Compound
score
Fees: Borrow APR + reserve factor; no platform fee to supply
Compound suits users who value a simple, conservative money market with a strong history. Its footprint has shrunk relative to Aave, and it carries the usual smart-contract and governance risks. This is not financial advice.
What Compound Is
Compound is a decentralized, algorithmic money market that pioneered pooled lending in DeFi, letting users supply assets to earn interest and borrow against collateral through smart contracts. Founded in 2018, it helped define the money-market model that much of DeFi later copied. Its newer version, Compound III (Comet), reorganizes markets around a single borrowable base asset, which streamlines how risk is expressed compared with the original multi-asset pools. The protocol is governed on-chain by COMP holders.
How It Performs on the Core Criteria
Compound scores 8.2, with its strengths in the safety and integrity columns. Security and audits (8.5), collateral and risk management (8.5), and transparency and track record (8.5) all reflect a heavily audited codebase, a long and largely clean core history, and open on-chain governance. Liquidity is solid at 8, though it no longer matches the largest venues. Rates are the weakest dimension at 7, a consequence of the conservative, single-base-asset design and a market footprint that has narrowed relative to newer competitors.
Costs and Fees
Like most pure money markets, Compound charges no platform fee to supply — you earn the supply APR directly. Borrowers pay a borrow APR determined by utilization, with a reserve factor skimming part of the interest into protocol reserves. The Comet design's single-borrow-asset structure keeps the cost picture simple: you generally borrow one base asset against a set of approved collaterals. Network gas applies on top and varies by chain.
The Main Caveat
The chief consideration is that Compound's liquidity and market breadth have fallen behind Aave, so some assets and cross-market flexibility available elsewhere are thinner here. Historically, a 2021 governance bug erroneously distributed excess COMP rewards — a reminder that even a mature protocol carries smart-contract and governance risk, though the core lending record remains strong. Fewer supported assets per market can also limit strategies for users who want breadth.
Who It's For
Compound suits users who value a simple, conservative money market with a long and reputable history over maximum choice or the highest yields. It is a comfortable fit for those who prefer the streamlined Comet model and are content borrowing a single base asset against blue-chip collateral. If you want the widest asset menu or deepest liquidity, a larger competitor may serve you better. This is not financial advice.
Overall 8.2 / 10 — the weighted average of the criteria above. How we score →
- + Pioneer of the algorithmic money-market model with a long, clean core track record
- + Compound III (Comet) uses a single-borrow-asset design that simplifies risk
- + Heavily audited and governed transparently on-chain
- + Widely integrated across DeFi tooling
- − Liquidity and market breadth have fallen behind Aave
- − A 2021 governance bug erroneously distributed excess COMP rewards
- − Fewer supported assets per market than some competitors
Is Compound safe?
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Compound has a strong safety profile, scoring 8.5 for security and audits in our review, with a heavily audited codebase and a long, largely clean core track record. It is not flawless: a 2021 governance bug wrongly distributed excess COMP rewards. As with any DeFi lending protocol, smart-contract, governance, and liquidation risks remain.
What is Compound III (Comet)?
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Compound III, known as Comet, is the protocol's newer architecture that centers each market on a single borrowable base asset rather than the original multi-asset pools. This simplifies how collateral and borrowing risk are structured. It is a key reason we consider Compound's risk design conservative and easy to reason about.
What are Compound's fees?
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There is no fee to supply — you earn the supply APR. Borrowers pay a utilization-based borrow APR, and a reserve factor routes part of the interest to protocol reserves, plus network gas. We score rates 7, a bit below leading peers, reflecting the conservative design and a smaller market footprint.
Compound vs Aave — which is better?
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Both are top-tier, heavily audited money markets, but our scores put Aave ahead at 8.9 versus Compound's 8.2, largely on liquidity and asset breadth, where Compound has fallen behind. Compound counters with a simpler, conservative design and a strong history. The better fit depends on whether you prioritize breadth or simplicity; this is not financial advice.
Is Compound still widely used?
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Yes. Compound remains widely integrated across DeFi tooling and retains solid liquidity, which we score at 8. However, its overall footprint has shrunk relative to Aave, so it is no longer the largest venue by market breadth even though it stays a well-established and reputable option.