ARCIPEDIA · DEFI

Plain English

Compound is one of the original DeFi lending protocols and the project that effectively launched DeFi Summer in 2020 by distributing its governance token (COMP) to users. Functionally similar to Aave: deposit assets to earn yield, borrow against collateral, floating rates.

How it actually works

Compound v2 introduced the cToken model: when you deposit an asset, you receive a cToken (cDAI, cUSDC, cETH) that accrues interest. Compound v3 simplified the architecture into separate markets where one asset is borrowable and others serve only as collateral. Both versions remain in production.

What it means for you

Compound is structurally similar to Aave but smaller in deposit volume. It still offers competitive rates on major assets. For members, the choice between Compound, Aave, and Morpho is mostly about which venue offers the best rate for the position you want at the moment.

How ARCrypto teaches this

We cover the practical comparison: when Compound makes sense versus Aave or Morpho, and the operational protocols for monitoring rates across venues.

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