A compound refers to a decentralized finance (DeFi) protocol that allows users to lend and borrow cryptocurrencies. It operates on the Ethereum blockchain and facilitates transactions without the need for intermediaries like banks.Users can supply their crypto assets to the protocol, earning interest over time. The interest rates are determined algorithmically based on supply and demand. Borrowers can take loans by collateralizing their crypto assets, which helps reduce risk for lenders.One of the key features of Compound is its use of smart contracts. These automated contracts execute transactions when specific conditions are met, ensuring transparency and security. The platform also uses its native token, COMP, which is distributed to users who lend or borrow, incentivizing participation.Overall, Compound enhances the financial options available to users, allowing for more control over their assets while potentially earning returns on their holdings.