What is cETH?

cETH is a cryptocurrency token that operates on the Ethereum blockchain. It is the balance token of the Compound protocol, which is a decentralized finance (DeFi) platform built on the Ethereum ecosystem. cETH is an asset-backed token and is categorized under Compound Tokens, cToken, and Asset-backed Tokens. It ranks 79th in terms of market cap rankings.

How does cETH work?

cETH works by allowing users to supply Ethereum (ETH) to the Compound protocol and earn interest on their deposits. When users deposit ETH, they receive cETH in return, which represents the balance of ETH they hold in the Compound protocol. The interest earned is continuously added to their cETH balance. Users can withdraw their ETH by redeeming their cETH tokens at any time.

As an ERC-20 token, cETH can be easily traded and transferred on the Ethereum blockchain. Its market price is influenced by supply and demand dynamics as well as market conditions.

Benefits of cETH

- Earn interest: By depositing ETH into the Compound protocol, users can earn interest on their holdings, allowing their assets to grow over time.

- Asset-backed: cETH is backed by the Ethereum deposited into the Compound protocol, ensuring that each cETH token represents a portion of the underlying ETH balance.

- Easy liquidity: cETH can be easily bought, sold, and traded on various cryptocurrency exchanges, including Uniswap V3, which provides liquidity to traders.

- Decentralized: The Compound protocol operates on the Ethereum blockchain and is governed by smart contracts, making it a decentralized platform for lending and borrowing.

FAQs (Frequently Asked Questions)