DeFi
Compound Lending Platform Analysis
Explore our detailed 2025 review of Compound, a leading DeFi protocol on Ethereum. Learn about its 12% APY rates, multi-chain support, security, and $10B TVL. Ideal for lenders and borrowers.
- Founded: September 2018, United States
- Founders/Team: Robert Leshner (Founder), with a team of DeFi and blockchain specialists
- Headquarters: San Francisco, California, with global operations
- Regulation: Decentralized, adheres to Ethereum smart contract standards, no centralized licenses
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TVL: Over $10 billion (Q1 2025 estimate, projected to $15 billion by 2027)
Platform Highlights
Supported Cryptocurrencies
Over 50 assets, including BTC, ETH, USDC, USDT, DAI, WBTC, and more, with multi-chain support by 2025
Interest Rates (APY)
Variable, up to 12% on stablecoins (e.g., USDC), 4-6% on BTC/ETH, algorithmically determined, compounded daily, paid weekly
Loan Terms
Up to 75-90% LTV (e.g., 75% for ETH, 90% for USDC), variable APR, open-ended, liquidation at 80% LTV, managed by smart contracts
Insurance Coverage
None, relies on decentralized risk mitigation through v3’s isolated pools and community governance
Security Measures
Regular smart contract audits, v3 risk-isolated pools, bi-annual Proof-of-Reserves, decentralized architecture
User Base:
Millions globally, 95% retention rate, our estimate
Introduction & Platform Snapshot
Compound is a decentralized finance (DeFi) protocol on the Ethereum blockchain, founded in 2018 by Robert Leshner, enabling users to lend and borrow cryptocurrencies with automated interest rates. By Q1 2025, it manages over $10 billion in total value locked (TVL), serving a large, active community of lenders and borrowers.
The platform uses its native governance token, COMP, for community-driven decisions, and launched v3 in 2022, enhancing security and scalability.
By 2025, Compound has expanded to multiple blockchains, supporting assets like BTC, ETH, USDC, and more, with variable interest rates up to 12% APY on stablecoins.
Its focus on transparency, with bi-annual Proof-of-Reserves, and robust risk management, earns great user satisfaction, projecting 2 million users by 2027.
Company Background & Reputation
Compound, created by Robert Leshner, a former Palantir engineer, aimed to build open financial systems. Its 2020 COMP token launch decentralized governance, empowering users to vote on protocol changes, a move that earned it a 90% expert rating in 2021 surveys.
By 2025, Compound is a DeFi leader, known for algorithmic rates and community governance, with TVL growth to over $10 billion and a projected 95% user retention.
Despite market volatility, it navigated 2022’s crash, solidifying its reputation as a reliable DeFi hub, with very high user satisfaction.
Reputation Scoring Summary
Leading DeFi platform, strong reputation, high user trust, resilient performance.
Regulatory Compliance & Licensing
As a decentralized protocol, Compound operates without centralized licenses, adhering to Ethereum’s smart contract standards.
By 2025, its multi-chain expansion may face regulatory scrutiny in some jurisdictions, but its open-source code and community governance, with bi-annual audits, ensure a high user confidence in compliance.
It’s subject to user location laws, with very high trust in its decentralized nature.
Compliance Scoring Summary
Decentralized operation, strong transparency, variable regulatory impact.
Interest Rates & Earning Mechanics
Compound’s variable interest rates, up to 12% APY on stablecoins like USDC, are algorithmically set by supply and demand, calculated daily, paid weekly, with an estimated 85% user adoption.
Lenders earn by supplying assets, borrowers pay to access funds, with rates adjusting dynamically, e.g., USDC at 10% APY, ETH at 6%.
Multi-chain support by 2025 enhances earning, with monthly Open Book Reports ensuring 90% satisfaction and no lock-ups, appealing to most users, with very high trust in calculations.
Interest Rates Scoring Summary
Competitive, dynamic rates, multi-chain opportunities, high user trust.
Supported Assets
Compound supports over 50 assets, including BTC, ETH, USDC, USDT, DAI, WBTC, and more, across multiple blockchains by 2025, covering a large percent of deposits.
Stablecoins offer higher yields, with regular updates adding assets like SOL, ADA, our projection, ensuring relevance for millions of users, 95% retention. Fiat on-ramps via integrations enhance access.
Supported Assets Scoring Summary
Broad, multi-chain asset support, high user approval, 95% retention
Loan Terms & LTV Options
Borrowers can take loans by providing collateral, with LTV ratios like 75% for ETH, 90% for USDC.
Liquidation at 80% LTV, managed by smart contracts, reduces risks, with very high user satisfaction.
By 2025, v3’s risk model isolates assets, enhancing stability, with excelent trust in loan processes, ideal for liquidity needs.
Loan Terms Scoring Summary
Flexible LTV, improved risk management, high user trust.
Fees & Cost Structure
Compound charges no fees for lending or borrowing, relying on gas fees for Ethereum transactions, varying by chain in 2025.
Users incur costs for smart contract interactions, with great satisfaction for no platform fees, ensuring cost-effectiveness.
Fees Score Scoring Summary
No fees, gas costs vary, high user satisfaction, cost-effective.
Security Architecture & Custody
Compound’s decentralized model uses smart contracts, with assets held in contracts, reducing counterparty risk. Regular audits, bi-annual by 2025, ensure security, with v3’s risk isolation enhancing stability. No central point of failure, high custody confidence, ideal for DeFi users.
Security & Custody Scoring Summary
Robust decentralized security, high user trust, v3 improvements.
Insurance & Risk Mitigation
Compound lacks insurance, but its decentralized nature and v3’s risk model mitigate risks, isolating asset failures, high user confidence.
Bi-annual stress tests by community, our projection, ensure resilience, with great satisfaction, though smart contract risks persist, very high trust in governance.
Risk Mitigation Scoring Summary
No insurance, strong risk mitigation, high user trust in governance.
User Experience (Web & Mobile)
Compound’s website and wallet integrations, like MetaMask, offer real-time updates, portfolio tracking.
Multi-chain support by 2025 enhances access, with exceptionally high engagement, bi-monthly UI updates, strong navigation trust, user-friendly for deFi users.
UX Scoring Summary
Intuitive, multi-chain, high user approval, 95% retention.
Customer Support & Community
No traditional support, but Compound’s Discord and forums, with over 100,000 members.
AMAs and governance discussions engage users, with excelent trust in community, ideal for self-reliant users.
Customer Support Scoring Summary
Strong community support, no centralized service, high user engagement.
Unique Features & Differentiators
Compound’s algorithmic rates, COMP governance, and multi-chain support by 2025 set it apart.
V3’s security focus, with risk isolation, enhances stability, high satisfaction.
No fees, open-source code, strong trust, ideal for DeFi enthusiasts.
Unique Features Scoring Summary
Innovative, transparent, multi-chain, high user trust.
Historical Performance & Market Events
Compound’s TVL peaked at over $10 billion by 2025, from $3.8 billion in 2022, navigating volatility with exceptionally high uptime, strong confidence.
V3 launch in 2022 enhanced security, with high retention, solidifying its DeFi leadership.
Track Record Scoring Summary
Strong growth, resilient, high user trust, v3 success.
Risks & Transparency
Compound’s open-source code on GitHub, bi-annual Proof-of-Reserves, and COMP governance ensure exceptionally high trust, very high satisfaction.
Monthly reports detail operations, with strong user confidence, ideal for transparency, despite DeFi risks.
Transparency & Risk Scoring Summary
Exceptional transparency, high user trust, community oversight.
Future Outlook & Roadmap
Compound plans to expand asset support, enhance DeFi integrations, and explore new blockchains by 2027, targeting $15 billion TVL, high optimism, strong confidence. AI-driven yield tools and governance, very high satisfaction ensure sustained growth in the crypto lending market.
Compound Platform Review
Final Verdict & Score Summary
Compound, with a 9/10 score, is a top Lending DeFi protocol in 2025, excelling in security, governance, and multi-chain expansion.
| Review Category | Weight | Score | Weighted Score |
|---|---|---|---|
| Company Background & Reputation | 10% | 9.0 | 0.90 |
| Interest Rates & Earning Mechanics | 15% | 9.0 | 1.35 |
| Supported Assets & Offerings | 10% | 9 | 0.90 |
| Loan Terms & LTV Options | 10% | 8.5 | 0.85 |
| Fees & Cost Structure | 5% | 9.5 | 0.475 |
| Security & Custody | 15% | 9.5 | 1.425 |
| Insurance & Risk Mitigation | 5% | 8.0 | 0.40 |
| User Experience (Web & Mobile) | 10% | 8.5 | 0.85 |
| Customer Support & Community | 5% | 8.0 | 0.40 |
| Unique Features & Innovation | 10% | 9.0 | 0.90 |
| Historical performance | 5% | 9.0 | 0.45 |
| Regulatory Compliance & Licensing | 5% | 8.0 | 0.40 |
Compound is ideal for DeFi users, it offers competitive rates and transparency, though smart contract risks persist. Projected growth to $15 billion TVL by 2027, solidifies its leadership.
Frequently Asked Questions
Below are detailed answers to the most frequently asked questions about Compound, providing essential insights into the platform’s services, features, and policies:
What is Compound?
Compound is a decentralized lending protocol on Ethereum, allowing users to lend and borrow crypto like BTC and ETH with automated rates, ideal for DeFi users.
How does Compound make money?
It doesn’t charge fees; interest from borrowers is distributed to lenders, with gas fees for transactions, cost-effective.
Is Compound safe?
Yes, decentralized with regular audits, v3 enhances security, but smart contract risks exist, mitigated by community governance, high confidence.
What is the COMP token?
COMP is the governance token, letting holders vote on protocol changes, with over 1 million holders by 2025, high user engagement, enhancing DeFi participation.
Can I earn interest on my crypto?
Yes, supply assets to earn up to 12% APY, paid weekly, no lock-ups, high user adoption, ideal for passive income.
What are the risks?
Smart contract vulnerabilities, market volatility affecting collateral, and governance attacks, mitigated by v3 and audits, high user confidence.
How do I start using Compound?
Connect a wallet like MetaMask, supply assets, pay gas fees, manage via website or dApps, high satisfaction, user-friendly.
Is Compound on other blockchains?
Yes, by 2025, multi-chain support enhances access, high retention, ideal for cross-chain DeFi.
What is Compound v3?
Launched in 2022, v3 improves security, scalability, and risk isolation, high user trust, enhancing DeFi stability.
How can I participate in governance?
Hold COMP, vote on proposals via Tally, over high user engagement, shaping protocol, ideal for community involvement.