Compound is a decentralized finance (DeFi) lending protocol that enables users to earn interest on their cryptocurrencies by depositing them into supported liquidity pools. When users deposit tokens into a Compound pool, they receive cTokens in exchange. These cTokens represent their share in the pool and can be redeemed for the original deposited assets at any time. For instance, depositing ETH yields cETH tokens. Over time, the exchange rate of cTokens to the underlying asset increases, allowing users to redeem more than they initially deposited—this mechanism distributes interest. Borrowers can take out secured loans by providing collateral. The loan-to-value (LTV) ratio depends on the collateral asset and typically ranges between 50% and 75%. Interest rates vary based on the borrowed asset, and loans may be automatically liquidated if collateral falls below a required maintenance threshold. Since its mainnet launch, Compound has grown significantly in adoption, accumulating substantial total value locked in its protocol. *(For more details on Compound, explore our in-depth guide on the platform.)* Compound was founded in 2017 by Robert Leshner and Geoffrey Hayes, both of whom previously held key roles at Postmates, an online food delivery service. The two remain in leadership positions at Compound Labs, Inc., the software development company behind the Compound protocol, with Leshner as CEO and Hayes as CTO. While both founders have experience building successful companies, Robert Leshner has been notably involved in supporting the blockchain ecosystem and has publicly invested in various crypto-related projects, including Argent Wallet, Opyn, and Blockfolio. The Compound team consists of more than a dozen members, with nearly half working as engineers. Compound highlights that many cryptocurrencies remain inactive on exchanges, providing no benefits to their holders. The platform addresses this issue with its open lending system, enabling users to deposit supported Ethereum-based tokens to earn interest or obtain secured loans—all in a decentralized, trustless manner. What distinguishes Compound is its community-driven governance model. Holders of COMP, the platform’s native governance token, can propose and vote on protocol changes without relying on the Compound team. These decisions may include adding new supported assets, adjusting collateral requirements, or modifying COMP distribution methods. Users can acquire COMP tokens through third-party exchanges or by engaging with the Compound protocol—such as depositing assets or borrowing funds. COMP has a fixed maximum supply of 10 million tokens. Currently, approximately 3.3 million tokens are in circulation, representing less than one-third of the total supply. The distribution of COMP tokens is structured as follows: - **Users**: Over 4.2 million tokens will be distributed to Compound users over four years. - **Shareholders**: Compound Labs, Inc. shareholders receive nearly 2.4 million tokens. - **Team & Founders**: 2.2 million tokens are allocated to founders and team members, vested over four years. - **Governance Incentives**: 775,000 tokens are reserved for community governance rewards. - **Future Team Members**: The remaining 332,000 tokens are set aside for future team allocations. The emission rate of COMP tokens can be adjusted through community governance proposals, allowing voters to modify distribution speeds as needed. For more details on governance, refer to [Compound's governance documentation](https://medium.com/compound-finance/compound-governance-decentralized-b18659f811e0). Everything on Compound is handled automatically by smart contracts, which mint cTokens when Ethereum and ERC20 assets are deposited. Users can redeem their stake by using these cTokens. The protocol enforces a collateralization factor for all supported assets, ensuring each pool remains overcollateralized. If collateral drops below the required level, it is sold to liquidators at a 5% discount. This process pays down part of the loan and restores the collateral to an acceptable level. This system helps borrowers maintain proper collateral, protects lenders, and offers liquidators an opportunity to earn. COMP is tradable on multiple cryptocurrency exchange platforms. It can be exchanged for other major cryptocurrencies as well as fiat currencies such as the U.S. dollar (USD), Indian rupee (INR), and Australian dollar (AUD). For those unfamiliar with converting fiat to cryptocurrencies like COMP, additional resources are available to learn more. *(Note: Links to specific exchanges and guides have been removed to maintain an evergreen format.)* Learn about **Aave**, a notable competitor to Compound in the decentralized finance (DeFi) space. Explore **yearn.finance**, one of the pioneering yield farming protocols in the crypto ecosystem. Looking to expand your crypto knowledge? Visit **DroomDroom** for educational resources. Stay informed with the latest industry insights by checking out our **blog** for updates on trends and developments.