Lenders deposit funds into Compound and receive interest payments from borrowers (supply-side fees).

Compound is a non-custodial lending protocol built on Ethereum. Compound was founded by Robert Leshner & Geoffrey Hayes and launched in 2017.

 COMP tokenholders own and govern the protocol. They currently take a cut of the total interest paid by borrowers (revenue). Compound’s investors include a16z, Paradigm, Polychain, etc.

governance

github

twitter

discord

etherscan

website

Lending

Compound

# Compound Expenses Methodology

## 1. Overview

The Compound expenses metric measures the total daily cost incurred by the Compound protocol in providing token incentives to users. This represents the protocol's operational expenses for encouraging lending and borrowing activity through reward token distributions. The calculation aggregates all token incentive payments made to users across Compound v2 and v3, converting them to USD to provide a comprehensive view of the protocol's user acquisition and retention costs.

## 2. Data sources

The calculation draws from several blockchain event sources and external data:

- **Compound v2 events**: Parsed `DistributedBorrowerComp` and `DistributedSupplierComp` events from Ethereum, which track COMP token distributions to borrowers and suppliers
- **Compound v3 events**: Parsed `CometRewards_RewardClaimed` events from Ethereum, Arbitrum, Base, and Polygon networks, capturing various reward token claims
- **End-of-day price feeds**: Token price data for converting reward token amounts to USD values
- **Token metadata**: Decimal precision information for proper token amount calculations

## 3. Step-by-step calculation

### Component A: Token incentive event extraction
- **Purpose**: Collect all token incentive payment events from Compound v2 and v3 protocols
- **Logic**: The system extracts reward distribution events from multiple sources. For Compound v2 on Ethereum, it captures `DistributedBorrowerComp` and `DistributedSupplierComp` events that track COMP token distributions to users. For Compound v3, it captures `CometRewards_RewardClaimed` events across Ethereum, Arbitrum, Base, and Polygon networks. Each event provides the recipient address, token address, and reward amount. All events are classified under the 'Lending' business line with appropriate version tagging (v2 or v3)
- **Key fields**: `account_address` (recipient), `token_address` (reward token), `amount` (raw token amount), `chain` (blockchain), `version` (protocol version)

### Component B: Data filtering and cleaning  
- **Purpose**: Apply protocol-specific business rules and data quality filters
- **Logic**: The system applies a critical hack exclusion filter that zeros out all reward amounts between September 28, 2021 and October 10, 2021, when the Compound reward contract was compromised. This prevents the inclusion of illegitimate reward distributions during the exploit period. All other data points retain their original values. Events are aggregated to daily timestamps using day truncation
- **Key fields**: `block_timestamp` (for hack period filtering), `token_incentives` (filtered amounts)

### Component C: Currency conversion and decimal correction
- **Purpose**: Standardize all token amounts to USD values with proper decimal precision
- **Logic**: The system converts raw token amounts to USD using end-of-day price feeds matched by token address and date. Simultaneously, it corrects for token decimal precision by applying the appropriate divisor based on each token's decimal configuration. This ensures accurate USD valuations regardless of the underlying token's decimal structure
- **Key fields**: `token_incentives` (converted to USD), `token_address` (for price lookup), `timestamp` (for price matching)

### Final aggregation
- **Combining components**: All processed token incentive payments are summed by day and chain, creating daily totals of USD-denominated reward distributions
- **Currency conversion**: All amounts are expressed in USD using end-of-day exchange rates applied at the time of each reward distribution
- **Time aggregation**: Data is aggregated to daily boundaries using timestamp truncation, with each day representing the total incentive expenses for that 24-hour period
- **Final calculation**: The final expenses value represents the sum of all USD-converted token incentive payments made by Compound to users on each day, filtered to exclude the hack period and filled with zeros for days with no activity to maintain complete time series continuity

*This methodology was automatically generated by Token Terminal's methodology analyzer.*

Total project operating and incentive expenses.

CompoundCOMP

Expenses

Expenses

Competitive landscape

Chain breakdown