Review on Compound by Hakan Altan
Efficient DeFi Project (Compound)
Compound is software that runs on Ethereum, aimed at promoting a distributed network of computers to operate a traditional money market.
Compound, one of the emerging and decentralized finance (DeFi) protocols, uses multiple crypto assets to provide this service, making it possible to lend and borrow as needed without a financial intermediary such as a bank.
Simply put, Compound allows users to deposit cryptocurrencies into credit pools for borrowers' access. Lenders then earn interest on the assets they deposit.
After a deposit is made, Compound gives the lender a new cryptocurrency called cToken (representing the deposit). Examples of ctoken include cETH, cBAT, and cDAI.
Each cToken can be transferred or exchanged without restrictions. But it can only be used for the cryptocurrency that initially locked onto the protocol. This entire process is automated and managed by Compound code, meaning lenders can withdraw deposits at any time.
To promote this event, Compound uses another cryptocurrency specific to its service called COMP. Every time a user interacts with a Compound market (by borrowing, withdrawing or repaying the asset), they are rewarded with additional COMP tokens.
Pros
- Reliable
- Easy access
Cons
- Not yet
