How does compound crypto lending work and what are the risks involved?

1 answers

• May 02, 2022 · 3 years ago
  Compound crypto lending is a popular way for crypto investors to earn passive income on their holdings. It works by depositing your crypto assets into a lending platform, such as Compound Finance, where borrowers can then borrow these assets by providing collateral. The interest rates are determined by the supply and demand of the platform. However, it's important to note that compound crypto lending carries certain risks. One of the main risks is the potential for the value of the collateral to decrease, which could result in a loss of funds for lenders. Additionally, there is the risk of the lending platform being hacked or experiencing technical issues, which could also lead to a loss of funds. It's crucial for investors to carefully assess these risks and choose reputable lending platforms with a strong track record.
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