Compound
Compound is a decentralized finance money markets protocol that was originally founded in 2017 with upgrades that followed: Compound v2 and lastly v3 in August 2022.
While Compound v2 supports a wider range of possible collateral assets (ETH, DAI, BAT, ZRX, USDC, WBTC, LINK, UNI, COMP, MKR, SUSHI, AAVE and YFI) and a wider range of debt assets (DAI, ETH, BAT ZRX, USDC, WBTC, USDT, TUSD, LINK, USDP, UNI, COMP, MKR, SUSHI, AAVE and YFI) in comparison to Compound V3 that is focused on capital efficiency and risk-reduction with the feature of single borrowable assets.
Compound V3 functions differently from its previous version, as instead of unified liquidity, assets have their own separate market.
This means that an asset's market only allows for it to be either borrowed or supplied as collateral, so a user that wants to earn yield can supply it, but not borrow it.
On the other hand, users who want to borrow it can supply a range of assets, but those will not be earning any yield, and only borrow interest will be paid on the borrowed asset.
The available markets are:
USDC
ETH
USDT
USDS
wstETH
In Compound, when you supply collateral, it remains your property. It can never be withdrawn by other users (except during liquidation).
In 2020, Compound introduced its native governance token, COMP, which allowed users to participate in the protocol's decision-making processes.
The COMP distribution contributed to the growth of Compound as a protocol in the defi ecosystem, and it’s also considered as the “yield farming” pioneer in defi.
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