Compound
Compound is a decentralized lending protocol: a set of smart contracts on Ethereum where you supply crypto into shared pools to earn interest, or borrow against collateral you post. It was founded in 2017 by Robert Leshner and Geoffrey Hayes at Compound Labs in San Francisco, launched on Ethereum mainnet in September 2018, and moved to on-chain community governance in June 2020 when the COMP token was distributed to users. Note the everyday homonym: "compound" also means compound interest or a chemical compound; this profile covers only the DeFi lending protocol, sometimes written Compound Finance.
- Launched
- Founded 2017 by Robert Leshner and Geoffrey Hayes; live on Ethereum mainnet September 20182018-09 · source
- Developer
- Compound Labs, based in San Francisco, United States
- Model
- Non-custodial, overcollateralized lending pools; you supply and borrow from your own wallet
- Governance
- COMP governance token deployed March 2020; on-chain DAO governance from June 20202020-06 · source
What is Compound?
Compound is a decentralized money market built on Ethereum. People supply assets into shared liquidity pools and earn a floating interest rate; others borrow from those pools by locking up collateral worth more than they take out. Every loan is overcollateralized, and if a borrower's collateral falls too far in value the position is liquidated automatically to keep suppliers whole. It is non-custodial: you interact from your own wallet and no company holds your funds.
Compound was among the first protocols to popularize pool-based, user-to-protocol lending rather than matching individual lenders and borrowers. Since June 2020 it has been run by a DAO, with holders of the COMP token voting on which assets to list, on risk parameters and on upgrades. Compound III (also called Comet) is the current version, which organizes markets around a single borrowable base asset per deployment. One plain disambiguation: "compound" is also an ordinary word for compound interest or a chemical compound; this page is only about the DeFi protocol.
Is Compound safe?
Compound's core contracts are among the more heavily audited in DeFi, and the protocol has not been exploited to drain user deposits since it launched in 2018. Its main safety mechanism is the same overcollateralization every lending protocol relies on: borrowers post more value than they take, and automated liquidations unwind risky positions. Because it is governed on-chain, changes flow through a timelocked proposal process rather than an admin who can flip a switch instantly.
That governance design cut both ways in September 2021, when a bug in a rewards upgrade mis-distributed a large amount of COMP (see the incident record below). No user deposits were lost, but the episode showed how a code error in a token-distribution path can move real value, and how slow on-chain governance can be when a fix is time-locked. The lasting risks are the ordinary ones: sharp liquidations in volatile markets, oracle or parameter risk on thinly traded collateral, and user-side dangers like phishing sites and malicious approval prompts. Confirm the official domain and read what you sign.
Incident record
A bug in a rewards upgrade (Proposal 62) to Compound's Comptroller contract caused COMP tokens to be distributed incorrectly, letting some users claim far more COMP than intended. Founder Robert Leshner initially said around $80M in COMP was at risk, and later put roughly 202,472 COMP (about $65M) at greatest risk once a distribution function was triggered; estimates of total exposure ran as high as ~490,000 COMP. Because there were no admin controls, a fix required a multi-day governance process. Leshner publicly asked recipients to return the tokens; a portion was returned to the community (Leshner cited about 117,000 COMP returned) while some remained unrecovered. No supplied or borrowed user deposits were affected.
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Frequently asked
What is Compound?+
Compound is a decentralized, non-custodial lending protocol on Ethereum where you supply crypto to earn interest or borrow against overcollateralized positions from your own wallet. It was founded in 2017 by Robert Leshner and Geoffrey Hayes at Compound Labs, launched on mainnet in September 2018, and has been governed on-chain by COMP token holders since June 2020.
Is Compound safe?+
Compound's core contracts are heavily audited and have not been exploited to drain user deposits since 2018. It uses overcollateralization and automated liquidations to protect suppliers, and changes flow through timelocked on-chain governance. The main risks are the ones inherent to lending — liquidations in volatile markets, oracle or parameter risk on thin collateral — plus user-side phishing.
Did Compound get hacked?+
User deposits have not been stolen. In September 2021 a bug in a rewards upgrade mis-distributed a large amount of COMP tokens, with the founder citing figures in the tens of millions of dollars at risk. Supplied and borrowed funds were unaffected; the founder asked recipients to return the tokens and some, but not all, was returned.
What is the COMP token?+
COMP is Compound's governance token, deployed in March 2020 and distributed to users starting June 2020. Holders use it to vote on asset listings, risk parameters and protocol upgrades through Compound's on-chain DAO. It is also used to reward supplying and borrowing on the protocol.
What changed
- 2026-09-28Profile created: founding and mainnet history, the supply/borrow and overcollateralization model, COMP and DAO governance, the everyday-word disambiguation, and a safety picture including the September 2021 COMP distribution bug with a partial-recovery verdict and no loss of user deposits.