What is Compound?
On June 16 2020, Compound set governance token COMP in motion. Nobody could guess how successful it would be. In only one day COMP took the first place in DeFi rankings getting ahead of the token Maker. After being listed on Coinbase Pro, the price went even higher. Since then, the token is among the leaders of the market. Compound is a decentralized lending application, where any user having a sustained cryptocurrency, can deposit it into a smart contract. The asset enters a liquidity pool and starts producing interest as a result of borrowed capitals. Compound suggests a unique system of deposits. Once the user makes his deposit, he receives the tokens, called cTokens, which afterwards can be utilised as a guarantee for a loan. This way, the assets can be consumed while they are bringing interest. How much interest will be generated, depends on the supply and demand of Compound’s underlying smart contracts. More people borrow a singular asset, the higher interest rate it will have.