What Is Compound Crypto Protocol?

The decentralized finance (DeFi) industry has brought us many innovative crypto solutions to put our assets to use. By expanding on the concept of traditional finance lending services, new lending and borrowing protocols are readily being adopted by crypto enthusiasts and flourishing in the world of DeFi in the last few years. Among the leading decentralized apps (DApps) in this domain is Compound Finance (COMP), a lending and borrowing protocol that celebrated its fourth birthday this month (September 2022).

What Is the Compound DeFi Protocol?

Compound Finance (COMP) is an Ethereum-based lending and borrowing protocol that algorithmically sets interest rates based on the activity in its liquidity pools. As of the time of writing (Sept. 15, 2022), the total value locked (TVL) in Compound’s smart contracts stands at over $2 billion.

As a Compound user, you can lend and borrow some of the most popular cryptocurrencies instantly without having to go through a traditional financial intermediary. It’s one of the largest and oldest lending and borrowing apps in the crypto world.

Compound is used extensively by DeFi developers, who programmatically integrate it into their DApps and use the protocol for dynamic borrowing and lending. Many yield aggregation protocols and other DeFi apps make use of Compound.