COMPOUND
The original algorithmic money market, now built around single-borrow-asset Comet markets.
Compound pioneered algorithmic interest rates and cToken receipt tokens in 2018. Compound V3 (Comet) redesigned the protocol around isolated markets where each deployment has one borrowable base asset (USDC, USDT, ETH, or USDS) and accepts multiple collateral types that themselves cannot be borrowed. This contains risk per market at the cost of narrower borrow flexibility, and remains a preferred venue for conservative stablecoin lenders on Ethereum and major L2s.
- Parent-protocol TVL is around $1.5–2B in Q2 2026 per DeFiLlama, well below its 2021 peak of over $12B.
- Comet markets are live on Ethereum, Base, Arbitrum, Polygon, and Optimism, with USDC as the flagship base asset and newer USDS and USDT deployments.
- Uses per-market interest rate curves and per-collateral supply/borrow caps set by governance; risk parameters are managed under long-running partnerships with Gauntlet and Chaos Labs.
- COMP token is roughly 99% circulating, and Compound has an active grants and business development program targeting incremental TVL growth in 2026.
- Audited by OpenZeppelin, Trail of Bits, ChainSecurity and others; the V2 protocol was exploited for ~$147M in 2021 via a bug in a COMP distribution upgrade, prompting the V3 redesign.
Frequently asked questions
How is Compound V3 different from Compound V2?
V2 was a single multi-asset pool where you could supply any listed asset and borrow any other, with each supply position minting cTokens. V3 (Comet) makes each market a single-borrow-asset system: you supply a base asset (like USDC) to earn interest, or deposit collateral to borrow that same base asset. Collateral in V3 does not earn interest and cannot be borrowed, which eliminates cross-asset contagion and simplifies risk.
Does the COMP token still give rewards?
Yes. Each Comet market has its own COMP reward budget split between suppliers and borrowers, set by governance and revisited periodically. Reward rates vary by market and chain, so effective APY is base rate plus current incentive; check the market page before deploying capital as incentives can change with a governance vote.
Why is Compound smaller than Aave in 2026?
The gap has widened as Aave shipped V3 across many more chains, launched the GHO stablecoin, and picked up institutional flows via Horizon. Compound stayed more conservative on asset listings and chain expansion. The 2026 growth program is focused on adding Comet deployments to more chains and listing LSTs and LRTs to close the gap.