In the world of cryptocurrency, a compound refers to a decentralized finance protocol that allows users to earn interest or borrow assets against collateral. It operates on the Ethereum blockchain and enables users to lend out their cryptocurrency to earn interest or borrow additional assets by using their existing holdings as collateral.

When a user deposits their assets into Compound, they receive cTokens in return, which represents their share in the pool of deposited assets. These cTokens continuously earn interest based on the utilization of the deposited assets within the protocol.

Users can also borrow assets by providing collateral in the form of other cryptocurrencies. The amount that can be borrowed is determined by the value of the collateral supplied and a specific collateralization ratio set by Compound.

Overall, Compound provides a way for cryptocurrency holders to earn passive income on their assets or access additional liquidity without the need for traditional intermediaries like banks or financial institutions.