Noob Trying to Understanding UI APY APR Total

1

Trying to understand what I will pay when I borrow.
I am planning on putting up Collateral Eth and Borrowing a stable coin.
When I go through the borrow screen it presents me with the current borrowing rate of the stable coin in this case about 4.3% and then a second APY rate for Compound of 3.4%.

So what is my real borrowing rate? Am I paying 4.3% Annual Percent per Year that is what I was expecting? Or, am I having to pay 4.3% stablecoin and 3.4% compound?

Is someone able to help clarify this for me?

2

the compound rate is the Comp yield you receive from the protocol. So you pay the borrow rate in stable coin, receive the Compound rate in Comp as part of the community Comp distribution.

3

What coburn said. PAY in the borrowed asset. EARN COMP.

You could speculate that the total borrow rate is then only 4.3 - 3.4 = 0.9, but keep in mind that COMP price is anything but stable. Also the COMP has to be claimed, which in itself has a substantial cost at this time.

4

Question already answered by above posters but something to keep in mind

  1. compound yield can change as the price of compound token changes.
  2. there is significant cost ( much more so than what a traditional bank charges ) to interact with the compound protocol - such as supplying / borrowing money, trying to take your earned compound, basically every interaction will cost you anywhere from $30-$200+ due to the ether price and dev team refuse to address or even acknowledge the issue. Instead wasting their resources on pointless governance changes and wasting reserve by giving them to people to do supposed marketing

Think carefully before you commit, using compound only make sense if you plan to supply 100k+ with a long time horizon and minimum interaction . Even then the fees will destroy your paper yield. If you have anything less than 100k and plans to actively manage the investment…just forget it. If you write your own code instead of using the GUI it helps with reducing the fee I think.

5

Thanks for the responses everyone.
I am noting that the cost of moving relatively small amounts of crypto to consolidate in one place is kind of expensive.

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