Compound (COMP) is a DeFi (Decentralized Finance) protocol, and like most DeFi protocols, it can be described as a system of publically available smart contracts built on the Ethereum network. Compound focuses explicitly on allowing borrowers to take out loans and lenders to provide these loans. Borrowers provide collateral to give the lender with certainty that the investment will be returned. As is standard with loans, the borrower pays interest to the lender. This interest is based on the supply and demand of the specific cryptocurrency. The interest is adjusted with every new block.