Crypto Lending Firm Compound Now Offers Services to Short Cryptocurrencies

Omar Faridi
  • Crypto lending service Compound now offers users the option to short digital currencies.
  • Shorting cryptos and Compound's other services are facilitated through partnerships with high-frequency trading (HFT) firms and over-the-counter (OTC) traders.

Compound, a crypto startup that allows users to borrow digital currencies or earn interest payments by lending them, has reportedly launched a protocol for shorting cryptocurrencies. Tokens currently supported (for shorting) on Compound’s platform include Ethereum (ETH), 0x (ZRX), Basic Attention Token (BAT), and Augur (REP).

Commenting on the crypto platform’s ongoing expansion efforts, Compound CEO Robert Leshner told TechCrunch: “If/when Compound scales, this will lead to some really interesting improvements in market structure, namely, fairer prices.”

‘Partnering With HFT, OTC Traders

The Andreessen Horowitz, Coinbase, and Polychain Capital-funded firm has successfully completed a security audit by Trail of Bits and partnered with 26 different hedge funds who are looking to actively trade with Compound. These funds mainly include high frequency trading (HFT) firms and over-the-counter (OTC) crypto trading desks.

Compound’s trading partners aim to offer liquidity services to crypto investors who are interested in working with borrowers or lenders. Additionally, the lending platform plans to develop and issue its own stablecoin, launch its own digital currency wallet, and partner with more financial institutions in order to offer greater liquidity.

To access Compound’s services, users can visit the company’s website through a Web3-compatible browser such as MetaMask or via a Coinbase wallet. When users enter a certain Ether (ETH) value, they are able to see the different interest rates for borrowing the token, lending it, and shorting supported cryptos.

At present, these interest rates are determined through an automated algorithmic process, however, Compound intends to introduce a community-led governance model to manage its financial products.

"Helping People Understand Crypto"

As the crypto industry evolves, companies are looking to remain competitive by continuing to offer new types of services. San Francisco-based cryptocurrency exchange Coinbase recently launched Coinbase Bundle. Per the exchange, it aims to “help people understand, explore, and buy their first cryptocurrency.”

Customers can now easily invest in cryptos as Coinbase Bundle allows users to buy all of the exchange’s supported cryptocurrencies with a single purchase. These include Bitcoin (BTC), Bitcoin Cash (BCH), Ethereum (ETH), Litecoin (LTC), and Ethereum Classic (ETC).

Similar crypto investment options have been introduced by CoinBundle which lets users purchase several major cryptocurrencies by choosing one of their packages. These packages are tailored for conservative, high-risk, and “aggressive” investors, according to CoinBundle.

Saad Rizvi, the CEO of CoinBundle, said that crypto bundles are similar to mutual funds prepared for traditional market investors. Rizvi explained that allowing users to invest in multiple different cryptocurrencies “brings a tried and tested methodology from traditional finance and stock investing to cryptocurrencies.”