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cUSDT is an ERC20-standard altcoin proposed by the Compound Protocol. Compound is a protocol hosted on the Ethereum blockchain that establishes money markets. A money market is essentially a pool of digital assets in which interest rates are determined algorithmically based on supply and demand for the assets.
Providers (and borrowers) of the asset interact directly with the protocol, earning (and paying) floating interest rate without the need to stipulate conditions such as maturity, interest rate, or collateral with a peer or counterparty. Each money market is unique to an Ethereum asset and contains a transparent and publicly-verifiable ledger with a record of all transactions and historical interest rates. In simpler terms, the Compound Protocol is a blockchain-powered platform that allows users to deposit tokens into liquidity pools for borrowers. Lenders then get some gains on the assets they provide to the pool.
Depending on the type of deposit, the Compound Protocol gives the lender a reward called a cToken. cTokens actually represent the coin with which the deposit was made. For example, if the underlying token is ETH, then the corresponding cToken is cETH, if the underlying token is USDC, then the corresponding token is cUSDC, etc.
All cTokens can be transferred or traded without restrictions. At the same time, you can convert your cToken only to the cryptocurrency initially locked in the protocol. The entire process is performed automatically and executed by Compound code, allowing lenders to withdraw their deposits at any time. cTokens accrue interest through the exchange rate against the underlying asset. Over time, each cToken becomes more valuable than the underlying coin.
cUSDT is the ERC-20 cToken corresponding to Tether USD (USDT) on the Compound protocol. The amount of cUSDT tokens held by the user will remain permanent over time, but when you swap it back to the underlying asset (USDT), the amount of USDT will be increased depending on the interest rate.
Compound is a De-Fi lending platform that exists on Ethereum. The platform has its own governance token called the Combined Control Token (COMP). COMP holders can have their say on the protocol’s modifications. Stakeholders who own at least 1% of the COMP’s total supply may submit management proposals; stakeholders with less than 1% of tokens can vote on proposals or delegate their votes to other community members to increase the value of their vote.
Individuals with long-term investments in Ether (ETH) and Ethereum-based altcoins can use the Compound Protocol as a source of additional return on their investments. For example, a user who owns DAI can distribute their tokens to the Protocol and receive interest (denominated in DAI) without having to manage their asset, fulfill loan requests, or take speculative risks.
dApps, machines, and cryptocurrency exchanges with token balances can use Compound as a source of monetization and additional profit by “cleaning” balances; the protocol has the potential to unlock completely new business models for the Ethereum ecosystem.
As for borrowers, Compound allows users to easily borrow digital assets from the protocol, using cToken balances as collateral. The borrowed assets can be used in any way within the Ethereum ecosystem (including selling and re-lending).
Unlike peer-to-peer protocols, borrowing from Compound is claimed to be frictionless, meaning a user just needs to specify the desired asset to borrow, without doing any cumbersome negations or calculations. Borrowing is instant and predictable.
Users who lend out assets under the protocol can borrow in any other cryptocurrency that Compound offers, up to the amount of the collateral.
It is important to note that borrowers may be liquidated if the asset they are borrowing rises in value and becomes more valuable than the pledged collateral.
It is impossible to buy cUSDC with fiat on any crypto marketplace. Still, there are some cryptocurrency exchanges where you can trade your crypto tokens for cUSDC, including Compound Finance and Uniswap.
Compound USD Coin (cUSDC) is issued on the Ethereum blockchain (ERC-20), so you can store it using any ETH-friendly wallet, both hardware, and software. You can store your cUSDC funds on the exchange where you purchase the coin, but it is recommended to use a dedicated crypto wallet for greater security. Hardware wallets offer the highest security measures, but they are quite expensive. They are the best choice for safekeeping large quantities of crypto, especially for long-term investment.