Compound rose to prominence as the default crypto lending platform, launched in 2018 by Robert Leshner and Geoffrey Hayes, enabling users to earn interest or borrow assets directly on Ethereum in a decentralized manner. It drew backing from top investors and helped popularize yield farming after launching its COMP governance token in 2020, turning passive users into active participants. By 2021, Compound was the core infrastructure for crypto lending, with billions of dollars sitting in its smart contracts and integration from protocols like Yearn Finance and Coinbase.
But October 2021 marked a turning point as liquidity began to thin quickly, with Compound’s TVL falling from a November 2021 peak of $12 billion to about $2.2 billion by November 2022, per DefiLlama. The problems began when a protocol update called Proposal 62 went live with a bug that overpaid rewards, leaking tens of millions of dollars’ worth of COMP to users. Because of governance structure, the team couldn’t immediately stop it, and the fix had to wait through a mandatory timelock while tokens continued to flow out and confidence waned. In an X post on Sept. 30, 2021, Leshner urged recipients to return excess COMP and offered a 10% reward for whitehat returns, a move that drew swift backlash, and he later walked it back.
The bear market and rising competition from Aave and Maker further eroded activity, while leadership shifted as Leshner stepped back and left Compound in 2023 to found Superstate. Today, Compound remains a notable DeFi lending protocol, but TVL sits just under $1.4 billion, ranking as the 7th largest by TVL. Monthly fees have dropped from a 2021 peak of nearly $47 million to about $3.5 million, while revenue has remained well below its 2021 highs.
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