Decentralised Finance (DeFi) is the most promising killer app on Ethereum right now. DeFi services give users access to various financial services that customers were previously only familiar with from banks and other traditional financial institutions. However, DeFi platforms use smart contracts to offer accessible decentralised alternatives. This is why these services are often referred to as Open Finance. The best known DeFi use cases are stable coins, lending protocols, decentralised exchanges and payment networks. Compound Finance is a lending protocol running on Ethereum. It managed to raise $25 million Series A round in November 2019 from venture capital firm Andreessen Horowitz.

The majority of cryptocurrencies sit idle on exchanges and in wallets, without yielding interest., Robert Leshner, Founder of Compound

Compound is, in short, a pooled algorithmic money market protocol running on Ethereum. The founder Robert Leshner started developing the protocol in 2017. Compound is entirely open; hence the lending process involves neither paperwork 📝 nor intermediaries. Anyone in the world with an Ethereum-enabled wallet can participate in the market. The protocol uses interest rates set by the demand for borrowing and lending activities. The main design goals of Compound are:

• providing liquidity,
• avoiding credit risk and
• frequent adjustment of interest rates

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