My First Impression of Lending Compound

The Compound token first came to my attention when I had a few spare minutes yesterday to catch up on the "earn rewards" section of Coinbase.

The small incentives aside, I usually like these presentations pitching assets to newcomers as it seems like a lot of thought is put into making the information digestible and concise. I had begun my explorations of DAI, Maker and BAT from such a launch pad over a year ago. And while I never dove into them too deeply I felt like it was at least a worthwhile overview.

So, I learned that the gist of the Compound protocol is to facilitate earning interest on otherwise idle crypto assets by supplying them for over collateralized loans. This was interesting to me as I was in the process of consolidating assets from across my portfolio into fewer wallets and exchanges for convenience.

As most of that crypto would be idle while I dollar-cost-averaged into predetermined positions it seemed like a good time to experiment with this lending opportunity. Around that time I also noticed on the compound website that the rate for lending of the Compound token itself briefly spiked to around 40% (auspicious?) It did quickly return to something like 11-14%.

Unfortunately, the tutorial on Coinbase that probably would have been the most helpful turned out to be on pause.

This happens sometimes, usually with the tuts that offer larger rewards for completion. So I suspect they're paused because of tapering off the giveaways or some such. Anyhow, it's kind of a shame because I'm much more interested in some straight forward info on how to proceed rather than the loot.

I figured it shouldn't be too hard to find some alternative instructions. But it turned out to be a bit of a rabbit hole that I didn't fully figure out until the next day.

My main mistep after acquiring some Compound to lend was looking for the lend operation in Coinbase's trading app. To shorten a long story, I finally found an explanation on Reddit that I needed the separate Coinbase Wallet application.

Then linking that application to an existing Coinbase account proved to be a bit of a headache. Partly this stemmed from several rounds of multi-factor authentication, which I can appreciate—even if it's a little time consuming. But also a couple of the steps just seemed plain glitchy.

Once finally linked I still didn't see the "Earn interest" and "Lend" menu items right away. Now to be honest I'm still not sure if they didn't show up until I restarted the app. Or if my eyes were just tired and I didn't navigate the app well.

Either way the bigger disappointment came in the form of fees. I had decided to see how things went with a small sum first ($500). It cost about $20 in ETH to convert this much to Compound. Then it required another $20 or so ETH to "activate" the lending smart contract.

(This probably would have been mentioned in the paused tutorial, right? ;) )

It wasn't completely unexpected. And I reckon that the fees would have been more efficient for a larger deposit. Still, even if the APR stays around12.5% (occasional jumps to 40%+ ??? ) it would be months before I break even.

I still find the idea interesting though and consider the $40 a small expense paid for getting first hand experience with the platform, along with the time spent.

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