Compound (COMP) Price

What Is Compound (COMP) and How Does It Work?

Compound (COMP) is a decentralized finance (DeFi) protocol built on the Ethereum blockchain that lets users earn interest on their crypto or borrow assets against collateral. It operates as an algorithmic money market, meaning interest rates adjust automatically based on supply and demand within each asset pool.

When you deposit supported crypto assets (like ETH, USDC, or DAI) into Compound, you receive cTokens in return, such as cETH or cDAI, which represent your stake in the protocol and earn interest over time. Borrowers can lock collateral to take out loans in other assets, while lenders earn a share of interest generated in the pool. Everything runs autonomously through smart contracts, with no intermediaries involved.

The COMP token serves as Compound’s governance token. Holders can propose and vote on changes to the protocol, such as interest rate models, asset listings, or reserve factors. COMP tokens are also distributed to users who interact with the protocol (e.g., lenders and borrowers), incentivizing platform participation.

Compound has evolved over time, with Compound III (Comet) streamlining collateral use and adding cross-chain support, making it more scalable and gas-efficient.

Who Created Compound and When Was It Launched?

Compound was founded in 2017 by Robert Leshner and Geoffrey Hayes, two entrepreneurs with backgrounds in economics and computer science. Both were previously involved in the fintech and analytics space before launching Compound to unlock open financial services on the Ethereum blockchain.

The Compound protocol officially launched on mainnet in September 2018, allowing users to supply and borrow a small set of Ethereum-based assets. Its key innovation was enabling interest accrual on crypto deposits via smart contracts, which became a foundational model for DeFi.

In June 2020, Compound became one of the first major DeFi projects to introduce a governance token, COMP. This move decentralized control of the protocol by allowing token holders to propose and vote on upgrades and policy changes, marking a key milestone in the DeFi governance movement.

Compound Roadmap Highlights

• 2017: Compound founded in San Francisco.

• 2018: Mainnet launch of Compound V1 on Ethereum.

• 2020: COMP governance token launched; protocol transitions to community-led governance.

• 2021: Major upgrades introduced in Compound V2, expanding supported assets and improving security.

• 2022–2023: Compound III (also known as Comet) released, offering a streamlined lending architecture with isolated risk pools, lower gas costs, and support for cross-chain expansion.

• 2024–2025: Continued protocol optimization, focus on real-world asset integration, and increased governance participation via on-chain delegation tools.

What Are the Use Cases of COMP Token?

The COMP token is primarily used for governance within the Compound protocol. Holders can propose, vote on, and implement changes to the system, such as listing new assets, adjusting interest rate models, or updating collateral factors. Additionally, COMP is distributed as an incentive to users who supply or borrow assets on the platform, encouraging long-term participation and decentralization.

You can trade COMP tokens on the BingX spot market by creating an account, searching for the COMP/USDT trading pair, and placing a buy or sell order directly from your wallet balance. BingX offers real-time price data, secure asset storage, and advanced trading tools for COMP.

What Is Compound Tokenomics?

Compound (COMP) has a fixed total supply of 10 million tokens, designed to support the long-term growth, decentralization, and governance of the Compound protocol. Here's a breakdown of how those tokens are distributed:

COMP Token Distribution

• 4,229,949 COMP (42.3%) — Distributed to users of the Compound protocol through liquidity mining (earned by supplying or borrowing assets).

• 2,396,307 COMP (23.9%) — Reserved for shareholders of Compound Labs, Inc.

• 2,226,037 COMP (22.3%) — Allocated to the Compound founding team, subject to a 4-year vesting schedule.

• 775,000 COMP (7.75%) — Set aside for the community and future governance proposals.

• 372,707 COMP (3.7%) — Reserved for protocol development and advisors.

Emission & Distribution Model

COMP tokens are earned by users based on their level of activity within the protocol. Each Ethereum block (~15 seconds), a set amount of COMP is allocated to specific markets (e.g., ETH, USDC, DAI), and then split between suppliers and borrowers. This incentive model ensures that those who use the platform help secure and govern it over time.

How to Supply and Borrow Assets on Compound Finance

Compound lets you earn interest or borrow crypto using smart contracts. Here's a simplified guide:

How to Supply Assets (Earn Interest)

1. Connect a Wallet: Go to compound.finance and connect a Web3 wallet like MetaMask.

2. Select and Supply a Token: Choose a supported asset (e.g., USDC, ETH), click “Supply,” approve it, and confirm the transaction.

3. Earn Interest via cTokens: You’ll receive cTokens (e.g., cUSDC), which automatically accrue interest. Withdraw anytime.

How to Borrow Assets (Using Collateral)

1. Supply and Enable Collateral: First, supply a supported asset, then toggle it as “Collateral” in the dashboard.

2. Borrow a Token: Choose a borrowable asset, enter an amount within your limit, and confirm.

3. Repay at Any Time: Repay borrowed funds (plus interest) anytime to unlock your full collateral.

What Are cTokens on Compound?

cTokens are interest-bearing tokens you receive when you supply assets to the Compound protocol. For example, if you deposit USDC, you’ll receive cUSDC in return. These tokens represent your share in the lending pool and automatically accrue interest over time, based on real-time supply and demand. The value of cTokens increases as interest is earned, meaning you don’t need to claim rewards separately; your balance grows passively.

You can redeem cTokens at any time to withdraw your original assets plus interest. cTokens are also transferable and can be used in other DeFi applications, giving you flexibility and liquidity while your assets earn yield in the background.

What Blockchain Network(s) Does Compound Protocol Operate on?

Compound Protocol primarily operates on the Ethereum blockchain, leveraging its smart contract infrastructure to enable decentralized lending and borrowing. The original version (Compound V2) supports a wide range of ERC-20 tokens and uses Ethereum-native assets for supply and collateral. With the release of Compound III (also known as Comet), the protocol introduced a more efficient architecture designed for multi-chain expansion, starting with deployments on other EVM-compatible networks like Arbitrum and Polygon. This expansion aims to reduce gas fees, improve scalability, and bring Compound’s lending services to a broader DeFi ecosystem.

Which Wallets Support COMP Tokens?

The easiest way to store your COMP tokens is on the BingX exchange. After buying COMP on the BingX spot market, your tokens are securely held in your BingX wallet by default. This option is ideal for traders who want fast access to trading tools, real-time price data, and platform-level security. You can also withdraw COMP anytime to an external wallet for self-custody.

For users who prefer full control over their assets, COMP is compatible with any Ethereum-based wallet. Popular options include MetaMask, Trust Wallet, and Ledger (via MetaMask or Ledger Live). These wallets let you store, send, and interact with COMP in decentralized applications (dApps). Since COMP is an ERC-20 token, make sure the wallet supports Ethereum and you have ETH to cover gas fees when making transactions.

Is Compound Safe and Audited?

Compound’s core smart contracts have undergone multiple professional security audits, including by Trail of Bits and OpenZeppelin in 2019–2020, with follow-up audits for governance, COMP distribution, and integration aspects. More recently, its Comet (Compound III) design was audited by ChainSecurity and again reviewed by OpenZeppelin in 2022. The protocol also uses formal verification (via Certora) and economic risk assessment (by Gauntlet), with a robust bug bounty program managed on Immunefi offering up to $1 million rewards.

That said, Compound operates in a complex, evolving DeFi space, and while audits significantly reduce risk, they cannot eliminate all potential vulnerabilities. Security depends on ongoing governance best practices, timely upgrades, vigilant oracle management, and active community oversight to catch unforeseen issues.

Is Compound (COMP) a Good Investment?

Compound (COMP) stands out as one of the most established and trusted protocols in the DeFi space. Its core value lies in powering a decentralized lending and borrowing system that’s fully transparent, non-custodial, and governed by its community. Unlike traditional finance, Compound enables users to earn interest or borrow assets in real time without intermediaries. The COMP token gives holders the right to influence the protocol’s future through governance proposals, which adds utility and long-term relevance to the token, especially as decentralized finance continues to grow.

As of 2025, Compound has successfully launched Compound III (Comet), a major upgrade that streamlines risk management and supports cross-chain deployments. This evolution, combined with a solid track record of security audits, long-standing usage, and consistent on-chain activity, positions Compound as a reliable protocol in the Ethereum ecosystem. While COMP’s price may fluctuate with the broader crypto market, its value is underpinned by actual usage, protocol fees, and governance participation, making it an attractive choice for investors who believe in the future of decentralized finance.