Save cryptocurrency to earn interest with Compound
One of the cornerstones of the Ethereum DeFi category. Compound is a simple dapp that enables users to save cryptocurrency to earn interest. As well as borrowing cryptocurrencies against their savings.
The core economic loop of Compound is that users borrow tokens at a higher rate and the savers are rewarded with part of this income at a lower rate.
In this way, the interest rates on both sides of the product are variable. With demand for borrowing a specific token raising the interest rate received when saving it.
It’s also worth pointing out that in order to borrow cryptocurrency, you first have to create some savings, which acts as collateral for the loan. It will also be used to automatically pay back the loan if it becomes liquidated for any reason.
Obviously, once you have savings in Compound, you can borrow any one of the tokens available.
Compound currently supports eight tokens including the DAI, USDC, and USDT stablecoins. Aside from ETH, the remaining tokens are the Basic Attention Token (BAT), Augur’s REP token, 0X protocol’s ZRX token, and Wrapped Bitcoin (WBTC).
At the time of writing, the highest interest rate for savings was 5.02% for ZRX and the cheapest token to borrow was DAI at 1.35%.
You can check it out at the Compound website.
And remember all DeFi dapps are experimental and come with risk. Never lock up more value than you’re prepared to lose if something should go wrong.
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