What is Compound?
Compound is a decentralized lending platform that allows users to borrow or lend assets without the need for authorization. The interest rates on this platform are determined algorithmically based on the percentage of assets loaned out. The platform's native cryptocurrency, COMP, is an Ethereum-based token that allows the community to govern the project's protocol.
Compound was founded by Robert Leshner, a former economist and CEO of the company, in 2018. The company is based in San Francisco and raised $8.2 million in a seed round in May 2018, followed by a $25 million Series A fundraising round in November 2019. In June 2020, Compound launched its COMP governance token, which quickly became the largest DeFi token by market capitalization.
The platform's functionality is built on yield farming procedures, providing an open decentralized finance experience for users without the need for technical knowledge. Users can earn passive income by lending out their unused cryptocurrency, and the platform provides a lending environment open to the public, with no credit checks and cash available immediately. Compound uses certified smart contracts to perform these activities autonomously and ensures network security through various techniques, including security examinations by organizations such as Open Zeppelin and Trail of Bits.
Compound also enables a borrowing and lending feature for a variety of cryptocurrencies, including Dai (DAI), Ether (ETH), USD Coin (USDC), Ox (ZRX), Tether (USDT), Wrapped BTC (WBTC), Basic Attention Token (BAT), Augur (REP), and Sai (SAI). Users can borrow from the lending pools with interest and a deposit, and the value of their collateral affects the total amount of financing they can borrow.
The COMP token is used for community governance of the Compound protocol. COMP holders and their delegates debate, propose, and vote on all changes to the protocol. The token is placed directly in the hands of users and applications, forming an ecosystem that can upgrade the protocol.
Compound is also used for earning interest on idle assets. Users can deposit their crypto assets into the platform, and earn interest on them without having to sell them. The interest rate varies depending on the demand for the asset, and is decided algorithmically. This allows users to earn passive income on their idle assets, without having to give up their possession of them.
In addition to earning interest, users can also borrow from the lending pools on the platform, with a deposit and interest. The amount of financing that can be borrowed is determined by the amount of collateral deposited. This allows users to leverage their assets, without having to sell them.
Compound also offers a variety of lending and borrowing options for different cryptocurrencies, making it a versatile platform for DeFi users. The platform also boasts a high level of security, with its smart contracts and code being examined by reputable organizations like Open Zeppelin and Trail of Bits.
Overall, Compound offers a wide range of possibilities for earning passive income, leveraging assets, and participating in community governance through the COMP token. It is a powerful tool for those interested in decentralized finance and the potential of blockchain technology.
The investment information, comments, and recommendations provided here do not fall under the scope of investment consulting. Therefore, making an investment decision based solely on the information and comments provided here may not yield results that meet your expectations.
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