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Money markets have been around for ages in the traditional finance world – now the crypto world has one of it’s own called Compound Finance.

Compound is an Ethereum-powered decentralized money market network that allows users to earn interest on deposits and borrow against collateral for interest rates that are based on supply and demand. It does require some technical skill to reap all of the benefits though.

For newer users there are a few handy graphical wallets that can make the process easier.

Join us as we go over the basics of Compound Finance and how to get started earning and borrowing.

Compound Finance: The Basics

Contents

You can think of Compound Finance as a big pool of money that operates on a set of transparent rules. Anyone can participate by depositing Ethereum assets like ETH or any compatible ERC-20 token. Because it’s completely decentralized and automated, there are no KYC checks or application rejections. Anyone with an Ethereum wallet can interact with Compound either directly or through a compatible app that offers integration with the platform.

Here’s how it works…

  • When you deposit crypto into the pool, you immediately start earning interest after each Ethereum block (about every 15 seconds).
  • The interest you earn comes from people that borrow from the pool and pay a higher interest rate that you earn by depositing.
  • Unlike with a bank account, deposits made into Compound are turned into a new type of Ethereum token called a C token.
  • For example, if you deposit USDC, you will receive cUSDC in return – a different ERC-20 asset. cUSDC is designed to proportionally increase in value as interest is accrued in the pool.
  • Since your deposit is completely under your control at all times, you are free to either cash out your deposit at any time to claim your interest. Or, you can directly sell your cUSD (or other C token) on compatible exchanges.

Borrowing assets on Compound Finance is more complicated than just making a deposit but it uses the same core principals. First, you’ll need to deposit your collateral just like you would to earn interest. All loans on Compound are over collateralized. That means if you want to borrow WBTC for example, you’ll need to deposit a larger amount of another crypto asset such as ETH or DAI. Since you have more on deposit than you are borrowing, depositors have some protection in the event that a borrow can’t or doesn’t’ repay their loan.

Interacting With Compound Finance

There are many different ways to get started using Compound Finance. One popular choice is to use the platform’s native web app. It’s available at app.compound.finance. Once you’re on the site, you’ll need to connect a compatible Ethereum wallet.

The default choices include Metamask, Coinbase, Ledger and Wallet Connect. You can connect either through a browser add-on or by scanning a QR code with a mobile app.

Once you’re connected you can begin interacting with the network and make deposits. Much like with other websites that interact with an Ethereum wallet, you’ll need to approve each transaction separately.

If you’re looking for a more simple and graphical experience, several wallets offer built in Compound Finance integration. One example is Exodus, a highly popular graphical desktop and mobile wallet. Using any recent version of Exodus, simply click on the Compound Finance button.

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From there, follow the on-screen instructions to begin earning interest with DAI. While using Exodus is much easier than other options, currently the wallet only supports interest earning deposits with DAI. Other assets are currently not supported. Loans are also currently not supported.

Another choice for those seeking a simpler experience is Argent wallet. Argent now supports Compound Finance and allows a wider array of assets than Exodus. It does appear that Argent also does not currently support loans.

How Much Can You Earn With Compound?

Interest rates for both earning and borrowing on Compound depend entirely on demand. If many people want to borrow an asset, depositors will get higher interest rates. Conversely, if there isn’t much demand from borrowers, interest rates on deposits will be lower. The same is true for borrowers but in reverse.

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The current interest rates for supported assets can be found at app.compound.finance, as well as through any wallets or apps that have built-in Compound integration like Argent or Exodus. During our research we found that the best rates for earning interest were for TUSD at just over 17%.

DAI, another stable coin, was trailing behind at just over 5%. However, other big name crypto assets like ETH and Bitcoin (in the form of WBTC, an ERC-20 token) were severely lagging behind and well under 0.20%. Looking at 30-day averages for these assets, these interest rates appear to be well within the normal range.

Comparing these income interest rates to other DeFi apps and platforms, the offerings on Compound are not at all competitive. On the flip side, the amount of interest available for TUSD deposits is top-tier. Interest rates for other ERC-20 tokens were typically between 1% and 5%. This means that Compound Finance may not be the be-all, end-all destination for all your DeFi deposits. Instead, you’ll need to look at the actual income rates and figure out what makes the most sense for your plan.

Interest rates change all the time. Once you’ve made your deposit, you’ll keep earning interest for as long as you hold your C tokens no matter what happens to the rate.

What are the Risks of Using Compound Finance?

Compared to other platforms that are on the bleeding edge of DeFi, Compound Finance appears to be a good choice in terms of trustworthiness from what we can determine. The platform claims on its homepage that it has been fully audited. The California-based company behind Compound also has an ongoing bug bounty program. So far, in its history Compound has not yet been the victim of any hack, theft, or other breach that we were able to find reports on.

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One point to consider about Compound is not so much a technical risk but a legal risk. Since the company behind it is based in the US – a place that has been far from welcoming when it comes to crypto projects – it’s hard to say what the future of the platform is in terms of its interactions with major regulatory bodies like the SEC. So far there hasn’t been any friction on this front from what we can tell.

In terms of protection from market volatility, the platform has undergone what looks to be a robust examination by Gauntlet. In a 44-page report, Gauntlet notes that: “…the protocol, as currently parameterized, should be robust enough to scale to at least 3x the current borrow size as long as ETH price volatility does not exceed historical highs.” In other words, it would take an enormous, practically unprecedented black swan event to put Compound at any risk.

As with any DeFi project, it’s important to only invest what you are willing to lose. From our research, Compound looks like a safe bet. Make sure to do your own research and read up on the project before getting involved.

Is Compound Finance your DeFi platform of choice, or do you use something else? Share your experiences with us in the comments below.

An Amazon Dash Button for Tide laundry detergent
An Amazon Dash button with the cover removed and circuit board visible
The

Amazon Dash is a consumer goods ordering service which uses proprietary devices and APIs for ordering goods over the Internet.

Amazon Dash consists of multiple components, which include:

  • the Amazon Dash Wand, a Wi-Fi connected barcode scanner and voice command device, used to reorder consumer goods around the house, integrating with AmazonFresh;[1]
  • the Amazon Dash Button, a small consumer electronic device that can be placed around the house and programmed to order a consumer good such as disinfectant wipes or paper towels;[2] and
  • the Amazon Dash Replenishment Service, which allows manufacturers to add a physical button or auto-detection capability to their devices to reorder supplies from Amazon when necessary.[3]
  • Amazon Virtual Dash Buttons, which mimic the appearance and function of physical Dash Buttons, but are displayed on Amazon's website and some smart devices with displays.

Barcode scanner[edit]

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The Amazon Dash Wand (originally branded simply Amazon Dash) was announced in April 2014. It is a Wi-Fi connected device that allows users to build a shopping list by scanning bar codes and saying product names out loud. It connects directly with AmazonFresh, the company's online grocery delivery service. The website for Amazon Dash highlights benefits such as 'never forget an item again' and suggests users keep the device on the kitchen counter or refrigerator so that every member of the family can add items to its grocery list.[4]

The Amazon Dash Wand is Amazon's first Internet of Things (IoT) device.

The second-generation Amazon Dash Barcode Scanner was announced in October 2016; it replaces the two buttons on the previous model with a single button used for both scanning barcodes and activating the microphone. The new model is also about an inch shorter and magnetic so it can be stuck to a metallic surface, like a refrigerator.

On June 15, 2017, a new version of the scanner was announced by Amazon.[5] The new version has Alexa built in, allowing users to ask for recipes and order from Amazon Prime Now.[6]

Replenishment service[edit]

The Dash Button and Dash Replenishment Service (DRS) were introduced by Amazon.com on March 31, 2015. Due to the timing of the announcement, there were a number of news stories questioning whether the Dash Button was an early April Fools joke.[7][8]

The Amazon Dash Button is a small electronic device designed to make ordering products easy and fast. The Dash buttons come in packs; each device contains an embedded button emblazoned with the name of a frequently ordered product. Users can configure each button to order a specific product and quantity, via the user's Amazon.com account, and mount the buttons, using adhesive tape or a plastic clip, to locations where they use the products. Pressing the button sends a Wi-Fi signal to the Amazon Shopping app, and orders new stock of whatever product the button is configured to order; the click also sends a message to the user's mobile phone, giving the user a half-hour to cancel.

Roll-out and response[edit]

Initially, the Dash buttons were made available by invitation to Amazon Prime members who were invited to request the devices. The devices received mixed reviews from critics and reporters upon release,[9][10][11] and have been parodied online.[12] In Germany, the product was deemed illegal due to insufficient information about the price of the product being given at the time of purchase. It is part of a larger issue between Amazon and Germany, where Amazon battles with unions and is under investigation for attempting to monopolize the country.[13]

Amazon Dash Buttons initially partnered with more than 100 brands. The most popular Dash Buttons are the Tide, Bounty, and Cottonelle buttons.[14]

Alternative use[edit]

In May 2016, Consumers' Research pointed out that Amazon Dash may be reprogrammed to use for other purposes such as ordering pizza, tracking time, and controlling lights and outlets in households configured to respond to such commands. In response, Amazon introduced a programmer-friendly, but more expensive button in the form of an 'Internet of Things Dash Button' which allows programmers to make programming modifications to the device.[15]

End of service[edit]

On March 1, 2019, Amazon discontinued the series, claiming that it was made unnecessary due to automatic reordering and product subscriptions. Additionally, Amazon claimed that voice-activated shopping on Alexa products would succeed the buttons.[16] On June 22, 2020, Amazon sent an email to owners of the Dash Wand stating that they would be disconnected in a month on July 21, 2020 with no recourse other than to use other Amazon devices, and directed owners to simply recycle their devices.[17]

References[edit]

  1. ^'Amazon Dash'. Retrieved 2015-04-05.
  2. ^'Amazon Dash Button'. Retrieved 2015-04-05.
  3. ^'Amazon Dash Replenishment Service'. Retrieved 2015-04-05.
  4. ^Ha, Anthony. 'Amazon Tests Dash Barcode Scanner For Ordering AmazonFresh Groceries'. TechCrunch. Retrieved 2015-12-01.
  5. ^Humphries, Matthew (15 June 2017). 'Need Groceries? Tell Amazon's Alexa 'Dash Wand''. PC Magazine. Retrieved 15 June 2017.
  6. ^Krishna, Swapna (15 June 2017). 'Amazon's Dash Wand lets you order groceries with your voice'. Engadget. Retrieved 15 June 2017.
  7. ^Kelly, Jon; Parkinson, Justin; de Castella, Tom & Sully, Andrew (April 1, 2015). 'April Fool's Day: 10 stories that look like pranks but aren't'. BBC News Magazine.
  8. ^Weise, Elaine (March 31, 2015). 'Amazon's Dash button--Not an April Fools' joke'. USA Today.
  9. ^Ian Crouch (April 2, 2015). 'The Horror of Amazon's New Dash Button'. The New Yorker.
  10. ^Fleishman, Benn (April 2, 2015). 'Don't dash to Dash: new Amazon buttons aid brands, not consumers'. PC World.
  11. ^King, Hope (March 31, 2015). 'Amazon Dash: Never run out of toilet paper again'. CNN Money.
  12. ^Bakalar, Jeff; Stevenson, Blake (April 3, 2015). 'Low Latency 125 Dash Problems: Low Latency 125: Dash problems (Amazon's Dash has met its match)'. Cnet.com.
  13. ^'Court says Amazon 'Dash' buttons violate German law'. Reuters. 2019-01-10. Retrieved 2019-03-02.
  14. ^'Top 10'. Dash Button Dudes. Archived from the original on 2016-11-28. Retrieved 2015-12-04.
  15. ^Dolan, Connor. 'Amazon's New Programmable Dash Button'. Consumers' Research. Consumers' Research. Retrieved 22 May 2016.
  16. ^'Amazon scraps Dash buttons'. BBC News. March 1, 2019. Retrieved March 2, 2019.
  17. ^'Amazon Dash Wand No More – Alexa Shopping Device Discontinued'. voicebot.ai. June 22, 2020. Retrieved June 24, 2020.

External links[edit]

Retrieved from 'https://en.wikipedia.org/w/index.php?title=Amazon_Dash&oldid=1001791693'
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