens ramped up accumulation. As a result, the size of this COMP investor category has grown by 12% in the last month.
Lastly, the last few days have been marked by a steady increase in coin distribution, as shown by COMP’s exchange activity. Per Santiment, the token’s supply on exchanges has grown by 1% since 29 November. Within the same period, its supply outside exchanges fell by 0.11%.
This showed that investors have distributed their COMP holdings to realize profits.