Compound

Compound's protocol functions as a decentralized lending system that gives users the opportunity to provide liquidity to large lending pools, and, in turn, receive rewards in the form of tokens.

Every cToken can be transferred without restrictions. However, it is only redeemable for the cryptocurrency, which was initially locked within the protocol. This is done automatically through the code on top of which Compound is built.

To make all of this a possibility, Compound utilizes audited smart contracts for each of the tasks required to occur on the protocol, which allows it to work autonomously. This means the network’s contracts take care of all vital functions within the network, including the process of storage and management, and they are responsible for facilitating all of the pooled capital.

The native cryptocurrency token used to incentivize the network of lenders and borrowers and to power the overall Compound protocol is the COMP token. Every time a user interacts with the Compound market, which can be in the form of borrowing, repaying, or making a withdrawal for a specific cryptocurrency, they can are rewarded with additional tokens.

If a user owns any of the cryptocurrencies mentioned above, they can send, lock, deposit, or lend at any time through utilizing them. The interest earned is denominated in the same token that was lent out, and this means that if a user sentsends out COMP, they generate interest in COMP; if they sentsend out DAI, they generate interest in DAI as a result, and this is repeated throughout any asset they up sending.

A borrower can be anyone who posts collateral on Compound through their cryptocurrencies. The main thing that's is unique to Compound here is that any borrower can borrow cryptocurrencies that Compound supports at a percentage based on their posted value.

Once a user locks crypto into Compound, they are able to borrow against it. Compound does not require a credit check, which means anyone across the globe can borrow cryptocurrencies. Compound determines how much a user is allowed to borrow, directly based on the quality of the asset.

There is also a Bug Bounty Program, in which Compound offers rewards for discoveries that prevent loss of assets, freezing of assets, or harm that might come to users.