Compound Finance is a decentralized financial protocol that enables users to lend and borrow cryptocurrency assets. It was launched in October 2018, by Robert Leshner, a former Wall Street executive. The protocol uses smart contracts to facilitate the lending of digital assets such as Ethereum (ETH), Basic Attention Token (BAT) and USDC stablecoin.
The Compound platform allows lenders to earn interest on their crypto holdings without having to manually manage loans or borrowers themselves. This type of automated lending system brings both convenience and risk mitigation for lenders, as it helps them quickly diversify their portfolio with different types of collateralized loans while avoiding default risks associated with manual loan management processes.
For borrowers who take out loans using Compound’s protocols they must first deposit an asset into the platform, which acts as collateral against potential losses due to market volatility while providing access to capital when needed at lower cost compared traditional loan providers like banks or other online credit services . Borrowers also benefit from not needing credit checks before accessing funds through this type of peer-to-peer lending process enabled by blockchain technology infrastructure running underneath the entire system itself ().
Upon depositing an asset onto the Compound network , users are able validate changes in value over time via real – time transparent data displayed within its user interface . This feature provides insight not only into how much money one can expect back after repaying debt obligations but also any applicable fees tied interacting with its various products depending on what service being utilized .
Overall , Compounds offers simplicity for holders looking for passive income options backed up secure infrastructure powered blockchain systems designed protect against malicious hacking attempts . As more people become aware these types services available open source projects range use cases could continue expand even further increase overall adoption rates across industry space long run potentially revolutionize way we think about banking finance world today !
