Ledger Cast Breaks Down the Compound Yield Farming Craze

Compound, the DeFi lending protocol that became one of the best-known venues for earning yield on crypto, is the focus of a new episode of Ledger Cast. Hosts Brian Krogsgard and Josh Olszewicz sit down with David Hoffman of Bankless, who has spent a lot of time studying decentralized finance, to explain how the protocol works and why so many users chased returns there.

The basic idea is straightforward. Users deposit crypto assets into shared pools, and borrowers pay interest to use them. Depositors earn a share of that interest. Compound later added a governance token that it distributed to users who supplied or borrowed assets, and that extra reward layer is what pushed many people toward liquidity farming: moving funds around to capture the highest combined returns, often on several platforms at once.

Hoffman's background in DeFi makes him a useful guide to the mechanics behind that trend. The conversation also covers the broader practice of yield farming, which quickly drew both enthusiastic participants and skeptical observers as rewards rose and fell.

The hosts are clear that the episode is educational material and not investment advice. Anyone who wants to go deeper can find Hoffman's work through Bankless and his POV Crypto podcast, and Josh's write-up on yield farming, which the hosts reference during the show.