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How Do I Apply for a Line of Credit from Compound?

Lines of credit can be offered by many financial institutions with the amount depending on the borrower's credit rating. The process can require paperwork and a credit check, but cryptocurrency has simplified the borrowing experience. Compound Finance isn't a bank, but a platform where users link their external, Ethereum-based wallets to fund assets to borrow later. Opening a line of credit is possible on Compound but involves a different procedure.

Basic Knowledge

The website includes many asset types, but you can reach out to Compound Finance's help desk if you have any questions. You don't need to create an account to link a compatible external wallet. Credit checks and KYC aren't necessary, but the platform depends on an overcollateralization system. You need to deposit more collateral than what you want to borrow. Depositing assets is easy:

  1. Visit Compound.finance and click on the App button located near the top right-hand corner. Select one of the following wallets: MetaMask, Coinbase Wallet, Ledger, Tally or Wallet Connect.
  2. Make your deposits toward the Compound wallet by following the instructions. Doing so allows you to lend or borrow from any other crypto type after you unlock it individually from its respective page.

Your Line of Credit

You can create your own line of credit by adding assets to your crypto wallet. All of your assets will be shown in the Supply column on the dashboard. You use the sliders next to each deposit type you wish to use as collateral against your loan. When you're ready to borrow, you'll see your Borrow Limit to the right of your assets. Remember to repay what you owe.

  1. Choose an asset in the Borrow column and enter the amount that you want to borrow. A pop-up window will show you your used Borrow Limit. Please note that your limit is based on any collateral you provide.
  2. If you're not satisfied with the amount you can borrow, you can add assets to it or wait for the interest to potentially accrue, which is calculated approximately every 15 seconds.

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Compound

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How do get a line of credit from Compound Finance
Opening a line of credit from Compound

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