Compound is an open-source, decentralized application built atop the Ethereum blockchain providing lending and borrowing services. The interest rate for each market is set algorithmically based on supply and demand.
Compound operates as a liquidity pool where users supply crypto assets to liquidity pools to earn interest. On the other side, borrowers take out loans from the liquidity pools and pay interest on their debt.
Borrowers need to provide alternative collateral when taking out a loan.
COMP is the native ERC-20 governance token for the Compound protocol. Holders of COMP may debate, propose and vote on all changes to the Compound protocol.
Compound is one of the most successful and popular protocols in the decentralized loans and yield farming space.