“Compound is an algorithmic, autonomous interest rate protocol built for developers, to unlock a universe of open financial applications.” – Compound.
Compound is a decentralised lending platform, built on the Ethereum blockchain network.
It is a protocol that allows the borrowing and lending of digital assets. The holder of a supported cryptocurrency may deposit it into a ‘liquidity pool’. The pool generates interest from users who borrow the assets and pay interest on the loan.
When assets are deposited, Compound issues users with ‘cTokens’. For example, a user deposits Ethereum (ETH) into the liquidity pool. The platform then issues the equivalent value of cETH to the user.
The cTokens can be redeemed for their underlying asset at any time. Accrued interest in the asset will also be paid upon redemption.
Interest rates for loans are algorithmically derived. They’re based on the supply and demand of a given asset. As an algorithm controls interest rates, there is no loan negotiation required with other parties.
COMP is an ERC-20 token that governs the Compound protocol. Holders of COMP can propose and vote on changes to the protocol. Compound is designed to become a Decentralised Autonomous Organisation (DAO). This means control will transition completely to the community and stakeholders.
At the time of writing:
- 1 COMP = AU$187.53
- Market Cap: AU$480,318,295
- Circulating supply: 2,561,279 COMP
- 24hr Volume: $43,494,230 AUD
- Coin Market Cap, 5:00pm, 31/07/2020