Compound

Compound is an interest rate protocol on Ethereum that lets users supply crypto assets to pooled markets to earn interest and borrow against posted collateral, with rates set algorithmically by supply and demand. It was built by Compound Labs, Inc., a San Francisco company founded in 2017 by Robert Leshner, a CFA charterholder who served as chief executive, and Geoffrey Hayes. The protocol's front end now runs at compound.xyz, which reports cumulative deposits and loans of about $480 billion and all-time loans of $57 billion.

Compound Labs first sold rights to future tokens through a simple agreement for future tokens, reporting $502,282 sold to 12 investors in a Form D filed in May 2018 with a first sale date of October 2, 2017. On May 16, 2018 it announced an $8.2 million seed round led by Bain Capital Ventures, Andreessen Horowitz and Polychain Capital, with participation from Transmedia Capital, Compound Ventures, Abstract Ventures, Danhua Capital and Coinbase. A further Form D filed in September 2019 reports a $33.6 million equity offering, with about $33.1 million sold to 26 investors starting August 30, 2019. The company later said it funded the protocol through traditional equity fundraising rather than token sales.

In February 2020 Compound Labs introduced the COMP governance token and a system to replace the protocol's administrator with community governance, with an initial portion of COMP distributed to the company's shareholders. On June 16, 2020 it began distributing COMP continuously to protocol users, declared its core protocol work finished, relicensed the code under the BSD-3 open source license, and committed not to vote, delegate COMP or coordinate governance proposals. The company said it did not profit directly from the protocol and would turn to new products. It later announced Compound Treasury, a product for businesses and institutions, and a third version of the protocol, Compound III.

Compound is an example of a venture-backed company whose main product was deliberately handed to a token-holder community rather than sold or listed. Equity investors such as Andreessen Horowitz, Bain Capital Ventures and Polychain Capital entered at the 2018 seed and received COMP through the shareholder distribution, so their exposure runs through governance tokens as well as Compound Labs equity. No acquisition or public listing of Compound Labs has been disclosed in the sources reviewed.