ARCIPEDIA · COIN · DEFI

Plain English

Compound is one of the earliest and most-respected lending protocols on Ethereum. COMP is the governance token; its mid-2020 launch via liquidity mining kicked off the “DeFi summer” of 2020. Compound v3 (Comet) shifted to single-borrowable-asset markets for better risk isolation.

How it actually works

Each Comet market has one borrowable asset (usually USDC) and multiple collaterals. Users deposit collateral, borrow USDC. Interest rates float based on utilization. The protocol has been deployed on Ethereum mainnet, multiple L2s, and Polygon. COMP governance controls market parameters and treasury.

What it means for you

COMP has been overtaken in size by Aave but remains a high-quality DeFi protocol. For HNW positioning, COMP is a smaller, more conservative DeFi governance allocation. Most users interact with Compound for the lending utility more than for COMP itself.

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Educational content only. Not investment, tax, or legal advice.