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Investment Tips | Compound Finance – Get Interests On Your Crypto While Holding Them

When buying cryptocurrencies, you might want to hold them for a long time, with the goal of realizing price appreciation, despite volatility.

If buy and hold is your strategy, wouldn’t you want to get interest on the way?

1. Factsheet

Company type For profit
HQ Location San Francisco
Founded date 2017
Status Active
Website Compound Finance


Compound was founded in August 2017 and entered the market in May 2018. The network is based in San Francisco at this time. Robert Leshner, the founder and CEO of Compound, served as the co-chair for San Francisco’s Revenue Bond Oversight Committee.

Compound has raised a total of $33.2M in funding over 2 rounds – $8.2M in funding during a seed round held in May of 2018 – with lead investors Andreessen Horowitz, Bain Capital Ventures and Polychain – and an additional $25 million in its Series A funding round in November 2019.

Business model

Compound is a decentralized cryptocurrency lending system and a major player in DeFi (decentralized finance), relying on a decentralized network of lenders and borrowers, who use smart contracts to arrange collateral and payment terms.

Compound’s algorithmic protocol lives on the Ethereum blockchain.

The principle is quite simple: Allowing users to lend their funds for interest.

But the simplicity for the end user, its characteristics and its many integrations make Compound one of the market leaders.

Before being an interface, Compound is above all a public protocol. End-users can therefore access services that Compound offers through different interfaces.

These interfaces are multiple starting with Compound itself, but also Zerion or InstaDapp for example.

2. How to make cash

How do YOU make cash

Buy and Hold: Compound allows regular users to secure a passive income.

Anyone can earn lending out their idle crypto coins.

Instead of simply holding your coins hoping that their value would rise, you can now leverage your holdings without completely relinquishing ownership of your coin.

But crypto holders are also widely engaged in speculative strategies.

If you want to do this kind of work, you can do it very well using Compound.

Short selling: Should you want to bet down on the Ether you can borrow two ethers and sell them immediately for the sum of 400 euros.

After while  and if the two ethers are only worth 300 euros, you only have to buy two ethers with your funds and return them on the protocol.

Finally you will end up with a capital gain of 100 euros, less interest. So you have simply shorted your Ether in a decentralized way.

Leverage: For example, if you want to invest in BAT with a lever, you can guarantee BAT tokens in order to borrow other tokens of the same type. While you now have more BAT tokens, you are also more exposed to price fluctuations.

3. Admission process

Let’s borrow some DAI and see how it works from a practical perspective.

There are several possibilities, since different interfaces exist in Compound.

Prerequisite: Choosing the Compound app, requires the use of Coinbase Wallet, a Ledger or a Metamask account.

Once connected by the method of your choice, you’ll have access to the Compound app.

Token activation: Before you can borrow funds from the protocol, you’ll need to activate the token you want to borrow.

Transaction: To do this you have to supply the protocol with the tokens of your choosing.

A transaction is enough and it’s very simple to make. Let yourself be guided by the application which is very easy to use.

You have access to important market parameters, such as market liquidity and the rate of use of available funds.

These are, of course, the stable corners that are most used by consumers.

Be mindful of the different warranty rates as some tokens require more than others. And again: research all the tools you use, from connection to transactions to ensure the integrity of your funds.

4. Expected income

Currently, Compound supports the borrowing and lending of a selection of cryptocurrencies.

At the time the earning interest, are as follows:

Currency Interest
DAI 7.48%
ETH 0.13%
UNI 0.90%
USDC 9.50%
USDT 14.36%
WBTC 0.18%
BAT 3.52%
ZRX 2.59%
COMP 3.53%

Note: The figures interest rates change over time and have been reported for information purposes only.

5. Feedback

Compound is a pretty good way for coins holders looking for the best option to make loans with their funds.

Be careful to learn and analyze all the risks related to these activities!

6. Site preview


Mat is the founder of cashtipsandtricks and has been working in the financial sector in Luxembourg for the past 10 years and brings his insights as an investor and entrepreneur.

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