Compound Introduces Ethereum Money Market

Finding it difficult to see returns in the cryptocurrency market these days? One San Fransisco startup is offering a different way to put your crypto investments to works, launching money markets for Ethereum. As MarketWatch reports, Compound’s new platform allows coinholders to earn interest by lending out their assets.

In a blog post by Compound founder CEO Robert Leshner, he explained that his company is “launching its money market protocol on the Ethereum blockchain — allowing individuals, institutions, and applications to frictionlessly earn interest on or borrow cryptographic assets without having to negotiate with a counterparty or peer. Each market has a dynamic borrowing interest rate, which floats in real-time as market conditions adjust.” Like Etherum itself, Compound’s money market will rely on blockchain technology. Leshner writes, “Blockchain assets are novel and exciting, but they lack the most fundamental financial infrastructure—efficient interest rates. Over time, hundreds of trillions of dollars of assets will be tokenized, but the institutions that deploy them will require the usefulness of traditional financial markets—today’s launch is just the first step.”

Because Compound’s money market will match lenders to interest rates, Compound notes that users will have great flexibility when borrowing or lending coins. They explain, “You can borrow for six hours, and pay six hours of interest. You can lend for two hours and earn two hours of interest.” Additionally, while algorithms will be employed to determine rates, the company anticipates annualized rates to come in between 5% and 10%.

While Ether is the headlining token supported on the protocol, Compound will also support 0x, Basic Attention Token, and Augur at launch. Additionally, the company has plans to introduce a stablecoin offering, which will be pegged to the U.S. dollar.

Currently the Compound protocol can be accessed through their app using a Web3 browser. However the company warns this initial release “should be considered extremely experimental technology.” As a result they encourage potential users to review the source code for themselves and evaluate the protocol’s safety before proceeding.

Although this warning will likely serve to keep less adventurous crypto investors at bay for now, surely those attentive to the cryptocurrencies space will take an interest (no pun intended) in what Compound is building. Moreover, with Etherum and other altcoins slumping as of late, introducing a different way for investors to cash in on crypto could help get things moving in the right direction once again. With that, hopefully Compound can pull off their big Ethereum money market idea and bring the protocol to a wider audience in the coming months.


Jonathan Dyer

I'm a small town guy living in Los Angeles looking to make solid financial decisions. I write for a number of finance websites, including HuffingtonPost and Business2Community. I founded in 2015 to focus on personal finance and the emerging FinTech markets.

Other Articles by Jonathan Dyer

Marqeta Expands Credit Program with New APIs and More

A FinTech that specializes in creating credit card experiences is rolling out some new features. This week, Marqeta announced what it calls a "significant expansion" of its credit platform. This includes more than 40 new credit APIs that will further help clients craft and launch their own credit card products. Additionally, the company notes an updated intuitive dashboard. Using this platform, businesses can create unique card options that can not...

PayPal Launches Small Business Credit Card with Flat 2% Cashback

The popular platform PayPal is rolling out a new product built specifically for small businesses. Today, the FinTech announced the launch of The PayPal Business Cashback Mastercard. The new card will be issued by WebBank and marks the first time PayPal has offered a business credit card. With the PayPal Business Cashback card, business owners will be able to earn 2% cashback on all purchases. This earning rate is not...

Wells Fargo Unveils New Autograph Rewards Visa Card

A new rewards credit card is on the way from Wells Fargo. Today, the bank introduced its Autograph card, which expands the company's refreshed card portfolio. In terms of rewards, the Wells Fargo Autograph Card will earn 3 points per dollar spent in a number of categories. These include restaurants, travel and transit, gas stations, select streaming services, and phone plans. All other purchases will earn 1x points. Beyond the...