Compound (COMP)

Compound (COMP) is the governance token of the Compound protocol, a decentralized finance (DeFi) lending platform built on the Ethereum blockchain. Founded by Robert Leshner and Geoffrey Hayes and launched on Ethereum mainnet in 2018, Compound lets users supply crypto assets into shared liquidity pools to earn interest, or borrow against deposited collateral, without relying on a centralized intermediary.

The protocol operates as a series of algorithmic money markets, one for each supported asset. When a user deposits a token such as ETH or USDC, the protocol issues a corresponding cToken (for example cETH) representing that user’s claim on the pool plus accrued interest. Interest rates for each market adjust automatically based on the ratio of borrowed to supplied assets, and all loans are over-collateralized, meaning borrowers must lock more value than they draw out, with insufficiently collateralized positions subject to liquidation.

COMP itself is an ERC-20 token whose primary function is governance: holders and their delegates can propose, debate, and vote on changes to the protocol, including interest rate models, collateral factors, and supported assets. Since June 2020, COMP has also been distributed to users who supply or borrow on the platform, tying token issuance directly to protocol usage rather than a one-time sale.