Compound V2
Rejected venues wait the longest for re-review; a rejection has to earn another look before the scheduled date.
Compound V2 is the earlier generation of Compound’s algorithmic interest-rate protocol on Ethereum, where suppliers earn what borrowers pay. DefiLlama recorded about $86.6M on 2026-08-14, under our $100M materiality line. Rejected on size: one practice advising 100 households moves $1M to $8M into a venue on the same research, and below $100M TVL that book becomes the exit crush. Size alone decides it, whatever the protocol’s quality.
- TVL sustained above $100M for 30 days
The research file
Mechanism
A supplier mints a market-specific cToken. Its exchange rate rises as borrowers pay interest, net of reserves. The Comptroller permits selected cTokens to serve as collateral, combines oracle prices with governance-set collateral factors, and exposes shortfall accounts to liquidation. Each market’s cash and debt remain in its cToken contract.
Control and operating evidence
COMP governance can list markets, change risk parameters and upgrade the Unitroller/Comptroller through Governor Bravo and a timelock. Compound publishes 2019–2020 audits, formal verification and a bug bounty. V2 has a long operating history, but maturity does not make reserves, oracle behavior or listed collateral risk-free.
Exit consequences
A supplier redeems cTokens for underlying only if the market has enough cash and the account remains sufficiently collateralized. High utilization can make redemption fail until borrowers repay or new liquidity arrives. Bad debt and oracle failure reduce economic coverage; borrowers may need to repay before they can release supplied collateral.
Why the class rule decides
The surveyed V2 aggregate remains below the $100M materiality floor and is a legacy generation beside Compound III. Size decides before market-by-market underwriting. Sustained scale above the threshold would reopen review of active markets, reserves, governance concentration, oracle configuration and migration status.
Sources
The claims above trace to these. Where a number could not be independently verified, the thesis says so.
- Compound V2 Docs — cTokens and redemption · primary · accessed 2026-08-14
Supports: cToken receipt, exchange rate, supply interest, redemption, reserves - Compound V2 Docs — Comptroller and liquidation · primary · accessed 2026-08-14
Supports: collateral factors, oracle prices, shortfall, liquidation, upgradeable proxy - Compound V2 Docs — governance and timelock · primary · accessed 2026-08-14
Supports: COMP governance, parameter control, proposal process, timelock - Compound V2 Docs — audits and verification · primary · accessed 2026-08-14
Supports: published audits, formal verification, bug bounty - DefiLlama — Compound V2 survey record · secondary · accessed 2026-08-14
Supports: survey TVL, borrowed amount, Ethereum deployment
Inherited controls
The verdict above grades the protocol layer. Every position also inherits the asset it holds and the chain it settles on. The least safe layer sets the position’s grade, and the position table names which one that is.
| Chain | Verdict | Grade | Control constraint |
|---|---|---|---|
| Ethereum | Approved | sovereign | No sequencer, no upgrade key, no operator who can be compelled — rule changes require social consensus. |