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What is cUSDC and Compound cTokens?

Compound tokens like cUSDC follow the ERC-20 Ethereum standard. They represent a specific currency deposited into the Compound liquidity pool, one of the most popular DeFi protocols.

cUSDC is a record of your digital dollars USDC deposited to the Compound protocol. When you deposit USDC, you receive corresponding cUSDC tokens. Anyone who holds cUSDC or any other cTokens earns the prevailing market interest rate. Interest payments are not remitted to depositors but are expressed via the cTokens exchange rate. Over time, each cToken becomes convertible into an increasing amount of its underlying asset USDC, for example. At the same time, the number of cTokens in your wallet stays the same. 

As of July 2020, Compound supports 9 distinct currencies, including Ether, Dai, and, of course, USDC. Every type of currency deposited to Compound has a corresponding cToken. For example, if you deposit Ether (ETH), you receive cETH tokens.

What can you do with cUSDC and cTokens?

cUSDC can be transferred to anyone in the same way you transfer any other digital asset.  cTokens are essentially a tokenized deposit position and can be used as collateral in other liquidity pools or exchanged for other digital assets. This is something that has not been seen in traditional consumer finance. Interest rates reside within the asset cUSDC and not with the owner of the asset.

How do you acquire cUSDC?

When you deposit USDC to Compound using Linen App, the protocol mints cUSDC tokens to your Linen wallet. Linen App acts as an interface for Compound. You’re free to redeem your cUSDC for USDC at any time, granted that Compound has enough liquidity to redeem them.