• Compound Finance has revealed the deployment of its third version on the Polygon network.
• This development allows for Wrapped Bitcoin [BTC] and Ethereum [ETH], as well as MATIC, to be used as collateral.
• However, it remains to be seen if this collaboration will result in a recovery of Compound’s Total Value Locked (TVL).
Compound Finance and Polygon Integration
The DeFi lending protocol Compound Finance recently announced that they were deploying their third version on the Polygon network. This new version allows users to use Wrapped Bitcoin [BTC] and Ethereum [ETH], as well as MATIC, as collateral when borrowing USDC. It is yet to be seen if this collaboration will lead to a recovery in Compound’s Total Value Locked (TVL).
Impact of Polygon Integration
Polygon has had significant growth in recent months across several areas, so it is not surprise that the Compound community was elated by the update. The question remains whether or not this integration will positively impact Compound’s TVL. Currently, the TVL has dropped by 4.25% in the last 30 days alone, leaving it at one of its lowest points since 2022. The increased public interest in Polygon might play a part in triggering more unique deposits into protocols under Compound Finance, which could lead to an increase in TVL. Additionally, active addresses for COMP are much lower than those for MATIC, indicating there is potential for more interaction between them due to this integration.
Limitations with COMPs
Despite these potential benefits from integrating with Polygon, there are still limitations with holding COMPs that could potentially limit how much of an effect it has on TVLs. For example, holders have reduced their asset holdings significantly since January 2021 due to various factors such as changes in market sentiment and other external pressures like taxes or fees imposed by exchanges or governments.
Compounding Profits Calculator
In order for users to get a better idea of how their portfolio may fair due to this collaboration between Compound and Polygon, users can make use of the “Compounding Profits Calculator” available on DeFi Llama’s website which provides analysis regarding various aspects such as current market value and estimated profits over time resulting from investments made via Compound Finance Protocols.
Conclusion
It remains uncertain if the collaboration between Compound Finance and Polygon will have positive effects on its TVL at this time but there are certain indicators that point towards potential success such as increased public interest in Polyton and higher active addresses compared to MATIC when using COMPs which suggest potential higher interactions between them due to this integration
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