Compound Crypto: What It Is, How It Works, and What You Need to Know

When you hear Compound, a decentralized finance protocol that lets users lend and borrow crypto without banks. Also known as cToken system, it powers one of the oldest and most trusted lending platforms in DeFi. Unlike traditional banks, Compound doesn’t need your ID, credit score, or paperwork. You just connect your wallet, deposit crypto like ETH or USDC, and start earning interest—automatically. The protocol matches lenders with borrowers in real time, using smart contracts instead of loan officers. This isn’t theory—it’s been running since 2018, handling billions in assets with zero downtime.

Compound works by turning your deposited crypto into cTokens. For example, if you deposit ETH, you get cETH. These aren’t just tokens—they represent your share of the pool and accrue interest every block. Borrowers pay interest, which flows back to lenders. The rate changes constantly based on supply and demand. If everyone wants to borrow USDC, rates go up. If too many people deposit, rates drop. It’s a live market, not a fixed rate. And because it’s open-source, anyone can build on top of it. That’s why you see projects like Aave, Yearn, and even wallets like MetaMask integrating Compound’s lending engine. The native token, COMP, gives users voting power over changes to the protocol. It’s not a coin you trade for quick gains—it’s a governance tool that lets the community steer the ship.

Compound isn’t just about earning interest. It’s the plumbing behind DeFi. Many airdrops, yield farms, and new tokens rely on Compound’s infrastructure. You’ll find it in the background of crypto strategies that use leverage, collateral swaps, or automated rebalancing. Even when markets crash, Compound keeps running. It’s not perfect—there have been exploits and rate glitches—but it’s survived longer than most DeFi projects because it’s simple, transparent, and community-run. If you’re curious about how crypto lending works in practice, Compound is where you start.

Below, you’ll find real reviews and breakdowns of projects that either use Compound’s tech or compete with it. From DEXs on Optimism to obscure tokens trying to mimic its model, these posts cut through the noise. You’ll see what works, what’s risky, and what’s just vaporware. No fluff. Just what you need to know before you deposit your crypto.