Compound begins COMP governance-token distribution, accelerating DeFi summer
Compound Finance announces COMP governance token distribution, kicking off 'DeFi Summer' frenzy that draws capital including Wrapped Bitcoin into Ethereum.
On June 15, 2020, Compound begins COMP governance-token distribution, accelerating DeFi summer. Compound Finance announces COMP governance token distribution, kicking off 'DeFi Summer' frenzy that draws capital including Wrapped Bitcoin into Ethereum.
The yields were often extraordinarily high, sometimes exceeding 100% annual percentage rates, creating intense competition among users to capture these returns. While DeFi Summer primarily affected Ethereum and various Ethereum-based tokens, it was relevant to Bitcoin's history because it created enormous demand for Wrapped Bitcoin (WBTC) and other Bitcoin-backed assets on Ethereum.
Bitcoin holders who wanted to participate in DeFi yields needed to convert their Bitcoin into tokens that could interact with Ethereum smart contracts, leading to rapid growth in WBTC supply as billions of dollars worth of Bitcoin were locked in Ethereum-based DeFi protocols. The DeFi explosion represented both an opportunity and a challenge for Bitcoin.