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What is COMP?

COMP is an ERC-20 token with a single function: control of the Compound protocol. Compound runs algorithmic money markets where suppliers earn interest and borrowers post collateral, and every knob in that system, including which assets are listed, collateral factors and rate curves, is set by on-chain votes of COMP holders and their delegates.

Compound Labs, Inc. created the protocol and handed its administrator rights to token holders in 2020, so no company can change the contracts unilaterally. The current generation, Compound III, runs each market around a single borrowable base asset, with governance anchored on Ethereum even for deployments on other networks.

How COMP works

Voting power must be delegated to count, either to the holder's own address or to someone else. An address delegated at least 25,000 COMP can create a proposal, and anyone can lock 100 COMP to float an autonomous proposal that graduates once it attracts that threshold. Proposals sit through a two-day review period, are voted on for three days, and pass with a majority that reaches the 400,000-vote quorum.

A successful proposal is queued in a timelock and executes two days later, so any change takes about a week from submission to effect. That delay is the protocol's main safety valve: it gives users and delegates time to react before something harmful goes live.

COMP supply and tokenomics

Supply is capped at 10 million COMP. At the 2020 decentralization, 4,229,949 tokens were reserved for users of the protocol, 2,396,307 had gone to shareholders of Compound Labs, 2,226,037 to founders and team under four-year vesting, 372,707 to future team members and 775,000 to community programs, of which 500,000 were offered through Coinbase Earn and 275,000 moved to the community-controlled Reservoir contract.

The user allocation streamed COMP every block to suppliers and borrowers in proportion to market activity, starting 15 June 2020. Just over half of the total supply, 5,004,949 COMP, was earmarked for the community across these programs. There is no burn mechanism; scarcity comes only from the fixed cap.

How COMP is governed

Compound governance has been stress-tested in public. In July 2024, proposal 289 passed with 51.84% of votes in favor, directing 499,000 COMP from the treasury into a vault called goldCOMP run by a group known as the Golden Boys, after two earlier versions of the idea had been voted down. Security researchers described the weekend timing and concentrated delegation behind it as a governance attack.

The proposal was cancelled days later in a negotiated settlement: the whale behind it agreed to rescind it in exchange for work on a staking product that would direct 30% of market reserves to COMP stakers. The episode pushed the DAO toward tighter review of treasury-moving proposals.

What people use COMP for

COMP is a working tool for anyone with a stake in how the protocol runs, from risk managers to integrators, and delegation lets smaller holders pool their influence behind active delegates.

• Delegate votes to an active Compound delegate or to yourself.
• Create a proposal with 25,000 delegated COMP behind it.
• Back an autonomous proposal by locking 100 COMP.
• Use COMP as collateral in lending markets that list it.

COMP risks and considerations

The goldCOMP episode showed that a determined bloc can pass a treasury-moving proposal when turnout is thin, and that the community's defenses rest on the timelock, social coordination and delegate vigilance. Voting power remains concentrated among a small set of large delegates and exchange-linked wallets.

COMP votes on Ethereum govern deployments on other networks through bridges, which adds execution layers that can fail independently. Wrapped and exchange-issued versions of COMP circulating elsewhere are separate assets; the token described here lives at 0xc00e94cb662c3520282e6f5717214004a7f26888 on Ethereum.