How To Earn Compound COMP Tokens?
This text is written for information purposes only and never constitutes a call to action. All financial transactions carried out by you are made at your own risk. The Guarda editorial staff reminds you of the riskiness of all kinds of speculation on all kinds of financial markets.
What Is Compound Finance?
Compound Finance is a project that algorithmically implements money markets. It allows generating markets where it is possible to lend assets and borrow them (basing these loans on collateral) so that the interest rate is calculated block by block according to the Supply and Demand in an algorithmic way.
Compound comes to create a market where the interest rate is defined algorithmically by supply and demand, practically to the second, to lend or borrow assets. Here the protocol advances a little more with respect to what we are used to in the real world.
What Are The Distinguishing Features Of Compound?
- The Compound protocol is not similar to a traditional bank and does not transfer user data to other users.
Instead, it provides market liquidity for tokens and users can borrow from this market. Demand and supply determine the interest rate in each market.
- When users provide tokens for a complex protocol, it uses cToken to represent them. cToken is the main token in the protocol, and all negotiation, transmission, and programming processes are based on it.
- The automated nature of the Compound protocol allows you to calculate the interest rate on holdings. Interest rates are updated with each production of the Ethereum block lasting about 15 seconds.
Step-By-Step Guide On Earning COMP Token
- So, we’ll start, perhaps, with the most fundamental part — buying ERC-20 tokens. In our case, it will be ETH. In order for us to get ETH on your wallet, you need to open your Guarda Wallet (on any digital device) and go to the Buy tab, where you specify the amount you need in your currency and pay with your VISA or Mastercard.
- Once you have purchased ERC-20 tokens, you need to tie your wallet with Compound Finance. In order to do this, you need to go to Compound Finance website, and on the main screen click on the App button.
3. The next step is about the connection to the wallet.
The team is working on an update for our extension in Google Chrome, which will soon allow us to experience the DeFi farming. We will notify everyone as soon as the relevant updates are made. Our application is developed in accordance with high technical standards and follows the latest trends in development by creating our own technologies. Our software allows us to maintain full control and provide a high level of security, so we research in detail the Wallet Connect technology, which interacts with any dApps that we try to avoid for the safety of your funds. Once our analytics department reaches a verdict that this technology is fully secure, we will implement it and allow you to leverage your assets to interact directly with DeFi pools.
So, connection to them is made through Web 3.0 wallets. Firstly, you have to click on the Connect Wallet button, where you need to select a compatible wallet and send your funds from a Guarda wallet to the one presented on the Compound website.
4. After the connection, a panel opens with a list of available cryptocurrencies, their balances, and interest rates on Supply and Borrow.
5. Then, in the control panel, you need to select which cryptocurrency to put (deposit) on the platform. Compound rewards its users both for providing assets for credit (Supply) and for obtaining credits (Borrow). To get the most out of it, users take both sides of the deal. They make a deposit, take out a loan, and deposit it again.
6. Earnings are also done through the use of cryptocurrency on the platform as collateral in order to borrow money. Borrowing funds also requires the payment of commissions. For example, getting a loan in Uniswap tokens will cost the investor 27,34 % per annum.
How Do I Get Compound, After All?
COMP is earned through interaction with Compound Tokens. COMP is accrued automatically as assets are provided or borrowed via the protocol. To find out how much COMP you have collected (or earned), just go to the voting control panel. Here you can Collect COMP for voting.
Note: COMP is automatically collected when assets are withdrawn from the protocol. If you want to save on gas, just remove any asset by 1 dollar and COMP will be collected automatically.
All operations in Compound are performed in two steps — send a request and confirm the transaction in the wallet application you are using.