Compound Markets: a Primer

Compound is a decentralized lending protocol that allows users to supply and borrow (against collateral) particular currencies on Ethereum. Liquidity available on Compound is determined by the activity of lenders and borrowers on one hand, and Compound’s own spending and earnings on the other. The queries and plots below explore these two sides of the equation - breaking down borrowing, supply, and TVL by market first, and then exploring reward payouts and Compound’s reserves.

Data and Tools

Flipside has produced several tables designed to make analysis of Compound straightforward. All data used in this dashboard comes from those tables.

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All contracts referenced in this analysis can be found here: Compound Contracts

If we calculate the difference in reserves by day, we can see how much Compound is taking in across all active markets each day. This could be thought of as revenue for the org.

COMP Rewards

Each Compound market rewards both suppliers and borrowers with COMP in exchange for using the platform. We can measure this in two ways:

The total COMP emitted, but not necessarily yet claimed to suppliers and borrowers over time.
The total COMP actually transferred to the borrower or supplier upon claiming (or other event that triggers distribution of their reward). Notice that the amount actually paid by day is considerably more variable than the daily emissions.

Compound's Perspective: Reserves and COMP rewards

Let's look at the money that Compound itself accrues and emits as rewards over time.

Reserves

Compound takes a small cut of borrower and supplier interest and stores it as reserves to be used for operations or other governance-approved expenses.

Per Compound, "reserves are an accounting entry in each cToken contract that represents a portion of historical interest set aside as cash which can be withdrawn or transferred through the protocol's governance."

TVL on Compound is the amount supplied in each market minus the amount borrowed.

These plots show Supply and TVL by market and day.

When a user supplies collateral to a Compound market, they can use that liquidity to borrow another asset. This plot breaks down the percent of all borrows by market and day.