Compound

As COMP has grown into one of the more robustly traded and earned DeFi assets, it is time to assess emission rate. Analysis by Gauntlet suggests that the current emission rate of 0.44 COMP / block is too high. Our aim in reducing emissions is two-fold. Firstly, we want to ensure that the protocol builds up a reserve of COMP that can be used for paying for other community needs. These needs include (but are not limited to) further security audits, funding feature development, incentivizing voters for participating, and liquidity incentivization. Secondly, we believe that the current emissions are too high to simply provide liquidity. Our analysis, combined with data from Nansen (below), illustrates that the majority of COMP goes to short-term holders and centralized exchanges.

We and others believe that COMP should be used for furthering protocol development and onboarding new users to the protocol. By first lowering the emissions rate and subsequently adding COMP emission vesting, we believe that COMP can be utilized to achieve these goals.