Decentralized Finance and the Compound Protocol

Compound Finance is a decentralized financial application that allows users to earn interest on seven different cryptocurrencies while still maintaining ownership of their coins and tokens. In my opinion, this is a win-win situation because you can earn interest in the short term while also retaining the ability to withdraw and sell your coins if the price goes up. This article is intended to help beginners learn how to set up a Compound account and start earning interest by lending crypto.

First off, it is important to point out that the interest you can on on each crypto depends on what specific coin/token you want to lend. For example, stablecoins such as DAI and USD coin (USDC) earn much more interest than BAT or Ether (Ethereum). One advantage of lending stablecoins is that the interest rate is significantly higher than what you could find at a bank account. For example, my current bank gives a 1.8% interest rate on a savings account. However, I can earn about 7% lending DAI on Compound Finance. As another example, I can lend USDC on compound for about 4.8% interest. USDC is exchangeable directly for $1, so it would be possible to take money out of my savings account that is earning 1.8% interest and purchase USDC to loan on Compound finance where I can earn over double the interest.

Let's suppose that you have decided you want to lend crypto and earn interest. There are a number of great sites where you can lend and receive interest on crypto, and I recommend checking out the site DeFI Pulse to get an idea of the different DeFi platforms and the interest rates that they offer. For the purposes of this video, I will focus on Compound because I have first hand experience with the site and it was the easiest for me to understand. You may find one of the other platforms better for your specific needs, and the "best" DeFi platform is largely a matter of user preference. Keep in mind that there are always risks involved with loaning crypto, and it is important to do your own research. This is not financial advice, and is simply an overview of an application that I have found useful.  #defi #cryptocurrency