Compound is a decentralised lending protocol built on Ethereum that enables users to supply crypto assets to liquidity pools and earn variable interest, or to borrow against their deposited collateral. Interest rates on the protocol adjust algorithmically based on the utilisation rate of each asset pool \u2014 when more of an asset is borrowed relative to what is supplied, the rate rises to attract additional supply. The protocol launched in 2018 and was one of the earliest DeFi lending platforms to gain significant adoption, helping to establish the broader concept of algorithmic money markets in the decentralised finance sector.<\/p>\n
COMP is the governance token of the Compound protocol, allowing holders to propose and vote on changes to protocol parameters such as interest rate models, supported assets, and collateral factors. COMP was distributed beginning in 2020 through a liquidity mining programme that rewarded users for supplying and borrowing on the platform, a mechanism that contributed to the initial DeFi growth cycle that year. The protocol operates without central custodianship \u2014 users retain control of their assets through smart contracts \u2014 but this also means that smart contract bugs or oracle failures can result in loss of funds with no recourse to a central authority. Compound faces ongoing competition from newer lending protocols offering improved capital efficiency or additional features.<\/p>\n","protected":false},"excerpt":{"rendered":"
Compound is a decentralised lending protocol built on Ethereum that enables users to supply crypto assets to liquidity pools and earn variable interest, or to borrow against their deposited collateral. Interest rates on the protocol adjust algorithmically based on the utilisation rate of each asset pool \u2014 when more of an asset is borrowed relative \u2026<\/p>\n","protected":false},"featured_media":0,"template":"","meta":{"tmp_coingecko_id":"compound-governance-token","tmp_symbol":"COMP","tmp_rank":0,"tmp_chain":"","tmp_ticker":"","tmp_pair":"","tmp_yahoo_symbol":"","tmp_faq":"[{\"q\":\"How does borrowing work on Compound?\",\"a\":\"To borrow on Compound, a user first deposits a supported asset as collateral. The protocol assigns a collateral factor to each asset u2014 for example, 0.80 means a user can borrow up to 80 percent of their collateral's value in other assets. If the value of borrowed assets approaches or exceeds the collateral limit, the position can be liquidated by third parties who repay the debt in exchange for a discounted portion of the collateral.\"},{\"q\":\"What does the COMP token do?\",\"a\":\"COMP is Compound's governance token. Holders can propose changes to the protocol u2014 such as adding new assets, adjusting interest rate models, or modifying collateral factors u2014 and vote on proposals submitted by others. A proposal requires a minimum quorum of votes to pass. COMP does not represent equity in Compound Labs, the company that originally developed the protocol, and holding it does not entitle holders to protocol revenue.\"},{\"q\":\"Is Compound audited and how safe are funds on the platform?\",\"a\":\"Compound's smart contracts have been audited by multiple security firms and have operated for several years without a major exploit. However, no audit eliminates all risk. The protocol relies on price oracles to determine asset values; oracle manipulation is a recognised attack vector in DeFi. Users also face liquidation risk if collateral values fall rapidly, and regulatory changes could affect access to the platform.\"},{\"q\":\"How does Compound compare to traditional bank lending?\",\"a\":\"Compound operates without identity verification, credit checks, or human intermediaries u2014 eligibility is determined solely by collateral. Interest accrues per Ethereum block rather than monthly. There is no deposit insurance equivalent to schemes protecting bank accounts. Compound interest rates can also change significantly within hours based on pool utilisation, unlike fixed-term bank rates, and losses from smart contract failures have no regulatory backstop.\"}]"},"class_list":["post-1000217","coin","type-coin","status-publish","hentry"],"_links":{"self":[{"href":"https:\/\/dev.themarketperiodical.com\/th\/wp-json\/wp\/v2\/coin\/1000217","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/dev.themarketperiodical.com\/th\/wp-json\/wp\/v2\/coin"}],"about":[{"href":"https:\/\/dev.themarketperiodical.com\/th\/wp-json\/wp\/v2\/types\/coin"}],"wp:attachment":[{"href":"https:\/\/dev.themarketperiodical.com\/th\/wp-json\/wp\/v2\/media?parent=1000217"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}