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How Do I Apply for a Long Term Loan from Compound?

Compound marketplace allows those investing in cryptocurrency to loan or borrow digital assets that are placed in a pool and governed by group of token holders and their delegates as a decentralized entity. Users can apply for a loan through the Compound marketplace app, but what is the loan process? How do you apply for a long-term loan? You can learn more about the marketplace by contacting customer support here, and below are the steps to seeking a long-term loan.

Understanding How Compound Works

Compound allows lenders to place assets in a "pool" that borrowers request loans from. This means that the lenders are not making loans directly to you, instead they are going into a larger pot of currency called a liquidity pool. This pool then uses a process called smart contracts to match borrowers with the appropriate assets. Other important points about Compound lending include:

  1. Compound does not set minimum amounts for lending or borrowing.
  2. Some lenders earn interest as rapidly as every 15 seconds.
  3. There are no penalties for long-term use of the marketplace.

How to Apply for a Loan

To apply for a loan on Compound, you need to complete the steps outlined below.

  1. Make sure you have connected your crypto wallet to Compound. Until you do this, you will be unable to make any transactions on the marketplace.
  2. Ensure your wallet has the required minimum balance for transactions.
  3. Select the wallet you will use for your loan.
  4. Look for "Borrow Balance" on the screen. Click this to begin the loan process.
  5. Click the type currency you want to borrow.
  6. When the pop-up window appears, enter the amount of crypto you want to borrow.
  7. Click "Borrow" to submit the application or transaction.

Compound Borrowing and Liquidation

You can set your own borrow limit, and you want to carefully monitor it. If it reaches 100% or greater due to asset value fluctuations, your account can be liquidated in part to cover the difference. When your account is being liquidated, another community member can repay up to half of your balance outstanding and get a portion of your collateral as a reward for paying off part of the outstanding debt.

Compound allows lenders and borrowers to easily exchange digital assets to the benefit of each. For more information or assistance regarding long-term loans, contact Compound trader support here.

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Compound

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