Compound V2 Review 2026: Established Ethereum Lending

Compound V2 is a long-running decentralized lending protocol on Ethereum. DefiLlama describes it as an algorithmic, autonomous interest rate protocol built for developers. Users supply assets to earn yield or borrow against collateral without a traditional intermediary.

DefiLlama lists about $101 million in TVL, a token called COMP, two audits and a 7-day TVL change of roughly 1.2%. The official site markets Compound as a global market for capital, claims 6+ years of operation and highlights a newer Compound Institutional Market. This page covers V2 specifically, which the site's footer lists as Compound II.

The homepage shows large lifetime figures, including $480B in total deposits and loans and $57B in all-time loans, but those headline numbers are not broken down by version.

Compound is a pooled lending market. Suppliers deposit assets into a shared pool and earn yield. Borrowers draw from that pool after posting collateral worth more than their loan. Interest rates adjust algorithmically as supply and borrowing demand change.

Because loans are over-collateralized, a borrower's position is liquidated if the collateral value falls below a threshold. The homepage lists loan-to-value ranges of 81%-87%, liquidation factors of 86%-93% and liquidation penalties of 5%-10% for the parameters it shows. Suppliers can withdraw at any time, subject to available liquidity in the pool.

Governance is handled through the COMP token and a governance section linked on the site, with the Compound Foundation described as supporting ecosystem growth and coordination.

Compound's fee structure is not itemized. Borrowers pay a variable interest rate, and suppliers earn a variable yield, both set by market utilization. Live rates are shown in the Compound app and on the markets page.

Users also pay Ethereum network gas for each transaction. The homepage describes rates as competitive but does not publish specific numbers, and it does not list a protocol withdrawal or deposit fee.

The homepage says Compound uses independent audits, testing and continuous security reviews, and runs a bug bounty program of up to $1M through Immunefi. DefiLlama lists two audits. The project does not name the auditors or any past incidents, so readers should review the audit reports in the docs.

The protocol is non-custodial lending run by smart contracts, so users keep control of their wallet but take on contract risk and liquidation risk on borrowed positions. Regulatory status is not described beyond the Terms of Service and Privacy Policy links on the site. Check the rules in your jurisdiction before using it.

Compound V2 is for users comfortable with self-custody wallets who want to lend or borrow major assets such as ETH, WBTC and stablecoins on Ethereum. It fits people who understand collateral ratios and can monitor positions to avoid liquidation. Beginners should start with small amounts.