6.0.2. How to Lend Crypto from Compound Protocol
To become a lender is to supply a crypto to the Liquidity Pool of Compound Protocol. To do this, it requires the following:
Step 1: Login to Compound Protocol at app.compound.finance and connect your Ethereum Wallet.
Step 2: Click on the crypto asset that you’d like to Supply.
By doing this, a page will pop up that displays:
(i). the Rate of Supply APY:
This is the rate of the number of tokens (cTokens) you will earn. cTokens are the primary means of interacting with the Compound Protocol; when you lend by supplying an asset to Compound Protocol, you will receive an amount of cTokens that is proportional to the amount of asset you have supplied.
By holding on to your assets, you will keep accumulating the cTokens as well as enjoy the appreciation of their value.
(ii). The Rate of Distribution APY:
This refers to the rate of the number of COMP token you’ll earn by supplying your asset to the Compound Protocol. The COMP you earn is an incentive so that you can continue to keep your asset in the liquidity pool.
COMP is the native token as well as the governance token of Compound Protocol. As a native token, it means you can trade your COMP for profit. As a governance token, it means you have voting power with which you can vote for changes to the Compound Protocol.
Step 3: Next click “Enable.” This allows the Compound protocol to interact with the asset in your Ethereum wallet.
Step 4: Type the quantity of crypto asset you’d like to supply at the top of the pop-up. Your Wallet Balance is displayed at the bottom of the pop-up.
Step 5: Finally, click Supply, and submit the transaction.
Assets are supplied directly from your Ethereum wallet into the liquidity pool.
