How to Deposit Cardano on Compound: Step-by-Step Guide (2023)

Introduction to Depositing Cardano on Compound

While Cardano (ADA) operates on its own blockchain, depositing it into Compound – Ethereum’s leading DeFi protocol – requires converting ADA into an Ethereum-compatible wrapped token. This step-by-step guide walks you through bridging ADA to Ethereum as wrapped ADA (wADA), then depositing it into Compound to earn interest. Learn how to safely navigate cross-chain transactions and maximize your crypto holdings.

Prerequisites Before You Start

Ensure you have these essentials ready:

• Cardano (ADA) in a non-custodial wallet (e.g., Yoroi, Daedalus)
• Ethereum wallet (MetaMask recommended) with ETH for gas fees
• Bridge account on a cross-chain service (e.g., Wanchain, Multichain)
• Basic understanding of transaction fees on both networks

Step-by-Step: Deposit Cardano into Compound

Step 1: Bridge ADA to Ethereum as Wrapped ADA

1. Visit a cross-chain bridge like Wanchain Bridge (bridge.wanchain.org)
2. Connect your Cardano wallet and Ethereum wallet
3. Select ADA as input token and Ethereum as output network
4. Enter the ADA amount to convert to wrapped ADA (wADA)
5. Confirm transactions on both chains (wait ~10-30 mins)

Step 2: Access Compound Protocol

1. Go to the official Compound Finance app (app.compound.finance)
2. Connect your Ethereum wallet (e.g., MetaMask)
3. Ensure your wallet network is set to Ethereum Mainnet

Step 3: Deposit Wrapped ADA

1. In Compound’s dashboard, locate “wADA” under supply markets
2. Click “Supply” and enter your desired wADA amount
3. Review transaction details including interest rates
4. Approve the contract interaction (first transaction)
5. Confirm the deposit transaction (second transaction)
6. Monitor your supplied balance in the dashboard

Key Considerations When Depositing

• Bridge Risks: Use reputable bridges and verify contract addresses
• Gas Fees: Ethereum transactions require ETH – keep $50+ worth available
• Interest Rates: wADA rates vary based on market demand (check current APY)
• Liquidation: Only applies if using wADA as collateral for borrowing
• Token Compatibility: Confirm Compound supports wrapped ADA tokens

Frequently Asked Questions (FAQ)

Can I deposit native ADA directly to Compound?

No. Compound operates on Ethereum, so you must convert ADA to an ERC-20 wrapped version (wADA) via a cross-chain bridge first.

Which bridges support ADA to Ethereum conversion?

Wanchain and Multichain are popular options. Always verify official links to avoid phishing sites.

How long do bridge transfers take?

Typically 10-30 minutes, but may extend during network congestion. Track progress via blockchain explorers.

What are the risks of wrapped tokens?

Bridge vulnerabilities and smart contract risks exist. Use audited platforms and never rush transactions.

Can I earn COMP tokens with wADA deposits?

Yes! Supplying wADA qualifies you for COMP governance token distributions based on market activity.

Are there minimum deposit amounts?

No Compound minimums, but bridges may have thresholds. Ensure you have extra ETH for gas fees.

Maximizing Your DeFi Strategy

Once deposited, your wADA earns variable interest in real-time. Monitor rates through Compound’s interface and consider these advanced tactics:

• Use earned interest to compound yields by reinvesting
• Borrow stablecoins against wADA collateral (maintain safe collateral ratios)
• Track gas fees using tools like ETH Gas Station to time transactions
• Diversify across multiple DeFi protocols for risk management

Always prioritize security: bookmark official sites, enable wallet transaction confirmations, and never share seed phrases. With this guide, you’ve unlocked Ethereum DeFi opportunities for your Cardano holdings – start earning today!