Compound is the name of a DeFi lending platform that allows users to earn interest on their cryptocurrencies by depositing them into one of several pools supported by the platform. Compound is also the name of the native cryptocurrency token that is used on the platform. The platform allows users to deposit different cryptocurrencies to stake and earn interest. Additionally, borrowers can take a secured loan from any Compound pool by depositing collateral.
The maximum loan-to-value (LTV) ratio varies based on the collateral asset, but currently ranges from 50 to 75%. The interest rate paid varies by borrowed asset, and borrowers can face automatic liquidation if their collateral falls below a specific maintenance threshold.
Since the launch of the Compound mainnet in September 2018 the platform has grown steadily, and recently passed more than $10.8 billion in total locked value across 18 markets.
A Brief History of Compound (COMP)
Compound was founded in 2017 by Robert Leshner (CEO) and Geoffrey Hayes (CTO), both of whom previously worked in high-profile roles at Postmates — an online food delivery service. The two continue to hold executive positions at Compound Labs, Inc — the software development firm behind the Compound protocol.
What makes Compound unique?
According to Compound, most cryptocurrencies sit idle on exchange platforms, doing nothing for their holders. Compound looks to change this with its open lending platform, which allows anybody who deposits supported Ethereum tokens to easily earn interest on their balance or take out a secured loan — all in a completely trustless way.
Compound seeks to set itself apart through its own form of community governance. Holders of the platform’s native governance token, $COMP, can propose changes to the protocol, debate, and vote whether to implement changes suggested by others without any involvement from the Compound team. This includes:
- Choosing which cryptocurrencies to add support for
- Adjusting collateralization factors
- Making changes to how COMP tokens are distributed
These $COMP tokens can be bought from third-party exchanges or earned by interacting with the Compound protocol, such as by depositing assets or taking out a loan.
Further details on trading COMP on TradeStation Crypto
Important information
This is for educational and informational purposes only and is not research or a recommendation regarding any security or investment strategy. TradeStation Securities Inc. and its affiliates doe does not provide legal, tax or investment advice.
Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options, futures, or cryptocurrencies); therefore you should not invest or risk money that you cannot afford to lose. Before trading any asset class, first read the relevant risk disclosure statements on our Important Documents page, found here: www.tradestation.com/important-information.
TradeStation Securities, Inc., TradeStation Crypto, Inc., and TradeStation Technologies, Inc. are each wholly-owned subsidiaries of TradeStation Group, Inc., all operating, and providing products and services, under the TradeStation brand and trademark. You Can Trade, Inc. is also a wholly-owned subsidiary of TradeStation Group, Inc., operating under its own brand and trademarks. TradeStation Crypto, Inc. offers to self-directed investors and traders cryptocurrency brokerage services. It is neither licensed with the SEC or the CFTC nor is it a member of NFA. When applying for, or purchasing, accounts, subscriptions, products, and services, it is important that you know which company you will be dealing with. Click here for further important information explaining what this means.
Investing in cryptocurrencies involves significant risks. Please click here for TradeStation Crypto’s risk disclosures on investing and trading in cryptocurrencies.
