Introduction to Compound
Compound is a leading decentralized finance (DeFi) lending protocol that allows users to earn interest on cryptocurrencies by depositing them into liquidity pools. Users receive cTokens representing their stake, which can later be redeemed for the original assets. Borrowers can also secure loans by providing collateral, with interest rates dynamically adjusting based on market demand.
Since its mainnet launch in September 2018, Compound has grown exponentially, surpassing $800 million in total value locked (TVL).
Founders and Background
Compound was co-founded in 2017 by Robert Leshner (CEO) and Geoffrey Hayes (CTO), both former employees of Postmates. Their company, Compound Labs, Inc, develops and maintains the protocol.
What Makes Compound Unique?
- Open Lending Platform: Enables users to earn interest on idle crypto assets or borrow against collateral without intermediaries.
- Community Governance: COMP token holders propose and vote on protocol upgrades, ensuring decentralization.
- Earn COMP Tokens: Users can earn COMP by depositing funds or borrowing, incentivizing participation.
Key Features:
- Trustless operations via smart contracts.
- Dynamic interest rates based on supply/demand.
- Overcollateralization for loan security.
COMP Tokenomics
- Total Supply: Capped at 10 million COMP.
- Circulating Supply: ~3.3 million (as of writing).
Distribution:
- 4.2 million COMP to users over 4 years.
- 2.4 million COMP to shareholders.
- 2.2 million COMP to founders/team (4-year vesting).
Compound’s Security Model
- Smart Contracts: Automate deposits, loans, and liquidations.
- Collateralization Factor: Ensures loans are always overcollateralized.
- Liquidation Mechanism: Under-collateralized positions are liquidated at a 5% discount to maintain stability.
👉 Learn how to maximize yields with Compound
Compound Market Data (Latest)
| Metric | Value |
|----------------------|---------------------|
| Price | $41.36 per COMP |
| Market Cap | $388.44 million |
| 24h Trading Volume| $55.60 million |
| Circulating Supply| 9.39 million COMP |
| Rank | #183 (by market cap)|
Price Change (24h): -5.89%
FAQs
1. How do I earn COMP tokens?
- Deposit supported assets or borrow from Compound pools to earn COMP as rewards.
2. What’s the risk of using Compound?
- Smart contract vulnerabilities or sudden collateral liquidation are primary risks.
3. Can I vote without holding COMP?
- No, governance proposals require COMP ownership.
4. Which exchanges list COMP?
- Major platforms like Binance, Coinbase, and OKX support COMP trading.
Final Thoughts
Compound revolutionized DeFi by democratizing access to lending/borrowing. Its community-driven governance and transparent tokenomics make it a standout protocol. For real-time updates, track COMP’s price and market trends on trusted platforms.