cTokens Explained

Each market on Compound has its own Supply interest rate (APR). Interest isn’t distributed; instead, simply by holding cTokens, users earn interest.

cTokens accumulates interest through their respective exchange rate and, over time, each cToken becomes convertible into an increasing amount of its underlying asset, even while the number of cTokens in your wallet stays the same.

For example, let’s say you supply 1000 USDC to Compound. In return for supplying the USDC to the protocol, you are issued cUSDC tokens to your Ethereum wallet which act as a claim on your share of the underlying USDC in the Compound protocol. This cUSDC is essentially an interest-earning ERC20 token that can be used like any other token on the Ethereum network.

When you are ready to close out your position with Compound, you simply pay back the cUSDC tokens to the protocol to unlock your USDC.

How cTokens Supercharge Sets

Existing Trend Trading Sets like the ETH RSI 60/40 Crossover Set are positioned in either 100% ETH (the crypto-asset) or 100% USDC (the stable asset). This means that when the Set is sitting in USDC, it is not generating any yield.

With the introduction of cTokens, the ETH RSI 60/40 Yield Set now gives you exposure to an interest-bearing asset when it’s positioned in cUSDC.

You can get started by minting the ETHRSIAPY Set on TokenSets here by using either ETH or cUSDC!

Converting to the ETHRSIAPY Set

Holders of the ETHRSI6040 Set can now convert to ETHRSIAPY by following the steps below. Do keep in mind that in doing so you are taking on additional smart contract risk due to cTokens being a product of the Compound protocol.

If ETHRSIAPY is currently positioned in cUSDC

Note: if you already have cUSDC, you can simply sell your existing ETHRSI6040 Set and then immediately purchase the ETHRSIAPY Set using your cUSDC.

Head to the ETHRSI6040 page on TokenSets Hit the Sell button and select USDC from the Get dropdown menu Hit the Preview Sell button and then hit Submit Sell Once the sale has completed, head to the Compound USDC portal Follow the Compound process to supply USDC to the protocol Once you have cUSDC in your Ethereum wallet, you can head to the ETHRSIAPY page on TokenSets and go through the normal buying process

If ETHRSIAPY is currently positioned in ETH

Follow Steps 1 to 3 above Make sure that you have ETH in your wallet Head to the ETHRSIAPY page, hit the Buy button and follow the process Done

Conclusion

cToken integration is a major improvement to the Set Protocol system and we’re excited to continue releasing Sets that contain cUSDC and eventually other cTokens. You can get started today by minting the new ETHRSIAPY Set on TokenSets.

If you have an idea for a strategy that you’d like to see on TokenSets, please don’t hesitate to reach out to us.

Developers interested in working with us can also reach out to our friendly team by emailing us at hello@setprotocol.com or by joining our Telegram chat.

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