What Does It Mean to Stake Ethereum on Compound?
While Ethereum staking typically refers to participating in its Proof-of-Stake (PoS) consensus, Compound operates differently. Instead of traditional staking, Compound lets you supply ETH to its liquidity pool to earn interest. This guide clarifies the process of earning passive income with ETH on Compound, even if you’re new to decentralized finance (DeFi).
Prerequisites for Supplying ETH to Compound
- Ethereum (ETH) in a crypto wallet (MetaMask, Coinbase Wallet, etc.)
- Enough ETH to cover gas fees (varies based on network congestion)
- Basic understanding of DeFi risks (smart contracts, impermanent loss)
Step 1: Connect Your Wallet to Compound
- Visit the official Compound website (app.compound.finance)
- Click ‘Connect Wallet’ and choose your wallet provider
- Authorize the connection in your wallet pop-up
Step 2: Supply ETH to the Protocol
- Select Ethereum from the ‘Supply Markets’ list
- Enter the amount of ETH you want to supply
- Confirm transaction details (including gas fees) in your wallet
Step 3: Earn Interest via cTokens
After supplying ETH, you’ll receive cETH (Compound ETH). This token automatically accrues interest based on Compound’s lending demand. Track your growing balance directly in the Compound interface.
Key Risks to Consider
- Smart contract vulnerabilities
- ETH price volatility
- Potential liquidity crunches
- Platform regulatory changes
FAQ: Ethereum on Compound
Q: Is this actual Ethereum staking?
A: No – you’re lending ETH through Compound’s protocol rather than validating transactions.
Q: What’s the minimum ETH required?
A: No strict minimum, but gas fees make small amounts impractical.
Q: How often is interest paid?
A: Interest compounds every Ethereum block (~13 seconds).
Q: Can I lose my ETH?
A: Risk exists through smart contract exploits or extreme market conditions.
Q: How do I withdraw?
A: Swap cETH back to ETH in Compound’s interface, paying network fees.
