Hi, Compound.Finance drives me nuts, so I created this calculator to do a little mathematics for me. The way it works is it takes your initial investment, the APR (Which is highly unstable) and the Years, and adds in the incremental bonus of compound every 15 seconds in the total calculated. Due to the ever changing APR on Compound.Finance, it will never give you an accurate result. But it will help you relax a little if you’re interested in figuring out your future potential earnings when using the compound.finance platform.

If this is helpful please feel free to donate to me via PayPal. I need food and all my money is in crypto.

If you’re interested in Crypto, you’ll most likely know about Compound.Finance, which is in it’s most simple form, a lending and borrowing platform. Personally I think it’s pretty cool, because I love watching numbers rise, but that’s just me.

Compound.Finance is an open DeFi lending protocol which allows lenders to accrue interest from their cryptocurrency holdings. Deposited assets are secured within smart contracts, which you may have heard being referred to as liquidity pools. Interest and Borrowing rates will vary dynamically based upon how much money is being lent and borrowed. This pretty much makes my calculator for Compound.Finance useless, however it’s good to get a quick overview of what you’re currently earning, and can assuage your worries. (It does at least for me!)

Utilizing smart contracts, the protocol automates interest rate calculations and loan issuance, eliminating the need for intermediaries, like those hideous banks. In the simplest terms, Compound.Finance operates as an open marketplace where lenders and borrowers interact directly, without third-party involvement.

Compound.Finance allows users holding cryptocurrency assets to act as lenders while enabling others to borrow these assets. The protocol employs smart contracts to pool assets provided by lenders into liquidity pools for each supported cryptocurrency. Borrowers can access funds from these pools, albeit not directly from lenders.

Key Aspects of Compound Finance:

Supplying Crypto Assets: Lenders lock their assets in liquidity pools, akin to depositing funds in a savings account. However, instead of traditional banks, assets are stored within the Compound wallet, with each asset being converted into cTokens, representing their value in the pool. These cTokens can be redeemed for the underlying assets at any time. (Except in the rare cases the platform is down or you run out of whichever currency you used to put the assets on the platform.

Borrowing in Compound: Borrowers must deposit collateral to secure their loans, ensuring overcollateralization to safeguard liquidity pools. Upon depositing collateral, borrowers receive “Borrowing Power” in the form of cTokens, dictating their borrowing limit from the pools.

Interest Rates: Interest rates for lenders are based on the amount of cTokens held and fluctuate according to asset liquidity. The protocol aggregates interest rates via the Open Price Feed contract, with rates reaching pretty high at times, I’ve seen them as high as 22% (Though a bit of this is paid in the Compound token) and they’ve also gone pretty darned low. I think I saw 3.75% *Shudder*

Transaction Fees: While Compound Finance doesn’t charge users for deposits or withdrawals, transaction and miner fees apply for minting, borrowing, liquidating, and other actions within the protocol. It sometimes makes me wonder why the hell I went with the eth pool… Ah well…

Yield Farming and COMP Token: Yield farming, catalyzed by Compound Finance, incentivizes platform users with COMP tokens, enhancing returns for both lenders and borrowers. COMP serves as the native cryptocurrency for Compound Finance, conferring voting rights for protocol governance. I can’t tell you much about that because I’m not involved in it.

Pros and Cons: Pros include nice earning opportunities, compound interest benefits, low entry barriers, safety assurances, and absence of trading fees. Conversely, limitations include fewer supported cryptos and a steeper learning curve for new users.

Basically, if an idiot like me can use it, anyone can.