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Rachel Welch

17 November 2022 51 Read Altcoins

What Is Compound Finance?

Compound finance is a type of loan that involves lending assets to others in return for interest. It works by assessing the assets as collateral and determining how much a user is eligible to borrow. Once a user has enough funds, he can enter the market and begin trading. This process can be very risky, but the rewards can be large.

In a nutshell, Compound Finance is an online lending system in which multiple assets are supplied as collateral. These assets have different Collateral Factors that determine their value. The Collateral Rate is based on the Collateral Factors of all of the assets. This rate is the benchmark for the amount of funds that a user can borrow.