The protocol that pioneered yield farming, Compound is one of the more popular decentralized finance products for lending and borrowing crypto assets. The way it works is there are several liquidity pools from which users can borrow, or to which deposit liquidity for a return. The higher the demand for liquidity in a pool is, the higher the annual percentage yield gets for lenders and interest rates for loaners.
Compound became popular in the DeFi summer of 2020 thanks to the introduction of a reward program that distributed the governance token COMP in addition to interest. The idea was to reward users who would most actively contribute liquidity to Compound's pools. COMP holders automatically gain the right to vote for improvement proposals such as adding new asset pools and even introducing changes to the protocol.