While banks and traditional capital markets allow governments, businesses, and individuals to borrow and lend fiat money, Compound connects those who want to lend their crypto assets with potential borrowers via its smart contracts.Ĭompound’s native token, COMP, is used to govern the platform and as a medium of rewards for using its lending and borrowing services. With its introduction in 2018, Compound Finance was one such lending and borrowing protocol. Likewise, lending and borrowing are essential functions of decentralized finance (DeFi) meant to perform a similar function but without the reliance on centralized third-parties.
From mortgages to personal loans and leveraged trading of assets, lending is an important function of the traditional financial system.
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