For its Earn crypto tutorial service, Coinbase has introduced Compound, one of the most notable DeFi protocols.
Earn Crypto By Learning
By learning and interacting with lessons specific to a particular crypto, users are rewarded with distinct crypto tokens.
Thanks to the inclusion of Compound to the Coinbase Earn scheme, Coinbase users can now get a guided entry into one of the most involved sectors of the DeFi community.
How to Earn COMP Coinbase
Users can earn COMP by completing the following activities:
- Watching a video about earing interest with Compound
- Watching a video about borrowing with Compound
- Learn about the basics of the COMP token
- Using COMP with the Coinbase wallet
- Inviting friends to complete the above activities
What is Compound?
Compound is an application built on the Ethereum network for decentralized lending. Anyone with a supported cryptocurrency can deposit it into a Compound smart contract where it joins a pool of liquidity and begins to generate interest.
Other consumers who borrow funds and pay interest on the loans are responsible for the interest. Compound acts similarly to a bank.
With Compound, the protocol issues the tokens, known as cTokens, when funds are deposited. Therefore, if Ether (ETH) is contained in the compound, the corresponding amount of cETH is obtained.
Loaning and Borrowing with Compound
The cETH will also be used as collateral for a loan, which ensures that the funds can be invested easily while receiving interest.
The interest gained is calculated based on supply and demand by Compound’s underlying smart contracts.
So, if a large number of individuals are borrowing a specific asset, the smart contract will raise the interest rate to attract lenders.
Compound Governance Token (COMP) will be used in community governance for the overall Compound ecosystem.