Did you know that you can earn interest on your cryptocurrency. So even if the price of crypto is dropping you're still able to accumulate more! One of the best platforms for earning interest is called Compound. In this post I'm going to explain how Compound works and how you can use it to make money.
What is Compound
Compound is an open source protocol that lets people lend there under utilised crypto and let others borrow it. Currently you can access the protocol through the compound.finance website. Compound is a decentralised money market. That means there is no one person or company who controls it and this means it's more secure.
Here are some of the features of Compound:
Use your own wallet – you don't need to transfer funds into someone elses wallet to start using Compound. You access the protocol through a Dapp (decentralised app).
Daily Compounding – You earn interest every single day. This means you don't need to lock up your funds to a year to see any gains. You're free to withdraw your money at any time.
Multiple Assets – Lend a number of different assets. Including StableCoins and other popular tokens like BAT and ZRX.
How to Lend money on Compound
Here is a step by step guide on how to lend money on Compound. For this guide I'm going to show you how to lend Dai. Dai is a stable coin. Which means it'll be worth very close to $1 usd. I recommend lending Dai (or another stable coin) as it's price isn't going to change. If you lend Ether you could lose money if the asset declines in value.
Step One – Buy Dai
So in order to lend, you'll need some assets. You can easily buy Dai on Coinbase. If you don't have a Coinbase account you can get one here. Depending on where you live you'll be able to purchase Dai instantly. And you can do this using a credit card or bank transfer. I recommend Coinbase as it connects with the Coinbase Wallet which you'll be using in the next step…
Step Two – Download the Coinbase Wallet
This is a seperate mobile app to the Coinbase app. The Coinbase Wallet is a wallet that lets you control your own keys and securely store your crypto on your own device. It also lets you access Dapps through the app.
Step Three – Transfer Dai to Coinbase Wallet
You can do this within the Coinbase Wallet app. It can link to your Coinbase account to make transfers easier.
Step Four – Activate Dai on Coinbase Wallet
Though the Dapp browser in the Coinbase Wallet you can access Compound. Just type the addresss “compound.finance” into the address bar. Then tap on Dai and then tap to enable the asset. It will cost you a small amount of ETH to enable the asset. Remember that Compound is a Decentralised App which is running on the Ethereum Blockchain. So it costs a small amount of ETH to power the app for you.
Step Five – Lend
Once Dai has been enabled, you can start lending it! Remember you'll be able to withdraw your funds at any time.
Lending on Compound is really easy. It allows you to make use of your tokens that otherwise would be sitting in your wallet and just collecting dust. Compound wants people to be able to use tokens!
Bonus Tip – If you sign up to Coinbase through this link, and buy $100 worth of Dai you'll get a bonus $10 in Bitcoin. So it's an extra little bit of cash for you.