Conversation

SBF
@SBF_FTX
1) What is COMP, you ask? Why is everyone talking about it, and why is FTX listing it? A thread.
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SBF
@SBF_FTX
4) One cool thing about Compound is the interest rate calculation--it looks at the supply and demand of each coin and algorithmically determines an interest rate. So if lots of people want to borrow USDC and no one wants to lend, rates will increase until that evens out.
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SBF
@SBF_FTX
5) The really cool things, though, are the cTokens. Rather than just paying you interest directly, Compound tokenizes it. What does that mean?
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SBF
@SBF_FTX
6) Say you deposit 5 USDC and lend it out for 1%/year. Compound takes your USDC and in return gives you cUSDC, $1:$1. So if cUSDC is worth $0.25, it'll give you 20 cUSDC for you 5 USDC. All cUSDC is fungible--you can send it to a friend, who can then redeem it back for 5 USDC.
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Duck 🦆
@duckdarryl
Replying to
@SBF_FTX
and
@SBF_Alameda
How does one redeem? Also, how to check if the supply is artificially increasing? This model, applies to USDT as well, and it seems to be perfect if and only if USDT is perfect - but USDT’s governance is not perfect - how so will this affect
@compoundfinance
then?
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