What Is Compound Crypto?
Compound is a protocol running on Ethereum that lets individuals, developers, and applications earn interest on their crypto without relying on third parties.
Compound is one of the increasing number of DeFi protocols entering the crypto space. They say that the majority of cryptocurrencies sit idle on exchanges and within wallets and their aim is to change this by allowing you to earn interest on the cryptocurrencies you hodl.
At the time of writing, Compound has over $2.5 billion assets locked into the protocol.
Earn Interest With Compound
Compound will allow you to deposit your cryptocurrency into lending pools and lenders will earn interest on these assets.
Compound will connect lenders to borrowers using smart contracts running on Ethereum and will incentive this by using cryptocurrency. When lenders put up their assets to be lent to borrowers they will earn COMP. Borrowers have the option to take out a loan in any cryptocurrency supported by Compound.
The interests rates paid for lending your crypto are determined by the supply and demand of each crypto asset.
Any applications that hold crypto-assets can integrate with Compound, unlocking the power of compound interest. This will see more exchanges where a lot of cryptos sit to enable users to start earning interest.
Borrowing Crypto With Compound
Borrowers on Compound will need to post collateral on Compound in the form of a cryptocurrency, they are allowed to borrow up to the value of the collateral. They will then need to pay interest on this loan which will be paid back to the lenders.
It’s a crypto decentralised peer-to-peer lending system.
To incentivise activity on the marketplace Compound uses the COMP token to reward the user each time they interact will the Compound market (by borrowing, repaying or withdrawing).
The COMP token is an Ethereum token that will enable the community to propose and vote on changes to the protocol. This allows all COMP holders to vote what happens with the protocol and what changes are added into the system.
You can earn up to $59 worth COMP token by taking the Compound token quiz on Coinbase. Use the following link to earn COMP.
Originally published at https://paulund.co.uk.