Hello and welcome to my homework post of week 4 for Professor @gbenga. I have learned a lot form the lecture and now it is time for me to submit my homework. I would like to discuss about Compound, part of DeFi movement and built on Ethereum Blockchain.

What is Compound and How it works.

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Compound is a decentralized protocol built on top of Ethereum Blockchain. It is part of the financial movement in the world of blockchain and part of Decentralized Finance. Its primary purpose is to allow lenders to lend and borrowers to borrow cryptocurrency by locking their assets into this protocol.

Compound was founded by Robert Leshner, former economist and current CEO of Compound Protocol. He came with the idea to facilitate users like financial institutions or banks do, but being decentralized in nature, compound has no central controlling authority. Users are allowed to earn money on the crypto assets they save in this protocol. This protocol allows users to borrow assets against collateral put above a threshold defined by the project.
When a user deposits its assets in banks, he can earn interest on it but cannot use this asset anywhere else as it is deposited in bank. On the other hand, Compound allows users to earn interest on the savings and also use them for other purposes like lending or trading.

Compound is an open source interface and it uses openly accessible smart contracts built on Ethereum blockchain. COMP is its governance token and it is ERC-20 token. It is used for governing the compound protocol. In compound smart contracts are utilized to lock up collateral. The interest rate to be paid and received by the borrowers and lenders is determined on the basis of supply and demand of crypto asset.

Ctoken is the native token of Compound protocol that facilitates users to earn interest on their money. Users can also transfer, trade and use in other supported decentralized applications. Compound tokens or cTokens are ERC-20 tokens represent funds that a user has deposited in Compound protocol. By depositing Eth or other ERC-20 token with compound, user is provided with cTokens of equal value of their assets. For example, a user deposits USDC token and protocol generates cUSDC tokens. User will be given interest of cUSDC. These tokens can be redeemed at any time and the user will be given back USDC plus interest in USDC.

Anyone can borrow assets from Compound against collateral put above a threshold, but it has a condition that the value of collateral should remain above a minimum amount relative to loan amount. It is a kind of risk and if the value of collateral drops, your collateral gets liquidated.

Coclusion.

Compound is a good part of DeFi movement and its goal is to help people to get more access and control over their assets. In future, it can be a very helpful platform for the users to save and earn money on their savings.

Special mentions
@steemcurator01
@steemcurator02
@gbenga