Recently, I’ve seen quite a few discussions about Compound, so I decided to organize my understanding and share a relatively comprehensive perspective with everyone.

First, let’s talk about what Compound is. It is essentially a decentralized lending platform built on Ethereum, which was established back in 2017. Simply put, it’s a lending market without traditional banks as intermediaries — you deposit crypto assets to earn interest, and borrowers borrow assets and pay interest to you. It sounds a bit like a traditional bank, but the fundamental differences are significant. Traditional banks operate centrally, while Compound relies on smart contracts for automatic execution, offering higher transparency and giving users control over their assets.

Regarding the COMP token, this is an incentive mechanism that Compound innovatively launched in 2020 — “lending as mining.” As long as you borrow or lend assets on the platform, you can earn COMP rewards. COMP is an ERC-20 token with a total supply of 10 million. Currently, the circulating supply has reached 9.67M, with a circulation rate of 96.68%, which means there’s already considerable selling pressure.

Looking at the team and investors, Compound’s background is quite solid. Founders Robert Leshner and Geoffrey Hayes both come from the University of Pennsylvania. Backers include top institutions like a16z and Coinbase, with three rounds of funding totaling over $70 million. Partners also include major players in high-frequency trading, market making, and exchanges.

As for market performance, honestly, it’s a bit complicated. Compound ranks second among DeFi applications, with a TVL (Total Value Locked) of around $1.14 billion. But the price trend is rather painful — COMP hit a historical high of $854.45 in May 2021 and has been falling ever since. The current price is around $19.10, a drop of over 97%. Over the past year, it’s declined by 54.66%. However, from another perspective, this price level might already be close to the bottom, considering it was around $58 when it first launched in early 2020.

Why is it still worth paying attention to? First, the DeFi sector itself is long-term promising, and Compound has expanded to multiple chains like Arbitrum and Polygon. Second, major investment funds continue to focus on this project, and such institutions usually have a long-term outlook. Third, compared to its all-time high, the current price has fallen sharply, which could create medium- to long-term investment opportunities.

If you want to invest in COMP, the process is actually quite simple. Log into a trading platform, search for “Compound,” choose to buy or sell, set parameters and stop-loss/take-profit orders, and you’re good to go. However, I still want to remind everyone — the crypto market is highly volatile, so risk management is key. The current market environment for COMP does present challenges, but for investors optimistic about the long-term prospects of DeFi, this price level might be a good entry point.