Compound Finance Review: Fees & Cryptos

Earning interest while remaining idle is becoming the new normal in cryptocurrency. Although tons of leading DeFi platforms offer investors handsome returns, Compound has become one of the best sources for DeFi yields. So, we will review Compound finance review and see where it currently stands in blockchain-based applications.

Key Takeaways

• Compound Finance is a unique crypto lending platform that uses blockchain and innovative contract technology to provide secure facilities.
• It supports numerous cryptocurrencies with interest rates depending on the demand and supply mechanism.
• The platform does not charge transaction fees; however, gas charges apply to trading and withdrawal amounts.

One thing is sure cryptocurrency is the future of finance, with digital assets gaining popularity and new ways of making money from them, putting them in the limelight. So, the Compound platform offers staggering growth by returning clients’ interests.

Furthermore, with a market cap of over $304 million, and high-interest rate returns, Compound Finance is too big to ignore. Likewise, its tokenization of assets through the ERC-20 blockchain is an added advantage.

So, let us indulge with Compound Finance Review.

Compound Finance Overview

• Website – https://compound.finance
• Headquarters – San Francisco, California
• Founded in – 2018
• Native Token – cTokens
• Listed Cryptos – ETH, DAI, USDC, TUSD, UNI, ZRX, USDT, BAT, LINK
• Supported Fiat Currency – USD
• Deposit Fees – Depends on Cryptocurrency
• Withdrawal Fees – Depends on Cryptocurrency
• App – Available

Key Features of Compound Finance

The Compound has numerous interactive features, making it easy for customers to earn income by holding their cryptocurrency with the platform.

Here are key features of Compound Finance.

• Compound Interest is the best feature, allowing users to earn compound interest on their cryptocurrencies.

• The protocol model of the Compound encourages users to be interested in crypto assets.

• Interest rates follow a decentralized function to cater to market pressure. Moreover, it extends features to sell cryptocurrency and request loans.

• Loan terms are highly flexible. Hence, there is no limitation on borrowing assets from Compound Protocol, and balances are payable at any time while interest accumulates per block on the Ethereum network.

• Voting rights at Compound protocol are vested to its holders of the tokens known as COMP. Moreover, users can delegate voting to one address at a time; the votes sent to the delegate are equivalent to the COMP balance in that user’s account.

• Time locks make Compound a unique protocol as all activities reside in Timeclock for at least 48 hours before implementation.

Compound Finance Fees

Since Compound is an attractive investment, investors are keen to learn about the platform’s fees and transaction charges. 

Although Compound does not charge users for depositing or withdrawing funds, users must pay a miner and transaction fees. Moreover, these Compound finance fees are not fixed and vary depending on the market situation. Likewise, a gas fee applies whenever a user borrows, transfers or mines on the platform.

Here is a summary of Compound finance fees.

• Minimum deposit – None 
• Trading fee – Standard gas fees
• Withdrawal fee – Standard gas fees

Compound Finance Lending Interest Rates

Here is a list of average monthly Compound Finance lending interest rates based on cryptocurrencies. 

• BAT – 1.21%
• COMP – 0.99%
• DAI – 2.18%
• ETH – 0.17%
• LINK – 0.89%
• TUSD – 2.29%
• UNI – 0.38%
• USDC – 1.63%
• USDT – 1.58%
• WBTC – 0.54%
• ZRX – 0.84%

Compound Finance Working

It is one of the best and most widely used crypto lending platforms. However, it only works on traditional lending mechanisms, as it has created a Liquidity Pool. It’s users can put their cryptocurrencies for borrowers to take out as per their requirements.

The Liquidity Pool is based on a smart contract chain that engages borrowers. So, Compound Finance Review says smart contracts are handy for automated interest-paying transactions. Since it uses computerized algorithms to calculate interest amounts, thus chances of error are minimal.

Likewise, it can control demand and supply based on the input information, thus keeping the Compound at an acceptable financial level.

Furthermore, interest rates for an underlying asset are generated on the rule of thumb. It’s greater demand means a high-interest rate for the borrower and lender. 

Moreover, the fluctuation in interest rates incentivizes lenders through COMP tokens. Thus, it creates harmony by motivating lenders and borrowers to maintain a financial balance.

Pros and Cons

The Compound has its advantages and disadvantages, which are mentioned below.

      Pros

• High-interest rates as compared to traditional banking.
• No requirement for KYC, AML or Credit scoring.
• One of the most trusted DeFi spaces.
• Users are rewarded with COMP – native Token.
• No limit on asset pool usage.
• Users have a voting right to govern the community.
• No minimum borrowing or lending constraints.
• No trading fee or slippage.

Cons

• Highly volatile algorithm-based protocol.
• A limited number of cryptocurrencies are available for trading.
• Yield farming is highly risky.

Frequently Asked Questions

What cryptocurrencies are supported by Compound?

Compound supports the following assets.

• ETH
• DAI
• USDC
• BAT
• USDT

What is a Compound’s market capitalization?

The market cap of the Compound network is $306 million as of late March 2023.

Is Compound Finance Legit?

Yes, Compound is legal and approved by many authorities across the globe. Moreover, the platform has got its procedures audited by third-party auditors.

Is Compound Finance a risk-free investment?

Compound Finance has its risks since it operates in a highly volatile crypto industry, so only invest if you are ready to cope with high volatility.

Parting Thoughts

Since Compound Finance Review produces good results, users have accelerated interest in the Compound platform. It has become the fastest-growing and most trusted crypto lending platform for smart contracts.

The Compound has developed a Liquidity Pool, where lenders put their cryptocurrencies, while borrowers can buy from the payback pool to pay back the amount at the interest rate. Lenders are then rewarded back with interest earned from borrowers.

Moreover, the platform has its native cryptocurrency – COMP- used to incentivize users. Borrowers can easily open an account or use the mobile app to start their Compounding journey.

In short, Compound has become a key player in revolutionizing cryptocurrency and traditional financial systems. Thus, it is a highly secure and accessible DeFi protocol that uses smart contracts to process transactions.

Here’s hoping you are well versed with Compound Finance Review, its working, benefits and future. Please leave feedback or query in the comments section.