compound.finance
Compound.finance connects lending and borrowing with conditional token rewards
Compound.finance supports crypto lending and collateralized borrowing, with Compound III tracking separate token rewards for eligible base asset positions. Each market has a base asset, the token that users supply for interest or borrow against accepted collateral. Rewards depend on the market’s configuration, qualifying balances, and accrual conditions. Supplying collateral alone doesn’t establish reward eligibility. Accrued rewards remain separate from lending interest and borrowing debt, and a successful claim with a positive outstanding amount transfers the configured reward token to its recipient.
Compound III tracks eligible base asset rewards separately from interest, and claiming those rewards doesn’t repay debt or withdraw supplied assets.
Base Asset Positions and Reward Eligibility
Compound III tracks rewards for base asset suppliers and borrowers through separate distribution settings. An eligible position can accumulate rewards when its side’s reward speed is positive and the applicable market threshold is met. A lending or borrowing balance alone doesn’t establish that incentives are running.
Supply Interest and Supplier Rewards
A positive base asset balance earns interest through the market’s supply interest model. Token incentives follow separate accounting. Compound III applies its reward accrual threshold separately to total supplied principal and total borrowed principal. Principal is the balance basis that the protocol stores before applying accumulated interest. The threshold concerns aggregate participation on the relevant side, rather than a universal personal deposit minimum.
Borrower Rewards and Collateral
A borrowing position incurs interest even when it qualifies for token incentives. Accepted collateral supports borrowing capacity, but collateral deposits don’t earn Compound III supply interest or directly participate in its base asset reward tracking. Reward eligibility therefore follows the resulting base position. Borrowers still face liquidation when their debt exceeds the limit that their collateral supports. Unclaimed incentives don’t add to that collateral balance.
A Compatible Market and Claim Connection
A claim requires the rewards contract to support the exact Compound III market that holds the position. Consider a hypothetical base asset supplier preparing to participate and later reconcile an expected reward.
- Before approving a deposit, confirm that the wallet network, market contract, and supplied token match. Confirm that the selected rewards contract supports that market, then check supplier incentive settings and the applicable accrual threshold.
- After supplying, confirm that the intended account has a positive base asset balance. A token approval alone hasn’t created that position.
- When rewards should have accrued, check the amount owed for that same account and market. An unsupported-market error identifies a claim connection problem; it doesn’t prove that the position earned nothing.
- If the selected rewards contract doesn’t support the market, stop before submitting a claim. If a rewards contract supports the market on its network, select that contract and network, then repeat the amount-owed check. Otherwise, collection must wait until support is available. Repeated submissions won’t create missing support.
- When the supported check returns a claimable amount, inspect the recipient before claiming. Confirm the successful transaction, reward transfer, and updated claimed record before treating collection as complete.
The supplied position remains open unless a separate withdrawal changes it.
Accrued, Owed, and Transferred Rewards
Compound III’s reward records describe different amounts: accumulated participation rewards, the outstanding claim, and tokens already transferred. Comparing those records requires the same account and market. A cumulative total won’t fall merely because a claim succeeds.
Accrual Updates
Comet, the market contract, maintains reward tracking indices and account accrual. Updating an account applies the relevant index changes to its recorded participation. A stored reading can therefore differ from a calculation that first updates accrual. This distinction matters when a balance appears unchanged despite eligible participation. The account’s supplied or borrowed principal, elapsed time, distribution speed, and relevant market total determine the calculation. Integer precision can also affect very small increments.
The Outstanding Claim
Compound III uses a separate rewards contract to calculate and transfer claimable reward tokens. That contract converts tracked accrual into the configured token’s units and accounts for previous claims. Its amount-owed calculation updates account accrual before calculating the outstanding amount. Raw tracking values and displayed token balances can use different scales, so comparing their unconverted numbers can suggest a discrepancy that doesn’t exist.
Transfer Confirmation
A claim can request an accrual update before transferring rewards. A successful transfer produces a reward event identifying the earning account, recipient, token, and amount. Those details distinguish a completed payout from an estimate shown before submission.
A successful claim transaction can also transfer nothing when the account has no outstanding rewards. Transaction success alone doesn’t establish receipt. Conversely, continued participation can produce another outstanding amount after collection. The claimed record and transfer details establish what the completed transaction paid; a later balance reflects a later observation.
Interest Costs and Liquidation Exposure
Borrower incentives don’t cancel borrowing interest. Interest rates respond to base asset utilization, while incentive settings and reward token value can change separately. Comparing their economic effect requires a common valuation basis and the transaction costs of collecting rewards. Falling collateral value can trigger liquidation before anticipated incentives offset those costs. Compound III uses separate borrowing and liquidation collateral factors, so losing capacity to borrow more doesn’t necessarily mean an account already qualifies for liquidation.
Other Participation Paths and Version Boundaries
Compound III supports supplying assets to another account and allowing an account manager to act on an owner’s behalf. Those arrangements make account identity relevant to rewards: the account holding the eligible position determines accrual. A manager’s permissions can include withdrawals and transfers, so granting management access carries broader consequences than simply viewing a balance.
Compound v2 uses cTokens to represent supplied assets, with interest reflected through their exchange rate against the underlying asset. Its accounting and reward interfaces differ from Compound III. A cToken position shouldn’t be interpreted through a Compound III rewards contract, even when both positions relate to the same underlying token.
COMP also participates in protocol governance through holders and delegates. Governance voting and base asset participation are separate activities; owning a governance token doesn’t establish a qualifying lending or borrowing position.
Closing a Position and Retaining Its Reward Record
Repaying debt or withdrawing a supplied balance changes future participation without automatically collecting outstanding incentives. Previously recorded accrual and claims remain relevant to the amount still owed. Withdrawals depend on available liquidity, account constraints, and pause settings. Compound III allows its governor or pause guardian to pause withdrawals. A reward claim doesn’t remove those restrictions or close the underlying position.
Helpful answers about Compound.finance
Does Compound III Automatically Reinvest Claimed Rewards?
A standard reward claim transfers tokens to the recipient without automatically supplying them back into Compound III. Reinvestment requires another supported operation, and the reward token may differ from the selected market’s base asset. Supply interest follows its own balance accounting, so interest accrual and reward reinvestment are separate mechanisms.
Can Another Account Collect My Rewards Without Taking Them?
Another account can trigger the standard claim that sends rewards to the earning account. Redirecting the payment to a different recipient requires the owner’s authority or an authorized manager. Permission to trigger the standard claim therefore doesn’t, by itself, permit the caller to redirect the tokens.
Why Might Reward Collection Fail When an Amount Is Owed?
A positive amount owed doesn’t guarantee that the rewards contract can complete the token transfer. The contract needs sufficient reward tokens, and the token transfer must succeed. A recipient-directed claim also requires appropriate authorization. Repeating the same transaction won’t resolve missing funding or permissions.
Do I Need a Separate Staking Deposit to Earn Compound III Lending Rewards?
Compound III’s base asset rewards don’t require a separate staking deposit. Eligibility follows a qualifying supplied or borrowed base asset position and the market’s reward configuration. Supplying tokens requires the necessary token allowance, but granting that allowance alone neither transfers the tokens nor starts participation.
What Happens If I Supply the Base Asset While I Already Owe It?
Supplying the base asset reduces an existing borrow before creating a positive supplied balance. The resulting position determines whether the account participates as a borrower or supplier. Treating the full incoming transfer as a new interest-earning deposit would overstate supply when some of it repays debt.
Are Liquidation Points the Same as Claimable Lending Rewards?
Liquidation points are separate records from base asset supplier and borrower rewards. Compound III records liquidation activity and approximate expenditure for potential governance compensation. Those records don’t, by themselves, establish a token payout or a claimable balance in the standard rewards contract.
Will Claiming Rewards Reduce My Borrowing Balance?
Claiming rewards doesn’t reduce the base asset debt recorded by Compound III. Repayment requires supplying the base asset against that debt. Receiving another token, including a reward token, leaves the borrowing balance and its interest accrual unchanged unless a separate repayment operation follows.