www.asiacryptotoday.com Open in urlscan Pro
162.159.135.42  Public Scan

Form analysis
2 forms found in the DOM

GET https://www.asiacryptotoday.com/

<form method="get" class="td-search-form" action="https://www.asiacryptotoday.com/">
  <!-- close button -->
  <div class="td-search-close">
    <a href="#"><i class="td-icon-close-mobile"></i></a>
  </div>
  <div role="search" class="td-search-input">
    <span>Search</span>
    <input id="td-header-search" type="text" value="" name="s" autocomplete="off">
    <input class="wpb_button wpb_btn-inverse btn" type="submit" id="td-header-search-top" value="Search">
  </div>
</form>

POST

<form method="post">
  <label class="mctb-label" for="mailchimp-top-bar__email">Subscribe to our FREE weekly newsletter - Subscribers outperform the market by 43%</label>
  <input type="email" name="email" placeholder="Your email address.." class="mctb-email" required="" id="mailchimp-top-bar__email">
  <input type="text" name="email_confirm" placeholder="Confirm your email" value="" autocomplete="off" tabindex="-1" class="mctb-email-confirm">
  <input type="submit" value="Subscribe" class="mctb-button">
  <input type="hidden" name="_mctb" value="1">
  <input type="hidden" name="_mctb_timestamp" value="1686807661">
</form>

Text Content

 * News
 * Guides
 * Analysis & Opinion
 * Education
   * Coin Overview
     * Bitcoin (BTC): What is Bitcoin?
     * Cardano (ADA): What is Cardano 2020
     * ChainLink (Link): What is ChainLink Token?
     * Enjin (ENJ): What is Enjin ?
     * HackenAI (HAI) : What is HackenAI?
     * Ripple (XRP) Guide: Everything You Need To Know About Ripple Protocol
     * Tezos (XTZ) Guide: What is Tezos?
 * Wallet Review


Search

Home Guides Compound Review: How To Earn Passive Income with Compound
 * Guides


COMPOUND REVIEW: HOW TO EARN PASSIVE INCOME WITH COMPOUND

By
Evan Ezquer
-
June 25, 2020
0
7184
Facebook

Twitter

ReddIt


Compound Finance or simply Compound is now the leading DeFi platform in terms of
Total Value Locked (TVL), as well as in its governance token’s market cap
relative to other DeFi tokens.

Simply put, Compound allows anyone to be able to earn money on the crypto assets
they save (lock up).

DeFi has been on the rise, posting double digital gains and outperforming even
Bitcoin in terms of growth. The decentralized lending market, in particular, has
seen the most tremendous surge both in price and locked-up assets.

Even mainstream media has heavily reported and praised decentralized lending
platforms due to their new and innovative approach to borrowing and lending.
DeFi platforms like Compound enable users to easily lend or borrow money by
locking up assets in smart contracts, allowing them to save or earn more since
intermediaries are eliminated.

In this guide, we shall review the inner workings of the Compound protocol, as
well as explore the steps in creating passive income while using this DeFi
platform.

Table of Contents

 * Background
 * How the Compound Protocol Works
 * Interest Rates
 * Native Assets
   * cToken
   * COMP
 * Supported Currencies
 * How to Earn Passive Income with Compound
   * Choose which asset to lend
   * Install and set up MetaMask
   * Transfer your BAT from the Exchange to MetaMask
   * Enable BAT on Compound
   * Supply BAT to Compound
   * Make Money Grow As You Sleep
 * How Safe is Compound?
 * Latest Compound News
 * Conclusion


BACKGROUND

Robert Leshner

Compound is a San Francisco based company founded by chartered financial analyst
and former economist Robert Leshner. Leshner is currently the CEO of Compound.

The company was able to successfully raise funds from private investors twice:
an $8.2 million seed funding round in May 2018 and a $25 million Series A round
in November 2019.

Compound was financed by the leading VC firms in the crypto space such as
Andressen Horowitz, Coinbase Ventures, Polychain Capital, and Bane Capital
Ventures.


HOW THE COMPOUND PROTOCOL WORKS

Compound is a protocol composed of smart contracts built and designed to run on
the Ethereum blockchain. Like most lending protocols, it enables lenders to
provide loans and borrowers to take out loans by locking up crypto assets into
the system.

These assets can be withdrawn anytime. Similarly the loans can be repaid anytime
as well.

Compound can be accessed via software or web wallets including Metamask,
Coinbase Wallet, TrustWallet, etc. If you want lend or borrow, all you need to
do is connect to the compound network via any of these wallets.

Once that’s done, you simply need to enable an asset, then start lending or
borrowing.

Different crypto assets have different Supply and Borrow Annual Percentage Rate
(APR). These APRs change frequently according to the supply and demand of the
asset.


INTEREST RATES

The interest rates received by the lenders and paid by the borrowers are
calculated algorithmically depending on the supply and demand of the underlying
asset. These interest rates are updated every time a block is mined. In
Ethereum’s case, a block is mined roughly every 10-19 seconds, hence, the
interest rates change accordingly.


NATIVE ASSETS

Compound Finance has two native assets in the system: cTokens, the main unit of
account of the platform, and COMP, the governance token.


CTOKEN

Compound tokens, denoted as cTokens are cryptocurrencies built on the ERC-20
protocol standard. Each cToken represents your balance in the compound platform.
Therefore, it entitles you to an underlying asset locked up in the system.

Furthermore, each market has its own cToken. E.g. cUSDC, cETH, etc., which will
be generated and sent to a user wallet once an asset has been locked up in the
protocol.



For instance, if you want to take out a loan by collateralizing your ETH, you
will automatically receive cETH in your wallet. The same goes for other assets.


COMP

Like any promising DeFi platform, Compound is governed by a decentralized system
and community. This governance system is powered by COMP, the native governance
token for the Compound Finance platform.

COMP is used to by by the token-holders and their delegates to submit proposals
and vote on protocol upgrades. Proposed changes to the system parameters may
include protocol fees, interest rates, supported collateral, and others.

Upgrade proposals require a minimum of 100,000 COMP delegated to its address.
Once the proposal is created, the community can vote on a three-day period.

In order for the new upgrade to become implemented, it needs to have at least
400,000 votes and be chosen by the majority. If successful, it will be queued in
a Timelock contract and become effective in two days.


SUPPORTED CURRENCIES

Here are the available assets that you can lend or borrow on Compound:

 * DAI
 * BAT
 * ETH
 * USDC
 * ZRX
 * WBTC
 * REP

The prices of these assets are generated by taking the median prices of the
cryptocurrencies in top exchanges like Binance, Coinbase Pro, Bittrex, and
Poloniex.

Compound is currently building an advanced Open Oracle System, which aims to
decentralized the price feed mechanism similar to how Chainlink does it.


HOW TO EARN PASSIVE INCOME WITH COMPOUND

Compound is probably one of the best if not the best way to earn money through
lending. This is evidenced by the sudden spike of users participating in
supplying assets.

Let us take you through the steps required in making passive income with
Compound.


CHOOSE WHICH ASSET TO LEND

Compound allows many different crypto assets to be supplied in its system.
Choose which one you’d like to lend. To make it easier, go over to Defipulse
where you could input the asset and quantity you’d like to lock up and generate
the estimated income you’ll get. You could even compare interest rates with
other lending platforms.

In this example, let’s say we choose Basic Attention Token (BAT). From here
onwards, you can replace ‘BAT’ with whichever token you have chosen, and follow
the guide as is.

As you can see from above, Defipulse says that if I lend 5000 BAT (worth roughly
$1350 as of post date) I’ll be able to generate a 24.95% passive income monthly,
which is roughly $28.27/month. Not bad for earning money while you sleep eh?

The larger the amount you lend, the more money you make. But be careful with
locking up large amounts of assets. And be aware of the risks involved such as
losing your seed phrase or having bugs and other unknown vulnerabilities that
will cause the system to fail.

Once you get past all that, the first thing you need is to buy BAT from one of
the exchanges that offer the cryptocurrency, which we trust that you’ve already
learned to do at this point. You can buy BAT on Binance, Coinbase Pro, OKEx,
Huobi Global, etc.


INSTALL AND SET UP METAMASK

MetaMask is a web extension wallet that connects you to the Ethereum blockchain
and manages your private keys. Head over to Metamask.io and click download, then
install. Remember that this extension only supports Chrome, Firefox, and Brave.

Once successfully installed, you should see the orange fox icon on the top-right
of your browser near the address bar. Click it and then click the “Continue’
button as well to begin your account setup.

You’ll then be asked to input a password for your MetaMask account. Make sure to
remember this as it will be required each time you want to access the browser
wallet. Once the password has been typed, click ‘create’.

Once that’s done, click the shaded area to uncover your seed phrase. Write it
down and store it somewhere safe as it is extremely important.

It will allow you to recover your wallet in case you forget your password or
your MetaMask account becomes inaccessible for other reasons. Remember that if
you lose your seed phrase there’s no way to recover it anymore.




TRANSFER YOUR BAT FROM THE EXCHANGE TO METAMASK

Now that you’ve bought BAT and set up a MetaMask account, it’s time to transfer.

First you need to copy the address of your Metamask wallet. Open the extension
and click on the hamburger button ≡ on the top-left side and click ‘Add Token’
and then type in ‘BAT’ or whichever token you choose. Now you can receive BAT
tokens.

Hover over the account name at the top of the window, which will show ‘Copy to
clipboard’. Click on that to copy your address. Then paste the address to the
‘recipient’ field in whichever exchange you bought your BAT.

Once all that’s done, press send. Your BAT will soon reflect on your MetaMask
wallet.




ENABLE BAT ON COMPOUND

Go to the Compound web app and be prompted to use one of three wallets. Choose
MetaMask. You will be shown a list of available assets to lend. Choose BAT in
the ‘Supply’ category and then click enable.

An Approve transaction will then pop up, which you’ll confirm using the same
steps as before. Open the MetaMask menu, click the pending transaction, as well
as the diagonal arrow on the right-side.


SUPPLY BAT TO COMPOUND

After your transaction is confirmed, you should be able to see a green ‘Supply’
button and a purple ‘Borrow’ button under the BAT section. Click supply and then
input the amount of BAT you’d like to lend to the platform.

After you input the amount, click the ‘Supply’ button at the lower part of the
pop-up menu which would open up a Metamask transaction. Confirm the transaction
like earlier by clicking ‘Confirm’, and then wait for it.


MAKE MONEY GROW AS YOU SLEEP

And now you have cBAT in your MetaMask wallet. This means that you’ll be earning
a passive interest every 10-19 seconds as Ethereum blocks are mined.
Congratulations! You are now making money while you sleep.


HOW SAFE IS COMPOUND?

The primary risk for DeFi platforms like Compound is the likelihood that
cybercriminals might be able to exploit or hack its smart contracts, which would
allow them to steal locked-up assets in the platform. After all, this has
happened more than once in similar lending platforms such as bZx and dForce.

Fortunately, the Compound team considers security their highest priority and
have invested heavily ensuring the safety of user funds.

All of Compound’s code is made public, which enables anyone to spot and report
faulty code or other vulnerabilities. Furthermore, a bug bounty is available to
incentive security researchers to be on the lookout for any of attack vectors in
the protocol.

With that being said, we can never be certain of the security of any financial
system, especially with DeFi platforms that are very new. That’s why it’s
important to not put all your eggs in one basket.


LATEST COMPOUND NEWS

As of June 25, Compound has locked up over $547 million worth of assets,
dethroning MakerDAO, and becoming the new largest DeFi platform based on TVL.
This is mostly thanks to Compound’s COMP reward scheme which has triggered a
gold rush among users. As a result, the price of COMP has spiked in the last few
days just after its issuance.

On the flip side, there are some pundits who see the sudden surge in locked-up
assets and price as a threat to the long-term sustainability of the Compound
ecosystem.



Then there is the scalability issue as the Ethereum network has hit a new
all-time high recently. Furthermore, gas usage analysis proves that gas
consumption came from higher utilization of smart contracts instead of normal
payment transactions.

Source: Delphi Digital

This means that DeFi is the one of the major reasons for the surge in gas usage.

On June 25, Binance had decided to list COMP and opened its trading against BTC,
BNB, BUSD, and USDT pairs. Users can also deposit COMP in the exchange.


CONCLUSION

Compound is one of the most promising DeFi platforms to date and it has been
moving very fast lately.

Compound appears to be one of crypto’s biggest players and is pushing the entire
industry forward. We are finally seeing blockchain and smart contract platforms
being applied in the real world solving real problems and innovating old
business models.

The revolution is unfolding before our very eyes. But like most DeFi platforms,
Compound will eventually face scalability issues as it grows further. For that
reason, its long-term success partly relies on the rollout of Ethereum 2.0,
which the Ethereum devs have been planning and working on for the past several
years.

 * TAGS
 * COMP
 * compound
 * compound finance
 * cToken
 * decentralized finance
 * DeFi
 * ethereum 2.0
 * lending

Facebook

Twitter

ReddIt

Previous articleCryptocurrency and Hollywood: 3 Times TV and Film Just Couldn’t
Get it Right (And 3 Times They Did)

Next articleIs Compound the Future of DeFi or An Experiment About to Fail?
Evan Ezquer
https://www.asiacryptotoday.com/
Evan is a die-hard crypto and blockchain supporter who has written over 200
crypto-focused content for various media companies and his blog,



RELATED ARTICLES


WHAT IS ALGORAND? $ALGO

June 12, 2023


WHAT IS BITCOIN CASH? $BCH

June 11, 2023


WHAT IS FLOKI INU? ($FLOKI)

May 31, 2023



ABOUT US
Asia Crypto today promises to be a fair and objective portal, where readers can
find the best information and recent cryptocurrency news.
Contact us: contact@asiacryptotoday.com
FOLLOW US
© Asia Crypto Today 2017-2019
▼
Subscribe to our FREE weekly newsletter - Subscribers outperform the market by
43%
Go to mobile version

We'd like to show you notifications for the latest news and updates.


AllowCancel