# Earning Interest w/ Compound - Users have idle crypto assets across exchanges and wallets: Not earning interest on any of them. - Savings account in the TradFi - You get interest for the money that you keep with the bank, and the bank then loans that money out to others and make money on it. Supply your crypto assets to the COMPOUND protocol so that you can earn interest on it: Other users can borrow your crypto and pay interest on the borrowed crypto ### Blockchain based interest rate markets 1. Maya submits an asset to compound 2. This asset gets added to a **Global Liquidity Pool** where other users can borrow from by providing collateral upfront 3. When borrowers in a specific market **accrue interest**, the compound protocol automatically distributes it to suppliers like maya > In TradFi, a short term borrowing and lending industry exists which is worth ~$5.5 trillion, in what are called MONEY MARKETS > Compound allows it's users to participate in a decentralized money market for crypto assets: Supply assets to compound and immediately begin earning interest Compound has no fixed terms: Supply and Borrow when you please for however long Once a crypto asset is distributed on compound, interest is automatically calculated and distributed with each new Ethereum Block every 15 seconds > Start earning interest on idle crypto assets in a trustless economy that does not rely on a central authority to manually calculate and distribute your supply interest Can be integrated into another FS and applications that could benefit from Compounds Interest Rate Markets The Compound protocol is a collection of ETH smart contracts that are both **decentralised and autonomous. ** Stop relying on and paying fees to third parties ---- ## Borrowing Crypto w/ Compound Getting a loan via TradFi, involves filling out a long application to a centralised authority. There is loads of requirements and opportunities for bias. You can borrrow directly from compound, using assets provided to the protocol as collaterall ##### Over-collateralized lending - Borrowing against supplied assets in TradFi - Assets value used as collateral on a loan exceeds the loan value Supplied Assets to Compound: - Generate Interest on all assets, even those used as collateral - Used as collateral to borrow The more supply, the more you can borrow --> Borrowing Limit Increases ##### Risk Limitation across the Protocol Each asset has it's own Collateral Factor, with each supplied asset affecting the borrowing limit differently > opportuntiy to optimize the Collateral Factors that impact individual borrowing limits and manage the risk of the protocol #### Net cost to borrow: Borrow Rate - Interest Earned on Supplied Assets Supply and Borrowing Rates always reflect current market conditions: - the more an asset is borrowed the more the interest rate will rise Borrow Crypto instantly: - w/o liquidate your crypto assets - w/o providing a credit score - w/o waiting for an underwriters decision ---- $COMP token Tags: #deeptech #kp Links:[[DeFi MOC]]