In June 2020, Compound Finance began distributing COMP tokens to protocol users — effectively paying people to borrow and lend. This 'liquidity mining' mechanism started the DeFi Summer phenomenon and proved that governance token distribution could bootstrap protocol growth. Today Compound v3 focuses on isolated, curated lending markets with simplified risk management.
Compound v3: The Architecture Changes
Compound v3: The Architecture Changes
Compound v3 (Comet) represents a fundamental redesign from v2. Instead of one multi-asset pool where any supplied asset becomes available collateral, v3 creates isolated markets for each base borrowable asset (USDC, ETH). This isolation means a problem in one market cannot cascade into others.
You can supply collateral (ETH, WBTC, LINK) but those supplied assets earn yield only when used as collateral for borrowing — not independently. The design prioritizes safety over maximum capital efficiency.
COMP Token: Governance and Distribution
COMP Token: Governance and Distribution
- ✓COMP total supply: 10,000,000 tokens
- ✓Distribution: to users via protocol interaction (lending/borrowing)
- ✓Governance: COMP holders propose and vote on all protocol changes
- ✓On-chain governance: votes executed automatically by smart contracts
- ✓Current APR boost: COMP distributions supplement base interest rates
- ✓Proposal examples: adding new collateral assets, adjusting collateral factors
Compound FAQs
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