Image for post
Image for post

First Look into Compound Finance

TwiceCrypto
Aug 10, 2019 · 7 min read
Image for post
Image for post
Image for post
Image for post
Stats from DefiPulse

How does Compound Finance work?

Image for post
Image for post
Tokens listed on Compound Finance

My Experience

Image for post
Image for post
My dashboard on Compound Finance

Risks

As far as empowering one’s finance goes and onboarding of the financial system onto the blockchain, we should take a step back and review the potential risks that come with it.

Smart contract risk

Just like any other code, there are bound to be bugs in the contract which could be exploited by malicious users and would lead to dire consequences if the bug is severe. Protocols in DeFi are relatively new and have not gone through the test of time.

Price oracle failure

The price oracle plays a crucial role in maintaining the collateral ratio for each loan as it needs to constantly update the contract with the right price of each asset at all times. Failure to do so might result in the liquidation mechanism not working as intended which could lead to a loss on the lenders’ funds.

Conclusion

As more people uncover the wonders of DeFi, Compound Finance will most likely be one of the first products they will come across. The process would provide insights as to how decentralized lending protocols work and give a great first impression as it is user-friendly. If you have some idle crypto lying around, remember to give Compound Finance a try!

Data Driven Investor

from confusion to clarity not insanity

Sign up for DDIntel

By Data Driven Investor

In each issue we share the best stories from the Data-Driven Investor's expert community. Take a look

By signing up, you will create a Medium account if you don’t already have one. Review our Privacy Policy for more information about our privacy practices.

Check your inbox
Medium sent you an email at to complete your subscription.

TwiceCrypto

Written by

Anything and everything that can be discussed under the world of blockchain! Revolutionize the future and be in control of your finances!

Data Driven Investor

from confusion to clarity not insanity

TwiceCrypto

Written by

Anything and everything that can be discussed under the world of blockchain! Revolutionize the future and be in control of your finances!

Data Driven Investor

from confusion to clarity not insanity

Welcome to a place where words matter. On Medium, smart voices and original ideas take center stage - with no ads in sight. Watch

Follow all the topics you care about, and we’ll deliver the best stories for you to your homepage and inbox. Explore

Get unlimited access to the best stories on Medium — and support writers while you’re at it. Just $5/month. Upgrade

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store