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DeFi Earn: Compound Lending

Details on DeFi Earn: Compound Lending - a decentralized on-chain money market and lending platform

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Written by Support Specialist
Updated over a week ago

What is Compound Lending?

Compound is a decentralised on-chain money market and lending platform, establishing pools of assets with interest rates algorithmically derived from the assets’ supply and demand.

The main value proposition for Compound is that it allows users to earn a yield on their crypto assets without having to custody them with a third party.

With DeFi Earn integration, we handle the deposit and withdrawal process with Compound Lending natively on the DeFi Wallet app. Therefore, you don’t have to worry about dealing with smart contract calls. Additionally, we simplify the concept of cTokens and display the accrued interest you’re earning overtime.

When your tokens are deposited to the Compound Lending protocol via DeFi Earn, you are transferring them to Compound’s smart contract. In exchange, you get the corresponding cTokens which representsthe claim to your lent assets.

The token rewards you earn are not distributed to your wallet. However, by simply holding onto your cTokens, you'll earn interest as these cTokens accumulate interest through their exchange rate. Over time, each cToken becomes convertible into an increasing amount of its underlying asset, even while the number of cTokens in your wallet stays the same.

Hence, we display an extra warning when you’re trying to send your cTokens to ensure you understand the implication of sending away your claim to lent assets + the accrued interest.

When you decide to make a withdrawal, you are essentially sending cTokens to Compound to redeem your deposited assets along with the accrued interest based on the cToken <> underlying token exchange rate.

To learn more about Compound Lending, you may view here for our in-house research article on Compound.

Read on to learn about how to make a deposit, view your earnings, and withdraw via DeFi Earn - Compound Lending.

How do I deposit my crypto assets to DeFi Earn - Compound Lending?

  1. Tap “Earn” at the bottom navigation panel of the DeFi Wallet app

  2. Enter Compound in the search bar

  3. Select your preferred token and enter the deposit amount to view your estimated earnings based on the latest APY percentages.

  4. Review and confirm your deposit by tapping “Confirm Deposit”

    1. Note: Depositing crypto assets to Compound Lending involves calling an Ethereum smart contract. This requires ETH as network fees, which causes the estimated network fee to be higher than normal transfers. Please ensure that you have sufficient ETH in your wallet before proceeding.

  5. Authorise the deposit request with your passcode (and 2FA, if enabled)

  6. Wait for the on-chain confirmation of your deposit request

  7. Once the deposit request is confirmed, your DeFi Earn page will display an updated amount regarding your total assets.

In the DeFi Earn page, you will also be able to see the estimated APY at a token level. The tokens you deposit to DeFi Earn will be linked to the protocols you selected. Your assets will start accruing token rewards once the deposit is confirmed on-chain.

How do I view my earnings or deposited assets via DeFi Earn - Compound Lending?

Navigate to the DeFi Earn page. The default view for your total DeFi Earn assets will be displayed in their fiat equivalent amount as “Total Fiat Amount”

  • Tap on “Total Fiat Amount” to switch this to “Total Crypto Amount” and view your DeFi Earn assets in their crypto equivalent amount

  • Tap on “Total Crypto Amount” to switch to “Earnings” and view your estimated earnings for each asset

For a more granular breakdown, tap on a specific token and you will be able to see the latest APY %, total amount deposited, and estimated earnings in crypto.

How do I withdraw my crypto assets from DeFi Earn - Compound Lending?

There is no lockup period for your deposit and you can withdraw your assets from DeFi Earn at any time. Here are the steps to withdraw your crypto assets from DeFi Earn:

  1. Withdrawal via the DeFi Earn tab

    1. Tap “Earn” in the DeFi Wallet’s bottom navigation panel

    2. On the DeFi Earn page, select the token that you would like to withdraw in the “Staked Assets” section

    3. Tap “Withdraw” in the DeFi Earn Details page

    4. Enter the amount you would like to withdraw and tap “Confirm Withdraw” after reviewing the transaction’s details

  2. Withdrawal via wallet balance

    1. In the DeFi Wallet’s homepage, tap “DeFi Earn Assets”

    2. Select the cCOMP token in the following page

    3. Tap “View Earnings” in the “cCOMP BALANCE” page

    4. Enter the amount you would like to withdraw and tap “Confirm Withdraw” after reviewing the transaction’s details

After confirming the withdrawal, a short amount of time is needed for the transaction to be processed.

  • Withdrawal via wallet balance

  1. From home screen, tap onto “DeFi Earn Assets”

  2. Select the token on the assets screen

  3. You will arrive at your wallet balance screen, tap “View Earnings”

  4. Tap onto the “Withdraw” button on the DeFi Earn Details screen

After confirming the withdrawal, you’ll see the pending status on both your home screen and the DeFi Earn screen.

How is my DeFi Earn interest and service fee calculated for Compound Lending?

To help you better understand each of the steps from depositing to withdrawing from DeFi Earn, here’s a sample:

  • Day 1: Deposit into DeFi Earn

  1. You deposit 100 DAI

  2. In return, you get 200 cDAI based on the exchange rate

  • Day 10: Check earnings

  1. Based on the exchange rate on that day, the 200 cDAI you have are now worth 102 DAI

  2. In total, you have accrued interest 2 DAI

Say you decide that you want to withdraw your crypto assets from DeFi Earn on Day 10:

  • Withdraw all earnings

  1. You input the withdraw amount, i.e. 102 DAI

  2. Upon confirmation, we transfer the underlying 200 cDAI to Compound in order to withdraw the 102 DAI you have requested

  3. 0.5% of your corresponding earnings for the withdrawal is charged as a service fee, in this case, 0.01 DAI is charged

  • Withdraw partial earnings

  1. You input the withdraw amount, i.e. 50 DAI

  2. Upon confirmation, we transfer the underlying 98 cDAI (based on the exchange rate on that day) to Compound in order to withdraw the 50 DAI you have requested

  3. 0.5% of your corresponding earnings for the withdrawal is charged as service fee, in this case, 0.0049 DAI is charged

Does charge a fee to deposit/withdraw to/from Compound Lending? charges a 0.5% service fee on the corresponding earnings for each withdrawal from Compound Lending. The fee is used to supplement the operational costs and risks associated with managing DeFi services, and bringing more DeFi projects to you.

Please note that Compound Lending is an Ethereum-based protocol and each deposit or withdrawal request incurs network fee in ETH.

Hence, we advise you to only withdraw your Compound assets + interest when you have earned enough to cover the network fee.

How do I receive COMP for using Compound Lending?

You automatically accumulate COMP by depositing to Compound. Once you have earned over 0.001 COMP, it will be distributed to your wallet the next time you make a deposit or withdrawal with Compound. The amount of COMP you will earn each day is proportional to how much is invested by you and everyone else using the protocol. View here to learn more about COMP distribution.

Users should be aware of the risks of possible slashing of staked assets or rewards. The specifics of slashing are defined within each protocol, and is a mechanism built into Proof of Stake blockchain protocols. Although it's unlikely, there is a possibility you may lose your staked assets or rewards in case of a network or validator failure. While we've taken measures to reduce these risks, losses incurred as a result of slashing or other on-chain contract security are outside of our control and we shall not have any liability or be responsible for any damages or liabilities suffered from slashing penalties.

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