earn and lend money with compound

Make your savings profitable with Compound

By Makingdigital | makingdigitals | 30 Dec 2020


Within the Ethereum blockchain we have a multitude of tools and applications, totally decentralized with which we will be able to interact for totally lucrative purposes. Compound is one of them and gives us the possibility to make our savings in cryptocurrencies profitable.

Despite being designed with the same technology as Ethereum, Compound was originally under the full control of the owners. This situation has altered in recent months and the dynamics of the platform is aimed at being much more transparent and faithful to users, handing over its operation to all investors, lenders and debtors of the platform.

The idea of ​​Compound is to create a simple and comfortable network of loans, credits and assets for any user. Just with a couple of clicks you can request a digital credit in cryptocurrencies, to use them wherever you want.

These transactions are done in a matter of seconds, therefore, we save a lot of time. Something that with conventional bank loans, does not happen. We necessarily have to overcome dozens of requirements and as if that were not enough we do not receive any type of interest in our favor.

Compound claims to be free of paperwork, however, the only requirement is that we provide the network with collateral. A kind of guarantee that can be covered by any cryptocurrency. In the Compound app they have DAIS, ZRC, BAT and Ethereum among others. An app susceptible to new additions of crypto assets that gives it more solvency and market breadth. The Exodus wallet offers a direct link to Compound for staking with Dais if we wish.

To access, we need a wallet connected to the Ethereum network. We can use Metamask, Ledger's cold Wallet or Coinbase Wallet. With metamask, in two clicks we are inside. To confirm our registration we have to unlock the entrance with a small fee. This gas is less than $ 1 and will be deducted from our Ethereum balance. When we work with Ethereum tokens we always need to have some Gweis to cover these steps.

Once enrolled, we add liquidity to the market directly from our wallet. This is the investor position, from where we are going to make profitable our savings in cryptocurrencies. For example, if you have 3 ETH under your belt and add it to Compound, the same network will compensate you with an interest in your favor. Depending on how long you keep them there, it can go up. If the price of ETH goes up, you earn more. Returns with ETH are usually around 0.02% per year. This value suggests working with more powerful investments. It has the advantage of compound interest, the interest is updated every 15 seconds, it is just the time it takes to consume a block of Ethereum.

When you lend money to the network, the network can lend it to you. Depending on the amount contributed, you will be qualified to request a loan in cryptocurrencies, for example, DAIS. You can take these DAISs to another crypto exchange and make them profitable if the interest they give you is good. You have to consider and study the credit conditions before, since it reports a negative interest that you will have to bear. This loan will be automatically paid off if the value of your crypto asset drops too low, exceeding the threshold limit. Hence, the smartest thing to do when requesting loans is in the form of Stablecoins such as USD Tether, USD Coin or DAIS. You make sure that the loan will not be liquidated in a loud or unexpected way.

If you are otherwise an advanced Crypto trader, you can risk asking for a volatile token. The problem is that if this token increases in value, your collateral can be jeopardized and liquidated on its own.

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Makingdigital
Makingdigital

Entrepeneur, writer and Cryptolover


makingdigitals
makingdigitals

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