Lending protocol
Compound
compound.finance ↗COMP market data →
Also known as Compound Finance, Compound Protocol, Compound III, Comet, COMP, Compound Foundation, Compound Labs
compound finance
Compound is an on-chain lending protocol: you supply crypto to earn interest, or borrow against collateral, with rates set by code. Its current version, Compound III (Comet), runs separate markets that each lend one base asset such as USDC or WETH. COMP holders govern it, and since 2025 a Compound Foundation has run development and a $52M V4 programme.
Our read
Compound is one of DeFi's oldest lenders and still a straightforward place to lend USDC or ETH, with a single borrowable asset per market that keeps each market easy to follow. It suits lenders who want a plain market with public risk parameters. The thing to watch is the listing of new collateral. The late-2025 deUSD collapse left the protocol with $15.6M of bad collateral, and the settlement meant to recover most of it fell apart in April 2026. Check which collateral a market accepts before supplying to it.
Key facts
- Total value locked
- About $1.63 billion (Compound V3 about $1.51B, V2 about $112M)
- Sep 2026 · DefiLlama ↗
- deUSD exposure
- $15,568,062 of exposure across deUSD and sdeUSD positions after the Elixir collapse
- Feb 2026 · Compound Governance Forum ↗
- Elixir settlement
- Elixir did not pay the agreed $11.65M, claimed to rescind, and entered voluntary liquidation in the BVI
- Apr 2026 · Compound Governance Forum ↗
- V4 programme
- Foundation reports a $52M programme, a new CTO and a Foundation-hosted front end at compound.xyz
- Jul 2026 · Compound Governance Forum ↗
How the Compound protocol works
Compound has two live designs. Compound V2 is a shared pool: every supplied asset earns interest, can be borrowed, and can back loans of anything else, tracked by cTokens. Compound III, whose markets are called Comets, is narrower. Each market has one base asset that can be borrowed, such as USDC, USDT or WETH, and a list of collateral assets that can only secure loans. They are not lent out and earn no interest.
| Compound V2 | Compound III (Comet) | |
|---|---|---|
| What you can borrow | Any listed asset | Only the market's base asset |
| Does collateral earn interest? | Yes | No; it only secures loans |
| Contagion between assets | Shared pool | Contained per market |
| TVL, Sept 2026 | About $112M | About $1.51B |
Rates follow a curve set by utilisation, and each collateral asset has a collateral factor (how much you can borrow against it) and a liquidation factor. Gauntlet has recommended those parameters since 2021. In 2026 it proposed cutting unused supply-cap headroom across Compound's L2 deployments, and a September 2026 proposal would set collateral factors to zero on deprecated Comets on Linea, Ronin, Mantle, Scroll and Unichain (comp.xyz).
For a lender, one Comet is one decision. If you supply USDC to the Ethereum USDC Comet, what matters is the collateral that market accepts, because that is what stands behind your deposit if a borrower defaults. The Compound card scores it against other lenders.
Who runs the Compound protocol
Compound was built by Compound Labs, whose team, led at the time by Robert Leshner, handled the 2021 distribution bug (Rekt). Changes are made by on-chain votes of COMP holders and executed through a timelock. In practice a small set of service providers does the work: Gauntlet on risk, security service providers (put up for renewal for 2026–27), and WOOF! on development and integrations.
Since mid-2025 a Compound Foundation has run operations under an 18-month mandate. By its own February 2026 report it cut $4M of costs, added $2M of new revenue, posted Compound's first profitable month since 2020, and led the deUSD recovery talks (comp.xyz). Its June 2026 update describes a $52M V4 programme, a newly appointed CTO, an independent non-executive director, and a Foundation-hosted front end at compound.xyz (comp.xyz).
Governance has been attacked before. In July 2024 Proposal 289, backed by a large COMP holder known as Humpy and associated wallets, passed and would have moved treasury COMP into a goldCOMP vault the group controlled. Delegates warned the group held about 11% of supply, enough to capture the DAO, and pushed Proposal 290 to hand timelock admin to the community multisig (comp.xyz). The same holder appeared again in 2026, when Elixir cited a message from Humpy as a reason to stall its deUSD settlement payment.
Compound news: deUSD losses, rsETH and V4
| Date | Event |
|---|---|
| Sep 2021 | Proposal 62 bug hands out excess COMP: about $80M at first, with up to $147M at risk before a fix passed |
| Jul 2024 | Proposal 289 governance capture attempt |
| Jun–Oct 2025 | deUSD and sdeUSD listed as collateral on Ethereum USDC, USDS and USDT Comets at 88% collateral factor |
| Nov 2025 | Elixir winds down deUSD; Gauntlet sets its collateral factors to 0; $15.6M of exposure remains |
| 11 Feb 2026 | Foundation agrees an $11.65M settlement with Elixir (78% recovery with Gauntlet's $690K) |
| 16 Apr 2026 | Elixir misses payment, claims to rescind and enters liquidation in the British Virgin Islands |
| 18 Apr 2026 | Kelp rsETH exploit: rsETH markets paused; 17,426 rsETH later recovered from Compound by liquidation |
| Jun–Jul 2026 | Foundation reports V4 programme on track; compound.xyz front end live |
The deUSD episode is the one lenders should study. The asset was accepted as a dollar-like stablecoin and given a high collateral factor. After the Stream Finance collapse in November 2025, confidence in deUSD broke, liquidity dried up and the collateral lost most of its value before positions could be unwound. The Foundation says it is pursuing legal remedies against Elixir, with no timeline (comp.xyz). COMP data is on our market page.
Incident log
4 entries · $95.6M lost in total · repaid, confirmed: 0 of 3 where user funds were at stake
Exploit
Kelp rsETH exploit reaches Compound markets
The attacker who minted unbacked rsETH through Kelp's bridge also posted it as collateral on Compound. Security partners paused markets with rsETH exposure and Proposals 568–571 adjusted parameters so they could reopen.
Repayment unknownLiquidation on 6 May 2026 recovered 17,426 rsETH from Compound (per Aave's governance post). We found no Compound figure for any remaining shortfall.Depeg$15.6M
deUSD and sdeUSD collateral collapse after Elixir wind-down
deUSD and sdeUSD, listed as collateral at an 88% collateral factor on three Ethereum Comets, lost most of their value when confidence broke after the Stream Finance collapse and Elixir wound the tokens down. Compound was left with $15.57M of exposure.
Partly repaidGauntlet contributed $690K from its Compound insurance fund. Elixir agreed to pay $11.65M but defaulted and entered BVI liquidation on 16 April 2026; the Foundation says it is pursuing legal remedies.Compound Governance Forum ↗Compound Governance Forum ↗Compound Governance Forum ↗
Other
Proposal 289 governance capture attempt
Delegates tied to the holder known as Humpy passed Proposal 289, which would move treasury COMP into a goldCOMP vault they controlled. Community members warned it showed an 11%-of-supply bloc could capture the DAO and proposed moving timelock admin to the community multisig.
No funds at stakeA governance dispute over treasury funds; no user deposits were at stake.Other$80.0M
Proposal 62 bug distributes excess COMP
An upgrade to the Comptroller contained a bug that let users claim far more COMP than they had earned. About $80M went out at first; because anyone could refill the vulnerable contract from the Reservoir, another ~$68.8M became claimable before Proposal 64's fix passed, taking the potential total to about $147M.
Repayment unknownThe loss was of protocol-owned COMP, not user deposits. We found no confirmed total of any excess COMP returned.
In our ratings
This page is the record. The scores sit on the review cards, next to the evidence and the weights they came from.
Compare Compound with
AaveLending protocol · 2017Aave is the largest on-chain lending protocol, with about $19 billion locked. V4, live since March 2026, splits lending into hubs and spokes.
MorphoLending protocol · FranceMorpho is a lending network of isolated markets and curator-run vaults, with over $14 billion deposited. Coinbase and Robinhood build products on it.
SkyLending protocol · 2014Sky, formerly MakerDAO, is the DeFi protocol behind the DAI and USDS stablecoins (≈$11.5bn together). It renamed in 2024 and swapped MKR for SKY at 1:24,000.
FraxLiquid staking · 2019Frax is the DeFi group behind the frxETH/sfrxETH staking pair, the frxUSD stablecoin and the Fraxtal chain. In April 2025 its FXS token was renamed FRAX.
Frequently asked questions
What is Compound's official website?+
compound.finance has long been the protocol's site, and in 2026 the Compound Foundation launched its own front end at compound.xyz. Both reach the same on-chain markets. Never enter a recovery phrase on either.
Is Compound the same as compound interest?+
No. Compound is a lending protocol named after the idea. Interest on it accrues continuously, so supplied balances grow over time.
What is the COMP token used for?+
Voting on Compound governance: listing collateral, setting parameters and spending the treasury. Its market data is on our COMP market page.
Is Compound still maintained?+
Yes. The Compound Foundation, a Gauntlet risk mandate and renewed security providers are active in 2026, and a V4 is being specified. Some older L2 deployments are being wound down.
Did Compound lenders lose money on deUSD?+
The protocol was left with $15.6M of bad deUSD exposure in late 2025. Gauntlet's insurance fund covered $690K, and the Elixir settlement meant to cover most of the rest fell through in April 2026.
What changed
- Profile published.
Compiled by
Blockchain Security Researcher · September 27, 2026
We have no commercial relationship with Compound and earn nothing from any link on this page. Every fact above carries the date it was true and a link to where it comes from; if one is out of date, the contact page reaches the editor who keeps this file.