Buy Compound

Compound is a decentralised finance (DeFi) protocol on Ethereum that lets people lend and borrow cryptocurrency, and COMP is the token used to help govern it. It was one of the first major DeFi lending platforms and helped popularise the wider DeFi movement.

It helps to separate two things. Compound is the lending protocol, while COMP is its governance token. Holding COMP is not the same as lending or borrowing on Compound. The COMP token is mainly about taking part in decisions over how the protocol is run, and you do not need to hold it to use Compound.

Compound is part of decentralised finance (DeFi), a category of financial services built on blockchains rather than through traditional banks. On the protocol, users can supply crypto that others can borrow, or borrow crypto by providing collateral, all managed automatically by code rather than a central company.

The protocol has evolved over time. Its current version, Compound III (also called Comet), uses a simpler design built around single-asset markets. In each market, people borrow one main asset, such as USDC, while supplying other approved cryptocurrencies as collateral. This model is intended to make risk easier to manage. Compound III runs on Ethereum and on other compatible chains, including Base, Arbitrum and Polygon.

What is Compound used for?

Compound is mainly used as a platform for lending and borrowing crypto, while the COMP token is used for governance. COMP is the token used to help govern the Compound protocol.

COMP is used to:

• vote on proposals about how the Compound protocol is run
• take part in the governance of the Compound community
• be held and traded as the protocol's governance token

It is worth being clear about the difference between using Compound and holding COMP. People use the Compound protocol to lend or borrow crypto. Holding the COMP token, on the other hand, is about governance. It lets you take part in decisions about the protocol, but holding COMP is not lending, and it does not by itself earn interest.

COMP has a maximum supply of 10 million tokens. It is not mined, and its role is focused on governance rather than processing transactions on its own blockchain. Like other tokens, COMP can be volatile, and its value can be influenced by interest in DeFi, the use of the protocol, and wider market conditions.

The history of Compound

Compound was founded by Robert Leshner and launched as a lending protocol on Ethereum, becoming one of the earliest and most influential DeFi platforms.

In 2020, Compound introduced the COMP governance token and began distributing it to people who used the protocol. This approach, sometimes called liquidity mining, is widely credited with helping spark the period of rapid DeFi growth that became known as "DeFi summer". The COMP token also handed control of the protocol to its community.

The protocol later moved to Compound III, a redesigned version focused on single-asset markets and more conservative risk management across several blockchains. You can find out more on the official Compound website. Today, Compound remains one of the best-known DeFi lending protocols. People buy COMP for many reasons, including taking part in governance or gaining exposure to DeFi.