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Compound is an algorithmic money market protocol on Ethereum that lets users earn interest or borrow assets against collateral.
Anyone can supply assets to Compound’s liquidity pool and immediately begin earning continuously-compounding interest. Rates adjust automatically based on supply and demand. Supplied asset balances are represented by cTokens: representations of the underlying asset that earn interest and serve as collateral.
Users can borrow up to 50-75% of their cTokens’ value, depending on the quality of the underlying asset. Users can add or remove funds at any time, but if their debt becomes undercollateralized, anyone can liquidate; a 5% discount on liquidated assets serves as incentive for liquidators. The Compound protocol sets aside 10% of interest paid as reserves; the rest goes to suppliers. There are no fees, and the protocol doesn’t have a native token. Compound initially launched on mainnet in September 2018 and upgraded to v2 in May 2019. The protocol now supports BAT, Dai, ETH, REP, USDC, WBTC, and ZRX. The upgraded protocol has been audited + formally verified.
How to get started
To get started you connect your Coinbase, Ledger or Metamask wallet. Once this is done, you will get an account overview. Here it will summarize the health of your account. This includes the value of assets supplies, borrowed and you borrowing capacity.
In order to use the Compound protocol, you have to enable each asset you plan to use. Then you can navigate on your asset page.
You choose if you would like to supply or borrow your assets. You can not do both.