Compound

About

Compound is a decentralized lending protocol built on the Ethereum blockchain, enabling users to lend and borrow cryptocurrencies without intermediaries. It operates through a network of smart contracts, which automatically manage lending and borrowing processes. By depositing cryptocurrencies into Compound's liquidity pools, lenders earn interest, while borrowers can take out loans using their deposited assets as collateral. The protocol uses cTokens, such as cETH or cDAI, to represent deposited assets, allowing for flexibility in managing holdings. Compound's governance is facilitated by its native COMP token, which grants holders voting rights on platform decisions. Interest rates are dynamically adjusted based on supply and demand in each liquidity pool. Borrowers must over-collateralize their loans, risking liquidation if collateral values drop. Compound offers a decentralized alternative to traditional financial services, providing global access to lending and borrowing without credit checks or geographical restrictions. Its decentralized nature and community governance make it a significant player in the DeFi ecosystem.