What fees do users incur when using Compound?

When users engage with Compound, they may encounter a few types of fees associated with borrowing and lending activities. First, it is essential to understand that Compound operates by allowing users to lend their assets to earn interest or borrow assets by putting up collateral. The interest rates for borrowing and lending are dynamic and adjust based on supply and demand for various assets within the protocol. While there are no explicit fees for transactions on Compound, users should be aware that borrowers pay an interest rate on the borrowed amounts. This rate varies through an algorithmic mechanism that balances the supply and demand of the assets in the market. Additionally, users may incur transaction fees associated with processing transactions on the Ethereum network, known as gas fees. These fees are required to facilitate transactions on the blockchain and can fluctuate based on network congestion at the time of the transaction. For the most accurate and up-to-date information regarding fees, users are encouraged to refer to the official documentation and the current web page of Compound.