Website: compound.finance

Compound is an algorithmic, autonomous interest rate protocol built on the Ethereum blockchain, designed to facilitate the lending and borrowing of cryptocurrencies without the need for traditional financial intermediaries. Founded in 2018 by Robert Leshner and Geoffrey Hayes, Compound allows users to supply their crypto assets into liquidity pools, earning interest based on the supply and demand dynamics of each asset. Borrowers can access these pools by providing collateral, enabling them to obtain loans in a decentralized and permissionless manner.

The protocol operates through smart contracts, ensuring transparency, security, and automation in the management of assets. When users supply assets to the protocol, they receive cTokens (such as cETH or cDAI) representing their stake in the pool. These cTokens accrue interest over time and can be redeemed for the underlying asset plus any earned interest. Interest rates in Compound are determined algorithmically, adjusting in real-time based on the utilization rate of each asset, thereby reflecting current market conditions.

Compound’s governance is decentralized, with decisions made by holders of its native COMP token. COMP holders can propose and vote on protocol upgrades, parameter changes, and other governance matters, ensuring that the platform evolves in line with the community’s consensus. This governance model empowers users to have a direct influence on the protocol’s development and policies.

As a foundational DeFi protocol, Compound has integrated with various platforms and services, contributing to the broader decentralized finance ecosystem. Its open-source nature encourages developers to build on top of the protocol, fostering innovation and the creation of new financial products. By providing a secure and efficient mechanism for earning interest and accessing liquidity, Compound plays a significant role in the ongoing transformation of the financial landscape.