The history of Compound from protocol launch to 2026 resilience

Foundations and early growth

Robert Leshner and Geoffrey Hayes founded Compound Labs in San Francisco. Both entrepreneurs previously held executive roles at Postmate. They raised $8.2 million in May 2018 from Andreessen Horowitz and Bain Capital Ventures. The protocol launched on the Ethereum mainnet in September 2018. In November 2019, they raised an additional $25 million from the same investors and Paradigm Capital. In the same year, the protocol received $1 million in USD Coin from Coinbase’s USDC Bootstrap Fund. The June 2020 launch of the COMP token popularized yield farming. Total value locked grew from 150 million to 1,600 million dollars in the three years following the launch. This value peaked at 20,000 million dollars in 2021. In 2021, Bitwise also announced the launch of a Compound fund for accredited investors. The protocol uses smart contracts to connect lenders and borrowers. Lenders deposit assets into liquidity pools and receive cTokens like cETH, cDAI, or cBAT. These tokens show the user’s interest and grow in value as interest accrues. Interest rates change based on the availability and demand of the asset. The protocol handles various assets including Tether, USD Coin, and Wrapped BTC. The total supply of COMP is 10,000,000 tokens. Approximately 4.2 million tokens go to protocol users over a 4-year period. Another 2.2 million tokens go to the founding and current team with a 4-year vesting schedule. The remaining 2.4 million tokens go to shareholders of Compound Labs, Inc. The protocol rewards lenders with COMP tokens based on the amount of cTokens held in their wallet.

Governance and structural evolution

The protocol transitioned to decentralized governance in 2020. Robert Leshner resigned as CEO in 2023 to lead Superstate. In July 2024, the DAO approved a proposal to allocate 499,000 COMP tokens, worth approximately 24 million dollars, to the goldCOMP vault. The community denounced the July 2024 decision to allocate 499,000 COMP tokens, worth approximately 24 million dollars, to the goldCOMP vault as a governance attack because the vote driver, Humpy, had similar precedents in other protocols like Balancer. In December 2025, the DAO voted 99.99% to deprecate Compound V2. You already know that governance requires token holders to delegate voting rights to an address. To create a proposal, a user needs at least 1% of the total COMP supply, or 100,000 COMP, delegated to their address. Voting periods last 3 days, and all administrative actions sit in a Timelock for at least 2 days. COMP holders can also delegate their voting power to outside sources, such as a financial expert, to vote on sensitive issues.

Resilience in the V3 era

Compound V3, or Comet, launched in 2022 to provide a more structured lending environment. Each market in V3 operates around only one asset, and users earn yields only on the main base asset. In V3, users cannot earn yields on all collaterals. All undercollateralized debts are liquidated completely because there is no dynamic close factor. When a position is liquidated, the protocol penalizes 5% of the collateral as a penalty. In the USDC-WETH market, many observations show the Loan to Value ratio is around 0.9. On April 18, 2026, the protocol faced bad debt after the KelpDAO exploit. An attacker used 294 million dollars in stolen rsETH as collateral in V3 to borrow WETH. This forced the protocol to pause the affected markets. The total value locked is 4 billion dollars. Interest rates in V3 are determined by the liquidity available in each market. I find the protocol’s resilience after such an exploit impressive. Will the protocol maintain this liquidity during the next major market crash?