Compound is an Ethereum-based lending platform that allows users to borrow or lend from a pool of assets without needing authorization. Rather than being established by individuals, interest rates are calculated by an algorithm depending on the proportion of assets lent out.
Compound aims to address the issues by developing a pooled loan model that allows users to deposit into a pool from which borrowers can withdraw if they present appropriate collateral. This means that loans do not have a set maturity date, and users do not need to wait for a counterparty because they interact with the entire community.
Users can use the compound to earn interest on their investments, short assets they believe are overvalued, or obtain assets they need without buying them.