Just two days after Compound launched its COMP governance token on June 15, 2020, the decentralized finance ecosystem was already transforming at breakneck speed. By June 17, the impact was unmistakable: Ethereum was logging its busiest week on record, total value locked in DeFi protocols had begun climbing from roughly $1 billion, and a new phenomenon called yield farming was capturing the imagination of crypto investors worldwide. What started as a simple token distribution mechanism would ultimately grow DeFi’s total value locked to $9 billion by September — a 9x expansion in just three months.
TL;DR
- Compound launched COMP governance token on June 15, 2020, introducing yield farming to the masses
- By June 17, Ethereum was processing its busiest week on record as DeFi activity surged
- DeFi TVL stood at approximately $1 billion, en route to $9 billion by September
- ETH traded at $233.03 while network gas usage spiked to unprecedented levels
- COMP became the first governance token, enabling community-driven protocol management
The Birth of Yield Farming
Compound had been a foundational DeFi protocol since its early days alongside MakerDAO, offering algorithmic interest rates for lending and borrowing on Ethereum. But the June 15 launch of the COMP token changed everything. The distribution mechanism was elegantly simple yet revolutionary: users who supplied or borrowed assets on Compound would earn COMP tokens as a reward. This created a powerful incentive loop — users could deposit assets, borrow against them, and earn COMP on both sides of the transaction.
The concept, quickly dubbed yield farming or liquidity mining, turned passive lending into an active yield optimization game. Crypto-savvy users began developing complex strategies to maximize their COMP earnings, moving capital between different DeFi protocols in search of the highest returns. The arbitrage opportunity was real, and the influx of capital was immediate.
Ethereum Under Pressure
The surge in DeFi activity had tangible effects on the Ethereum network itself. By June 17, Ethereum was processing its busiest week in history. Gas usage spiked as users interacted with Compound, Uniswap, and other DeFi smart contracts at unprecedented rates. ETH changed hands at $233.03 on CoinMarketCap that day, down a modest 0.8%, but the real story was happening on-chain.
The network congestion would become a recurring theme throughout what would later be known as DeFi Summer. As more users piled into yield farming strategies, transaction fees began to climb, and block space became increasingly competitive. The infrastructure was being tested in real-time, revealing both the promise and the limitations of building financial products on a shared blockchain network.
Governance Token Revolution
Beyond the immediate yield farming frenzy, COMP represented something more profound: the first true governance token in DeFi. COMP holders gained the ability to propose and vote on changes to the Compound protocol, effectively decentralizing decision-making power away from Compound Labs and into the hands of the community.
This model would prove enormously influential. In the months that followed, virtually every major DeFi protocol would launch its own governance token, from Uniswap’s UNI to Aave’s AAVE. The template COMP established — distribute tokens to active users, grant governance rights, create economic incentives for participation — became the standard playbook for DeFi protocol launches.
The Numbers Behind the Boom
The scale of DeFi’s growth in mid-June 2020 was staggering by any measure. Total value locked across all DeFi protocols sat at approximately $1 billion at the start of June. The COMP launch served as a catalyst that would propel this figure to $10 billion by September — a tenfold expansion in roughly 90 days. MakerDAO and Compound were the early leaders, but the field was rapidly expanding to include protocols like Aave, Synthetix, and Yearn Finance.
Trading volumes reflected the surge in activity. On Kraken alone, total market volume on June 17 reached $158.5 million, with ETH pairs accounting for $17.5 million of that figure. The exchange had also just launched Australian dollar (AUD) trading pairs that day, a sign of the growing mainstream interest in cryptocurrency that DeFi was helping to fuel.
Broader Market Context
The DeFi explosion was happening against a backdrop of broader crypto market recovery. The COVID-19 crash of March 2020, which had seen Bitcoin lose 52% of its value in a single day and ETH drop 43%, was fading into memory. The third Bitcoin halving on May 11 had reduced mining rewards to 6.25 BTC per block, creating a supply shock that would eventually help drive BTC from $9,480 to $63,000 by April 2021.
Altcoins were also showing signs of life. Cardano’s ADA gained 5% on June 17 to reach $0.083 as the Shelley upgrade approached. Chainlink’s LINK added 2.9% to $4.16, benefiting from its role as a key oracle provider for DeFi protocols. The symbiotic relationship between DeFi growth and broader crypto market sentiment was becoming increasingly apparent.
Why This Matters
June 17, 2020, was the moment DeFi transitioned from a niche experiment to a paradigm-shifting force in cryptocurrency. The launch of COMP and the yield farming phenomenon it created would define the next six months of crypto market activity, driving unprecedented user adoption, network usage, and capital inflows into decentralized protocols. The governance token model COMP pioneered has since become foundational to how DeFi protocols operate, with billions of dollars in assets now managed through community-driven governance processes. Looking back, this week in June 2020 was the spark that ignited one of the most transformative periods in cryptocurrency history.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Past performance is not indicative of future results. Always conduct your own research before making investment decisions.
was there for this. farmed COMP on day one, gas was brutal but the yields made it worth it. $1B to $9B TVL in 3 months was wild
ETH at $233 and gas was already spiking. could not imagine what it would look like at $4k during the next DeFi wave lol
ETH at $233 and gas was already a problem. crazy to think that was considered expensive back then
gas was brutal in summer 2020 too. nothing changes lol. we just pay more now for the same congestion
yield_pioneer_ day one COMP farmer here too. yields were insane, like 50% APY on USDC. everyone knew it was unsustainable, nobody cared
pool_hopper_ 50pct APY on USDC and nobody cared it was unsustainable. we were all just farming and dumping COMP onto the next pool. pure ponzi economics
COMP was the first governance token and we all treated it like free money. learned some hard lessons about what governance actually means
governance tokens gave us the illusion of participation. most COMP holders never voted on a single proposal. it was yield farming dressed up as decentralization
governance_void hit the nail on the head. most COMP holders farmed and dumped without ever reading a proposal. governance tokens were just yield farming with extra steps
governance_void COMP was the first time we realized governance tokens are just veiled equity. the SEC figured that out 2 years later
governance_void COMP proved governance tokens were just yield farming with a civil rights costume. SEC figured it out 2 years later
governance_void 2 years later the SEC confirmed what everyone already knew. COMP was yield farming dressed as governance the entire time
gov_skeptic_88 the SEC calling COMP a security 2 years later confirmed what every degen already knew. it was yield farming with a governance fig leaf from day one
governance_cynic_ SEC calling COMP a security 2 years later confirmed what degens already knew. governance was always yield farming in a suit
COMP farming was when DeFi went from niche experiment to full casino. TVL going from 1B to 9B in 3 months was the kind of vertical chart that only happens once
every new protocol after COMP just copy pasted the liquidity mining model. most of them went to zero within a year
TVL going from $1B to $9B in 3 months was the original liquidity mining bubble. when incentives dried up the TVL crashed right back. same pattern repeats every cycle
TVL going 1B to 9B in 90 days then crashing back to 3B when incentives ended. same playbook as every liquidity mining program since
TVL 1B to 9B in 90 days then crashing back was the original liquidity mining template. every incentive program since follows the same curve
Denisa P. every incentive program since COMP copied the exact same curve. launch token, pump TVL, dump when rewards dry up. nothing changed in 6 years
COMP launched and TVL went 1B to 9B in 90 days. every liquidity mining program since then has copied the exact same curve. innovate once profit forever
ETH at $233 during COMP farming season. gas was 800 gwei on Sundays and we still aped. 2020 was a different species of degen
ETH at $233 during the busiest week on record. if you were gas optimizing during COMP farming season you remember those 800 gwei sundays
Sophie R. 800 gwei Sundays just to approve a USDC deposit. we paid more in gas than we earned farming. peak degen behavior
COMP at launch kicked off yield farming and nobody had a clue what TVL would become. $1B to $9B in 90 days is still the craziest chart in defi history
ETH at 233 and people thought gas was expensive. try farming COMP in 2021 when a single approve transaction cost 40 dollars. nostalgia is a funny thing