Wouldn’t it be nice if you could earn interest on your crypto? Well, that’s what Compound are hoping to achieve, and they’ve made a good start with an $8.2 million seed funding round, led by Bain Capital Ventures, Andreessen Horowitz and Polychain Capital as well as Compound Ventures, Abstract Ventures, Transmedia Capital, Coinbase and Danhua Capital.
Compound will launch money markets on the Ethereum blockchain, allowing a range of investors – from major corporations all the way down to individual investors – to earn overnight rate interest. And the smart contract will algorithmically work out interest rates, which should in theory make them predictable, thus present a real opportunity to shred investors who want use their existing portfolio as capital, to borrow from the “pot”.
Compound Is a Better Way to borrow
According to Compound officials, they are focused on making borrowing easier and less risky.
- Rather than directly funding loans, users own a fungible, pro-rata share of a pool of assets made available to borrowers — allowing users to withdraw from the market whenever they want.
- Users and dApps can instantly borrow from a money market, based on their available collateral supplied to the protocol.
- The protocol algorithmically sets interest rates, based on supply and demand within each money market.
– Source: Compound on Medium.com
After this successful round of funding, it’s going to be an interesting few months for founders Robert Leshner and Geoff Hayes, who will now be aiming to launch their first crypto money markets before the end of 2018.