Compound V3
Notes on economic model:
Compound is oftentimes used for leverage. For example, if I strongly believe ETH price is going up, I want to long ETH with some leverage. I can go to Compound, deposit ETH as collateral and borrow USDC for example. After that I can buy ETH with borrowed USDC, so when ETH price does go up I can withdraw my collteral and sell all the ETH I hold. Even crazier, I can deposit that ETH we just bought as collteral again, and borrow USDC one more time. The leverage is getting larger and larger by doing so.
Last updated
Was this helpful?