6.0.3. What Takes Place Once You’ve Supplied Asset
Once you have clicked Supply and submitted the transaction, three things will take place:
(A). cToken will be deposited in your Ethereum wallet.
By submitting your transaction, some amount of cTokens is minted and deposited in your Ethereum wallet. The amount of cTokens deposited represents the amount of crypto asset you have supplied. For instance, if you supply USDC, you will receive a commensurate amount of cUSDC, if you supply Ether, you will receive a commensurate amount of cEther, etc.
The value of your cTokens in your Ethereum wallet will be seen in the Supply Balance on the Compound dashboard anytime you connect your wallet.
(B). You will immediately begin to earn Supply Interest.
The Supply Interest is generated for every block of Ethereum blockchain. It takes about 15 seconds for a block to be formed on the Ethereum blockchain. That means your Supply Interest accrues every 15 seconds.
The rate of the Supply Interest is calculated as Annual Percentage Yield (APY) of the total asset amount you supplied.
Important Note:
The rate of the Supply Interest is determined by the supply and demand of market. When there’s a lot of liquidity in a particular pool market because there are many suppliers (depositors) or because there is a small number of borrowers, the interest rates will be lower. If there’s less liquidity, then the interest rates are higher.
It may happen that for a period of time, there is not enough liquidity to borrow and withdraw digital assets. In this case, interest rates become high to incentivize suppliers to add more funds to the pool and borrowers to repay.
Note that the value of your Supply Interest is added to the value of your cTokens and both will be seen collectively in the Supply Balance on the Compound dashboard once you connect your wallet.
(C). You will immediately begin to earn Distribution Interest.
For lending a crypto asset to the liquidity pool, you will start to earn COMP tokens, which are distributed to all lenders and borrowers. The number of the COMP tokens you have can be seen at the Comp Balance.