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

Introduction: Bridging Cardano to Compound

Want to earn interest on your Cardano (ADA) through Compound Finance? While Compound operates primarily on Ethereum, this guide reveals how to bridge your ADA to Ethereum’s ecosystem and deposit it as collateral. Follow our step-by-step instructions to navigate cross-chain transfers, wrapping tokens, and maximizing DeFi opportunities with your Cardano holdings.

Prerequisites Before Starting

• Cardano (ADA) in a compatible wallet (e.g., Yoroi, Daedalus)
• Ethereum wallet (MetaMask recommended) with ETH for gas fees
• Bridge service account (e.g., Wanchain, RenVM)
• Basic understanding of transaction fees and DeFi risks

Step-by-Step: Deposit Cardano on Compound

Step 1: Convert ADA to Wrapped ADA (wADA)

1. Access a cross-chain bridge like Wanchain Bridge
2. Connect your Cardano wallet and Ethereum wallet
3. Select ADA as the source token and Ethereum as the destination chain
4. Enter the ADA amount to convert and confirm the transaction
5. Wait for bridge processing (typically 10-30 minutes)

Step 2: Receive wADA in Your Ethereum Wallet

1. Check your Ethereum wallet for wADA tokens
2. Add the wADA contract address to MetaMask if not visible: 0x... (verify current address on Etherscan)
3. Confirm token balance reflects your bridged amount

Step 3: Swap wADA for Compound-Supported Assets

1. Visit a DEX like Uniswap or SushiSwap
2. Swap wADA for Compound-supported tokens (e.g., DAI, USDC, ETH)
3. Adjust slippage tolerance (1-3%) and confirm swap

Step 4: Deposit Assets on Compound

1. Go to the Compound Finance interface
2. Connect your Ethereum wallet
3. Select your token (e.g., DAI) and click ‘Supply’
4. Enter deposit amount and review interest rates
5. Approve transaction and pay Ethereum gas fee

Step 5: Manage Your Position

• Track accrued interest in your Compound dashboard
• Use supplied assets as collateral for borrowing
• Withdraw funds anytime (subject to liquidity)

Key Considerations & Risks

• Bridge Fees: 0.1-0.5% + network fees
• Gas Costs: Varies with Ethereum congestion
• Impermanent Loss: Possible during wADA swaps
• Smart Contract Risk: Audit all protocols
• Interest Rate Fluctuations: APYs change dynamically

Frequently Asked Questions (FAQ)

Can I deposit ADA directly on Compound?

No. Compound doesn’t natively support Cardano. You must bridge ADA to Ethereum as wADA first.

Which bridges support ADA-to-Ethereum transfers?

Wanchain and RenVM are popular options. Always verify bridge security and supported assets before use.

Why swap wADA instead of depositing directly?

Compound doesn’t list wADA markets. Swapping to established tokens (DAI/USDC) ensures compatibility.

How long does the entire process take?

Approximately 15-45 minutes, depending on bridge processing times and Ethereum congestion.

What are the tax implications?

Bridging and swapping may trigger taxable events. Consult a crypto tax professional.

Can I borrow against my deposited assets?

Yes! Once deposited, assets become collateral for borrowing other tokens on Compound.

Conclusion: Unlock Cardano’s DeFi Potential

By converting ADA to Ethereum-compatible tokens via secure bridges, you can tap into Compound’s lending markets. While the process involves multiple steps, this guide helps you navigate them safely. Always verify contract addresses, monitor gas fees, and start with small test transactions. As cross-chain solutions evolve, direct ADA integration may become possible – but for now, strategic bridging opens Compound’s doors to Cardano holders.