So as you guys know by now i am all about getting the most out of my crypto. Being on a crypto enthusiast on a limited budget can be challenging so we have to make every token count. With that said, today we are going to take an in depth look at the compound finance platform and examine how we can earn passive income that compounds daily.
What is compound finance?
Compound Finance is a decentralized lending platform that is managed by smart contracts run on the ethereum network making it one of the more secure DeFi platforms out there today. If you so wished, you could also borrow crypto from them to invest or trade. The interest rates as of 2/20 are listed above but they are dynamic so you can find the current rates they offer here : https://compound.finance/markets
The app allows users to easily connect their Coinbase, Ledger, or Metamask wallet to transfer tokens in and out. It essentially works like this : Users deposit any of the above cryptocurrency on their platform and in return receive an ERC20 collateral token (or C token) in return like cDAI, cBAT, cETH, etc. and it is all recorded on the ethereum network via smart contract. How it works is cDAI (or any other c token) becomes more valuable every day as interest compounds. So the tokens you receive gain value over time and when you decide to swap them back they are now worth more which means you will get more DAI (or whatever token you invest) in return.
Key points to consider
When considering what DeFi platform to choose there are a few different things to look at. For me, i want to know if there is a time limit that my tokens must be locked in, is there a minimum amount that must be invested, how secure is it, the interest rate, and if interest is compounding. The Compound Finance app checks all these boxes for me with no minimum time you must lock your tokens in, no minimum investment, being one of the most secure platforms, some of the highest interest rates out there, and interest that compounds daily. Currently the best investment seems to be in DAI and what better to hold value than a stablecoin ? In conclusion the Compound Finance app looks to be a strong and secure decentralized platform that offers some of the best rates available. I would highly recommend giving them a shot if you are considering using a DeFi platform any time in the future. I would love to hear from anyone else who has had experience with this platform or DeFi in general and how it compares to my assessment. Thank you for reading and as always, invest wisely.