Lecture 7.0.0. How to Borrow Funds from Compound Protocol
Besides lending, you can also borrow crypto assets from Compound Protocol.
Remember that cryptocurrencies are money just as Dollars, Naira, Pounds or Rands. Hence, instead of going through the hassles of borrowing from traditional banks, you can easily borrow the funds you need from decentralised protocols like Compound.
Here are the steps.
Step 1: Login to Compound Protocol at app.compound.finance and connect your Ethereum Wallet.
Step 2: Deposit collateral
If you have not supplied any asset as collateral for your loan, you can do so by clicking on the Collateral button at the right side of the asset you want to supply as collateral.
Take note of the assets that are accepted as collateral by Compound Protocol; you will see the Collateral button on the right side of such asset. With this Collateral button you can enable or disable an asset to be used as collateral.
By clicking the collateral button next to the asset, you’ll be presented with a pop-up which displays how your Borrow Limit will change.
If you want to use the asset as Collateral, click on “Use asset as Collateral”, and a page will open requesting that you “Enable as Collateral.” You can then confirm it by authorizing it in your Ethereum wallet.
Step 3: Next is to click on the asset that you’d like to Borrow.
By this, a pop-up will appear, displaying the Borrow APY (amount of token/year) you’ll pay, and the Distribution APY (amount of COMP/year) you’ll earn by borrowing the asset.
Step 4: To Borrow an asset, type the quantity you’d like to borrow at the top of the pop-up.
Note the 80% Limit button, which tells you that it is safer for you not to borrow more than 80% of your Borrow Limit. In fact, for the safety of your collateral, the system may not even allow you to borrow more than your 80% of your Borrow Limit.
The amount of borrowing you have made against your collateral at any particular time is displayed on the Borrow Limit meter.
Step 5: Click Borrow, and submit the transaction.
Once you have done this, the amount of crypto you have borrowed will be deposited in your Ethereum wallet, where you can use it for whatever purpose you have intended it for.
