Compound USDT (cUSDT) is a cryptocurrency issued by the Compound protocol, which is a suite of Ethereum smart contracts. The Compound protocol enables developers to get access to diverse cryptocurrency markets via the platform’s interface. Using cUSDT, it is possible to earn money on the fluctuations of the DeFi tokens. The Compound ecosystem was launched to deliver a new scheme of borrowing services that don’t employ fixed rates or agreed rates between the parties.
The platform was created to make users contribute their cryptocurrency holdings to a lending system thus making their assets bring profit, not staying idle without any movement. As the industry evolves, the amount of frozen cryptocurrency funds has become really huge. Despite the incredible turnover of funds on the cryptocurrency exchanges, many people prefer to ‘hodl’, therefore, their funds remain intact. The income provided by the Compound platform is a serious benefit that attracts many investors. They can earn profit without any risk as the lending facility Compound has become an ideal solution for holders of digital assets. The main task for the team was to create an open and resilient interface that improves the functionality of the product.
Compound is a decentralized finance protocol hosting lending pools and enabling users to earn interest on cryptocurrencies. Using the pools hosted by Compound, holders of digital assets supply borrowers with their cryptocurrencies at a certain interest rate. At this, the rate is determined automatically on the basis of supply and demand. The core of the technology is a special algorithm that makes Compound stand out from the rest.
When users lend their digital assets on the Compound lending platform, they make their holdings not stay idle but work for them instead. This is how they get compound interest over time. The platform offers over 14 different pools of diverse digital assets at the time of writing including various cryptocurrencies and stablecoins. Compound USDT is one of them along with Compound DAI, Compound Ether, COMP, and others. The interest rate is the same for all clients regardless of their volume traded and other factors. Compound differs from similar platforms thanks to the possibility to withdraw your funds at any time.
It’s worth mentioning the obligatory collateralization during the procedure that guarantees that the borrowed tokens are going to be returned along with the interest. It will also help to enhance the borrowing capacity of users.
The procedure of liquidation occurs only when the price suddenly goes down and users owe more funds that it’s allowed by the system. In this case, people can purchase the collateral with a discount. The procedure of liquidation is prevented when the borrower repays the debt at least partially.
Compound platform and its products
A testnet of the Compound platform started its work in 2018, and in mid-May 2019 v2 version was released. The mainnet of the facility was launched in 2017 with the goal to make it entirely decentralized over time. The aim was successfully achieved with the release of the platform’s token COMP (the Compound Governance Token). The holders of COMP tokens can participate in voting thus affecting the development of the facility. It is necessary to have 1% of the COMP tokens to submit government proposals.
The platform is absolutely automatic and relies on smart contracts functioning on the basis of the Ethereum blockchain in accordance with a sophisticated algorithm developed by the in-house team of the platform. The interest rates increase as the demand grows, and, on the contrary, become lower when the number of potential customers is not so high. Such a scheme was devised to avoid excessive borrowing and to urge holders to provide their digital assets to users.
The tokens deposited to the platform are transformed into cTokens, which just represent the cryptocurrency that was deposited. In this way, cUSDT represents USDT that was originally deposited. As for the borrowers, they borrow real tokens from the facility.
Customers can participate in the liquidity mining program that was launched in 2020. The system is still vulnerable as lack of activity can make it decline. For this reason, the rewards are offered to the members to make them share their funds willingly and participate in the mining program.
One of the products released by the team of the platform is the oracle Open Price Feed. This is an instrument that gathers data from price reporters and posters. It was integrated into diverse networks. Previously, the platform used the Coinbase data and other sources such as Uniswap V2 price feed.
The team serving the needs of the platform also provided the opportunity to build its own API. Besides, it’s possible to invoke protocol smart contracts of the Compound through HTTP requests.
Compound USDT helps to exchange Ethereum assets without delay. The distribution of cUSDT among the lenders of assets on Compound helps to see the amount owed by a user along with the value of the accrued interest. The interest is accumulated in cTokens or cUSDT against the underlying asset. In comparison with the underlying asset USDT, the assets become more valuable over time which helps its holders to get profit.
The platforms that offer Compound USDT include Poloniex, FTX, Compound, and numerous well-known platforms. The list of investors includes Andreessen Horowitz, Coinbase Ventures, Paradigm, and Polychain Capital. This DeFi exchange is reliable and features a high level of liquidity.
The platform was launched by Robert Leschner who admitted that it was an experiment that evolved into a promising project. The facility was created with the goal to decentralize it fully so the team under his guidance gradually moved to this purpose. As a result, the members of the team don’t have any privileges and have equal rights with other members of the ecosystem.
At the time of writing, the Compound is a decentralized community that governs the platform on its own. The decisions are taken by COMP token holders who can add cryptocurrencies to the exchange and take other serious decisions that determine the future of the ecosystem.