Coinbase Earn: Borrowing Crypto with Compound (Lesson 2 of 3)

– Second lesson Borrow cryptocurrency from Compound For loan Maya must fill out an application form Central financial service provider This process is very common, many requirements Also biased To avoid, Maya can borrow cryptocurrency Directly from Compound Using assets he can provide agreements In traditional finance, this loan process Providing assets is called borrowing Compound is different from traditional money markets Because it is decentralized Completely anonymous Only the central authority is the code With Compound, Maya or any financial application The service person can deposit and withdraw cryptocurrency assets Make good use of For example, Maya’s goal It may be an advanced trading strategy Like leveraged cryptocurrency Invest in other assets Borrowing cryptocurrency First of all, Maya must provide assets to Compound Provide assets immediately to generate interest Can also be used for borrowing Give other investors Maya selected assets The more she offers Can increase the borrowing limit In order to limit the risk Compound gives each asset its own unique factors This means that each provided asset will affect Different borrowings For example, every piece of money provided by Maya She can borrow 75 cents Because it can be 75 cents Maya earns interest When they can use This helps reduce costs Borrowing at static cost as long as the interest rate is the same as the borrowing rate Inspect to provide assets earned The interest rate compound market is floating According to supply and demand The interest rate determines the interest rate for Maya payments Borrowing assets and calculations Like earning interest rates This is to ensure that interest rates always respond Current market Over time there are fewer suppliers in the market More expensive ones will become more expensive Borrowing becomes more profitable But there are many borrowers in the market, and few borrowers It will become cheaper Relatively unprofitable Basically more assets to lend Higher interest rates will increase, and vice versa Compound saves Maya time Borrow cryptocurrency right away No need for assets to draw other cryptocurrency assets No need to fill in the form Or wait for bank to make money

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