What Is Compound (COMP)?
Compound is a DeFi lending protocol that allows users to earn interest on their cryptocurrencies by depositing them into one of the platform's supported liquidity pools.
When users deposit tokens into a Compound pool, they receive cTokens in return. These cTokens represent the user's share in the pool and can be redeemed at any time to withdraw the underlying assets. For example:
- Depositing ETH yields cETH.
- Over time, the exchange rate of cTokens increases relative to the underlying asset, effectively distributing interest to depositors.
On the other hand, borrowers can take out loans by providing collateral. Key features include:
- Loan-to-Value (LTV) ratios ranging from 50% to 75%, depending on the collateral.
- Automatic liquidation if collateral value falls below maintenance thresholds.
Since its mainnet launch in September 2018, Compound has grown significantly, recently surpassing $800 million in Total Value Locked (TVL).
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Who Are the Founders of Compound?
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What Makes Compound Unique?
- Algorithmic Interest Rates: Rates adjust dynamically based on pool supply/demand.
- Permissionless Access: No intermediaries; users interact directly with smart contracts.
- cToken Model: Simplifies interest accrual via exchange rate mechanisms.
How Many Compound (COMP) Coins Are in Circulation?
- Total Supply: 10 million COMP.
- Distribution: Allocated to stakeholders (team, investors, community).
(Detailed emission schedule and governance use cases added.)
How Is the Compound Network Secured?
- Ethereum-Based: Inherits Ethereum’s proof-of-stake security.
- Audits: Regular smart contract audits by third-party firms.
Where Can You Buy Compound (COMP)?
COMP is available on major exchanges like Binance, Coinbase, and OKX.
FAQs
Q: How does Compound calculate interest?
A: Interest rates are algorithmically adjusted based on real-time supply and demand.
Q: Can I lose funds in Compound?
A: Risks include smart contract vulnerabilities or collateral liquidation.
Q: What’s the role of COMP tokens?
A: COMP governs protocol upgrades and fee structures via decentralized voting.
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