Introduction to Compound Protocol
Compound is a decentralized lending protocol established in 2017 that enables users to earn interest on cryptocurrencies through automated lending pools. Built on Ethereum's blockchain, its operations are governed by smart contracts, with COMP serving as its ERC-20 governance token.
Core Features and Functionality
Lending and Borrowing Mechanism
- Lenders: Deposit cryptocurrencies into Compound's pools to earn interest, receiving cTokens (e.g., cETH, cDAI) representing their share.
- Borrowers: Post crypto collateral to borrow supported assets at dynamic interest rates based on supply/demand.
COMP Token Utility
- Governance: Holders propose/vote on protocol upgrades.
- Incentives: Lenders earn COMP tokens proportional to their cToken holdings and market liquidity.
Risk Management
- Liquidation: Occurs if borrowed assets' value exceeds collateral.
- Multi-Asset Loans: Borrowers can access any supported asset up to collateral value.
Current Market Performance (Key Metrics)
| Metric | Value |
|---|---|
| Price | $41.33 |
| 24h Change | -6.29% |
| ATH | $911.13 (May 2021) |
| Market Cap | $388.11M |
| Circulating Supply | 9.39M COMP |
| 24h Trading Volume | $32.51M |
Keyword Integration
- Decentralized Finance (DeFi): Compound pioneers Ethereum-based lending solutions.
- Governance Tokens: COMP empowers community-driven protocol decisions.
- cTokens: Represent lender deposits and accrue interest.
- Smart Contracts: Automate Compound's lending/borrowing processes.
- Liquidity Pools: Enable flexible crypto asset utilization.
- ERC-20: COMP's technical standard on Ethereum.
FAQs
How does Compound determine interest rates?
Rates adjust algorithmically based on real-time supply and demand for each asset.
What happens if my borrowed position is undercollateralized?
The protocol liquidates collateral to repay the loan, with a penalty applied.
Where can I track COMP’s price?
👉 Live COMP price charts provide real-time data and historical trends.
How does COMP governance work?
Token holders submit/vote on proposals via decentralized autonomous organization (DAO) structure.
What’s Compound’s max token supply?
10 million COMP, with ~9.39 million currently circulating.