How does compound crypto work in the context of decentralized finance?

1 answers

• PriyabrataFeb 27, 2023 · 2 years ago
  Compound crypto, as the name suggests, is a compound interest protocol in the decentralized finance space. It allows users to lend their cryptocurrencies and earn interest on their deposits. The interest rates are determined by the utilization of the assets in the protocol. When there is high demand for borrowing a particular cryptocurrency, the interest rates increase, incentivizing lenders to supply more of that asset. On the other hand, when the demand decreases, the interest rates decrease as well. This mechanism ensures that the interest rates are market-driven and responsive to changes in supply and demand. Compound crypto has gained traction in the decentralized finance ecosystem due to its innovative approach to lending and borrowing.
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