{"id":6934,"date":"2020-10-15T15:13:38","date_gmt":"2020-10-15T09:43:38","guid":{"rendered":"https:\/\/zebpay.com\/?p=6934"},"modified":"2020-10-15T15:13:38","modified_gmt":"2020-10-15T09:43:38","slug":"compound-on-zebpay-everything-you-need-to-know","status":"publish","type":"post","link":"https:\/\/zebpay.com\/in\/blog\/compound-on-zebpay-everything-you-need-to-know","title":{"rendered":"What is Compound?: Everything you need to know"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_66_1 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/zebpay.com\/in\/blog\/compound-on-zebpay-everything-you-need-to-know\/#What_is_the_Compound_protocol\" title=\"What is the Compound protocol?\">What is the Compound protocol?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/zebpay.com\/in\/blog\/compound-on-zebpay-everything-you-need-to-know\/#How_it_works\" title=\"How it works\">How it works<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/zebpay.com\/in\/blog\/compound-on-zebpay-everything-you-need-to-know\/#What_is_the_Compound_token_COMP\" title=\"What is the Compound token (COMP)?\">What is the Compound token (COMP)?<\/a><\/li><\/ul><\/nav><\/div>\n\n<h2 class=\"data-collection wp-block-heading\" id=\"h-what-is-the-compound-protocol\"><span class=\"ez-toc-section\" id=\"What_is_the_Compound_protocol\"><\/span>What is the Compound protocol?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>At its simplest, <a href=\"https:\/\/zebpay.com\/in\/buy-comp\/\" target=\"_blank\" rel=\"noreferrer noopener\">Compound<\/a> is a DeFi loan platform where you can borrow and supply ERC20 tokens. These include <a href=\"https:\/\/pro.zebpay.com\/trade\/ETH-INR\">ETH<\/a>, <a href=\"https:\/\/pro.zebpay.com\/trade\/BAT-INR\">BAT<\/a>, <a href=\"https:\/\/pro.zebpay.com\/trade\/DAI-INR\">DAI<\/a>, <a href=\"https:\/\/pro.zebpay.com\/trade\/UNI-INR\">UNI<\/a>, <a href=\"https:\/\/pro.zebpay.com\/trade\/USDT-INR\">USDT<\/a>, and <a href=\"https:\/\/pro.zebpay.com\/trade\/ZRX-INR\">0x<\/a> among others.<\/p>\n\n\n\n<p>Think of it as putting your savings into a bank. When you deposit a certain amount into your savings account, you earn an annual interest on that amount. Now imagine being able to actually use that money, <em>while it\u2019s earning you interest<\/em>. That\u2019s the brilliance of Compound.<\/p>\n\n\n\n<h2 class=\"data-collection wp-block-heading\" id=\"h-how-it-works\"><span class=\"ez-toc-section\" id=\"How_it_works\"><\/span>How it works<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Let\u2019s say you put 0.5 <a href=\"https:\/\/zebpay.com\/blog\/uniswap-an-exchange-playing-by-its-own-rules\/\" target=\"_blank\" rel=\"noreferrer noopener\">UNI<\/a> into Compound. The amount of supply and demand for a particular asset automatically determines its interest rate. This means that (at the time of writing), you would earn a whopping 6.50% annual percentage yield (APY) on the amount of UNI you supplied. After supplying, you also have the option to use it as collateral to borrow<em> any other<\/em> token of your choice on Compound.<\/p>\n\n\n\n<p>This is where cTokens come in. The Compound <a href=\"https:\/\/compound.finance\/documents\/Compound.Whitepaper.pdf\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">white paper<\/a> explains it best:<\/p>\n\n\n\n<p><em>Assets supplied to a market are represented by an ERC-20 token balance (\u201ccToken\u201d), which entitles the user to an&nbsp; increasing quantity of the underlying asset. As the money market accrues interest, which is a function of borrowing demand, cTokens become convertible into an increasing amount of the underlying asset. In this way, earning interest is as simple as holding a ERC-20 cToken.<\/em><\/p>\n\n\n\n<p>Here\u2019s how it would play out: your 0.5 UNI would be converted into ERC-20 form as cUNI. You would then be free to do as you wish with it: trade, move, or use it in another decentralized application (dapp). This interoperability is a crucial aspect of DeFi\u2014the ability to combine multiple protocols and dapps to have control over your own assets.<\/p>\n\n\n\n<p>Compound also possesses other important hallmarks of DeFi: Since there is no central party that controls its functioning (more on that below), it cannot be shut down. It also operates entirely through smart contracts built on Ethereum, which makes it non-custodial. This is extremely important for the security of your assets. The Compound protocol is also completely free and open-source.<\/p>\n\n\n\n<h2 class=\"data-collection wp-block-heading\" id=\"h-what-is-the-compound-token-comp\"><span class=\"ez-toc-section\" id=\"What_is_the_Compound_token_COMP\"><\/span>What is the Compound token (COMP)?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/lh5.googleusercontent.com\/delGXdEPU3r3Pz67xqYprJadl3FcEtfb_PlN7Iuvp-YKZZ2CHtzDhtkmd8BUtu_ZbJP4sGDBZH64JA0pwALSCg5eXx-s_6SSbgPv6PwjrC3rzvjYWL2W5_GvMoQsepI1WlDZsaUP\" alt=\"\"\/><figcaption>Source: Coingecko<\/figcaption><\/figure>\n\n\n\n<p>The Compound platform was built using traditional equity fundraising. Venture capital firm Andreeson Horowitz\u2014with now-legendary companies such as Facebook, Lyft, and Slack under its belt\u2014was a major investor. This generated some amount of criticism: Compound couldn\u2019t claim to be truly decentralised when its users didn\u2019t have a say in how it runs. That all changed <a href=\"https:\/\/medium.com\/compound-finance\/compound-community-ownership-ee0ed1252cc3\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">this year<\/a>, with the launch of the COMP token.<\/p>\n\n\n\n<p>COMP is the governance token of the Compound platform. The COMP token is distributed to users of the Compound protocol, in proportion to their contributions. The higher the demand of the token you\u2019re supplying, the more COMP you earn.<\/p>\n\n\n\n<p>The token is used to <a href=\"https:\/\/app.compound.finance\/vote\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">vote<\/a> on proposed changes to the Compound protocol. COMP token holders receive voting power on a 1\u20131 basis to the amount of COMP held.<\/p>\n\n\n\n<p>Still unconvinced? Rashi Jaiswal, our Senior Software Engineer summed it up best: \u201cCompound provides an environment to enjoy benefits of multiple assets while truly owning just a single asset.\u201d<\/p>\n\n\n\n<p><a href=\"https:\/\/connect.zebpay.com\/account\/login?returnUrl=%2Fconnect%2Fauthorize%2Fcallback%3Fclient_id%3Deee7baaa-9d6c-43f1-9eb6-8174f62cd244%26redirect_uri%3Dhttps%253A%252F%252Fweb.zebpay.com%252Fsignin-oidc%26response_type%3Did_token%2520token%26scope%3Dopenid%2520profile%2520wallet%253Atransactions%253Aread%2520wallet%253Aaddress%253Aread%2520wallet%253Aaddress%253Acreate%2520wallet%253Atransactions%253Asend%2520trade%253Aread%2520trade%253Acreate%2520payment%253Aget%253Adata%26response_mode%3Dform_post%26nonce%3D637750933103201191.YzczNzVmNjctODU4OS00YzJmLTk3ZjktOTAxYmM2Mjc5YzBhZDBiOGEwZGMtN2JjZS00NTkzLWI5MWMtMWFiMGNlODkzMTM5%26state%3DCfDJ8BLpXCyXoWdBlQxqnfY4qRVzBzXJpSFcu51kpqw0Q1e-AwRABy2x4w60bsRz9lo3K0grpGmZh4Ba5xaNcrHp3iPorKmxODCwXjdAjxFcpHtc0Vj7A0FqH546KyQnJczBVLG7We0J4GehlNExuDjHGAa2gGPsYL2_gq1RMTcBqtWJYPh3h1dNaQjr9Tbvs4jpctJxte1flWdBZ8AeDh0tYioeNUdlh5uJewH46lj1ZVdY54D6Ex7o2XNXhvvv_pR8Xsta8z90c1Q74XrXZyBWq4uCwoqkdmq5-Rs2GFyT4sgY%26x-client-SKU%3DID_NETSTANDARD2_0%26x-client-ver%3D5.5.0.0\" target=\"_blank\" rel=\"noreferrer noopener\">Login now<\/a> to start trading COMP on ZebPay.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>What is the Compound protocol? At its simplest, Compound is a DeFi loan platform where you can borrow and supply ERC20 tokens. These include ETH, BAT, DAI, UNI, USDT, and 0x among others. Think of it as putting your savings into a bank. When you deposit a certain amount into your savings account, you earn [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":6937,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"_ayudawp_aiss_exclude":false,"footnotes":""},"categories":[14],"tags":[84],"acf":[],"_links":{"self":[{"href":"https:\/\/zebpay.com\/in\/wp-json\/wp\/v2\/posts\/6934"}],"collection":[{"href":"https:\/\/zebpay.com\/in\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zebpay.com\/in\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zebpay.com\/in\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/zebpay.com\/in\/wp-json\/wp\/v2\/comments?post=6934"}],"version-history":[{"count":0,"href":"https:\/\/zebpay.com\/in\/wp-json\/wp\/v2\/posts\/6934\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/zebpay.com\/in\/wp-json\/wp\/v2\/media\/6937"}],"wp:attachment":[{"href":"https:\/\/zebpay.com\/in\/wp-json\/wp\/v2\/media?parent=6934"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zebpay.com\/in\/wp-json\/wp\/v2\/categories?post=6934"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zebpay.com\/in\/wp-json\/wp\/v2\/tags?post=6934"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}