What Is Compound DAI (cDAI) How It Works & Where To Buy It?

Compound DAI (cDAI) is the token distributed to users that lend DAI tokens to the Compound protocol. The Compound platform allows people to earn cDAI for lending DAI coins as well as allowing users to borrow DAI on the platform.

Currently, 1 DAI = 45.47267712064085 cDAI.

Compound Dai is currently the 4th most borrowed digital asset on the Compound platform.

How Compound DAI (cDAI) Works

It’s important to understand how Compound DAI (cDAI token) works but this is only possible once you understand what Compound (COMP) is.

Simply put, users can earn token rewards on tokens they lend to Compound pools. Lenders earn a different APY % rate according to the tokens they lend to Compound – the current APY for lending DAI is 1.78%.

cDAI are tokens that are distributed to DAI lenders – their lending rewards are distributed in cDAI tokens.

Essentially, lenders can easily earn rewards for their DAI tokens by allocating their DAI tokens to the DAI pool. Several assets can be lent to the platform and each has its own APY%.

DAI is the 5th largest stablecoin in the world by market cap. It is widely used and traded which makes lending it to a platform like Compound an easy way to earn rewards.

What Is Compound DAI (cDAI) Used For?

The DAI pool is where lenders facilitate the growth of DAI being supplied, and where borrowers tap into the liquidity of the DAI pool. Essentially, lenders supply liquidity for the borrowers, as well as for any DAI trade on the Compound platform.

All rewards paid from the DAI pool are paid to lenders in cDAI tokens. Lenders have the option to use the received tokens in whatever way they choose – they can easily trade in the tokens for another asset on the platform.

Compound has quickly grown to become one of the most popular lending protocols. The protocol has already attracted thousands of participants because it’s easy to use, has multiple assets that can be borrowed or lent, and provides an easy way to earn interest.

The credibility and sustainability of the platform are achieved by lenders and borrowers providing sufficient collateral. Typically, the demand for supplying assets on the platform has been higher than the demand for borrowing assets on the platform.

cDAI funds are typically divided into a collateral factor and a reserve factor. The reserve factor accounts for 15% and the collateral factor accounts for 80%.

Currently, there have been 46,747,389,516 cDAI minted. There are also 20,779,613 DAI in reserve.

Where To Buy Compound DAI (cDAI)

cDAI tokens are native to the Compound lending protocol. Currently, more than 15 cryptocurrencies can be lent or borrowed on the lending protocol.

There are no centralized cryptocurrency exchanges that sell cDAI coins – the tokens are only available directly from the Compound App. Therefore, individuals seeking to buy Compound DAI won’t be able to.

If you’re still wondering “What Is cDAI?” – DAI is the token lent to the platform and cDAI tokens are what lenders receive as rewards for lending DAI.

People seeking to participate in lending protocols need to research the specific protocol, and its team of founders, and developers and compare multiple online sources to obtain the most credible information. v

Currently, the Compound DAI price is $0.02197.

About Compound Compound Dai (cDAI)

How long has Compound DAI (cDAI) existed?

Robert Leshner and Geoffrey Hayes founded the Compound Protocol in 2018. Both of the founders are extensively experienced – most notably, having worked at Britches, a company that facilitates the aggregation of inventory from local shops that will be sold on PostMates.

cDAI has become one of the most popular reward tokens. DAI was added to Compound because of the widespread demand for stablecoins. The compound DAI token continues to maintain stable price levels and users are drawn to the platform because token rewards are relatively stable.

The market liquidity for Compound DAI is 428,940,425 DAI – DAI is currently the 4th most lent asset on the platform.

What’s controversial about Compound DAI (cDAI)?

There are thousands of projects emerging in the crypto space. Many are credible and transparent and have been garnering immense user adoption and popularity. Lending protocols such as Compound have become especially popular in recent months. However, it’s very important for any projects before investing. Research the project’s history, its founders, and any other important information involving the project.

Like many other projects, Compound has already had its fair share of controversy. Let’s take a look at the top two controversies surrounding Compound DAI (cDAI).

• Governance attacks – Governance attacks pose the biggest threat to the Compound protocol. The protocol’s native COMP token is also the governance token – COMP holders receive voting rights proportionate to the number of tokens they hold.

  This is especially risky for a lending protocol like Compound because anyone can borrow COMP and sway proposals in a biased way. One of the best examples is when TRON founder, Justin Sun, was accused of trying to sway an important governance vote after he borrowed more than 90k COMP. This caused a considerable amount of concern in the community and lead people to question whether this would cause more issues in the future.

• The number of lenders vs borrowers – The sustainability of a lending protocol is affected by multiple factors but one of the most important factors is the liquidity available. Potential borrowers need to be able to borrow various assets, with sufficient collateral available.

  Achieving an equilibrium and bolstering participation is a key focus for lending protocols like Compound. However, there is a significant discrepancy between the number of people borrowing on the platform and the number of lenders (suppliers). There seems to be an imbalance that indicates a shortage of demand – the borrowing activity is relatively low.

  Essentially, there has been a surge in the number of tokens being lent to the platform but demand for borrowing is quite low. Individuals believe that most crypto investors are wary of lending protocols – this is the main reason for the lack of borrowing interest.

How many Compound DAI (cDAI) tokens are there?

At the time of writing, cDAI’s self-reported circulating supply is 46,743,775,205.

The total supply of Compound DAI (cDAI) is 46,743,775,205.

The current Compound DAI price is $0.02197.

The current price fluctuates in the same manner as most cryptocurrencies, according to the relative supply and demand.

Can Compound DAI (cDAI) be mined?

Compound DAI (cDAI) is not a mineable cryptocurrency. cDAI tokens are distributed to users that lend USDC to the Compound platform.

These users earn cDAI tokens as rewards for lending DAI to the platform. The current APY % for supplying DAI is around 1.78%.

What is the market cap of Compound DAI (cDAI)?

The market cap of any cryptocurrency can be calculated by using the same formula: the total amount of coins in circulation times the current market price.

Compound DAI (cDAI) Market Cap = 46,743,775,205 x $0.02197 = $1,02 billion.

It should be noted that there are discrepancies in the cDAI tokens circulating supply. cDAI price statistics can be found here.

The market cap is always fluctuating according to circulating supply and the Compound DAI price.

Biggest Competitors Of Compound And Compound DAI (cDAI)

The Compound lending protocol is one of the most popular platforms and is used by thousands of people globally. The platform rewards lenders with tokens, and each according asset that is lent or borrowed has a specific APY %. The decentralized lending protocol has amassed significant popularity and lending and borrowing activity is increasing rapidly.

Some of Compound’s most notable partners include Coinbase and A16Z. The full list of the platform partners can be found here.

Compound’s competitors are other lending protocols that facilitate similar features.

The biggest competitors of Compound currently are:

• Maker
• AAVE

What Are The Future Plans For Compound And Compound USD Coin

Compound is seen by many as one of the most trustworthy lending protocols. However, the platform has some notable competitors.

Going forward, more pools where lenders and borrowers can participate will be included – there are currently 20 assets available on the Compound market.

The platform seeks to offer more digital assets, a seamless user experience, and improved liquidity.

Pros And Cons Of Compound And CUSDC

Pros:

• Rewards mechanism – Lenders receive cDAI tokens as a reward. There are multiple pools on the platform, each with various interest rates. The DAI trading volume is also the 4th largest on the platform.
• One of the largest lending protocols – Compound is currently among the most utilized lending protocols.
• Easy to navigate – Compound provides users with an easy-to-use platform that isn’t complex.
• Liquidity/collateral – One of the major pros for Compound and cDAI is that there is excess liquidity, enabling easy and reliable borrowing.

Cons:

• COMP governance token – Holders of COMP tokens receive voting rights which means that there is potentially a possibility for borrowers of the token to sway a governance vote.

  The amount of COMP tokens held by an individual determines their voting power.

• Low-interest rates / APY – The interest rates offered to lenders are quite low and are unappealing for many potential investors. cDAI lenders currently receive a 1.78% APY which is relatively low compared to what can be earned by staking tokens. Users seeking to avoid extreme fluctuations that can sometimes even occur within 24 hours prefer the stability of lending protocols such as Compound.