How to Deposit DOT on Compound: Step-by-Step Guide for Beginners

Unlock Passive Income: Deposit DOT on Compound in 4 Simple Steps

Depositing DOT on Compound Finance lets you earn interest on your Polkadot holdings while contributing to decentralized finance (DeFi) liquidity. This 900-word guide breaks down the process into manageable steps, whether you’re using wrapped DOT (wDOT) on Ethereum or future native integrations. Learn how to safely put your DOT to work and start generating yield today.

Prerequisites Before Depositing DOT

• DOT Tokens: Minimum 1 DOT in your wallet
• Web3 Wallet: MetaMask or WalletConnect-compatible wallet
• Gas Fees: ETH for Ethereum transactions (if using wDOT)
• Bridge Access: Portal Bridge or Multichain for DOT-to-wDOT conversion

Step-by-Step: How to Deposit DOT on Compound

Step 1: Convert DOT to Wrapped DOT (wDOT)

1. Go to a cross-chain bridge like Portal Bridge
2. Connect your Polkadot wallet (e.g., Talisman) and Ethereum wallet
3. Select DOT as input and wDOT (ERC-20) as output
4. Confirm conversion (wait 2-5 minutes for completion)

Note: wDOT maintains 1:1 value with DOT but exists on Ethereum

Step 2: Connect Wallet to Compound

1. Visit Compound’s official app
2. Click “Connect Wallet” (top-right corner)
3. Choose your wallet provider (MetaMask recommended)
4. Approve connection request in your wallet

Step 3: Deposit wDOT into Compound

1. In Compound’s dashboard, locate “wDOT” under Markets
2. Click “Supply” next to wDOT
3. Enter amount (leave buffer for gas fees)
4. Approve contract interaction in your wallet (one-time)
5. Confirm deposit transaction (check gas fees carefully)

Step 4: Track & Manage Your Deposit

• View accrued interest in “Your Dashboard”
• Monitor APY rates (updated in real-time)
• Withdraw anytime via “Withdraw” button
• Use cTokens (cDOT) as collateral for borrowing

Key Benefits of Depositing DOT on Compound

• Earn variable APY (typically 2-8% for wDOT)
• No lock-up periods – withdraw anytime
• Compound interest automatically
• Use cDOT as collateral for loans
• Support decentralized lending markets

FAQs: Depositing DOT on Compound

Can I deposit native DOT directly?

Currently, Compound only supports Ethereum-based assets. You must convert DOT to wDOT using a cross-chain bridge. Future upgrades may enable native DOT deposits.

What are the risks?

Smart contract vulnerabilities, wDOT bridge risks, interest rate fluctuations, and liquidation if using as collateral. Only deposit what you can afford to lose.

How often is interest paid?

Interest compounds every Ethereum block (~15 seconds). Your cDOT balance increases continuously, reflecting earned interest.

Are there deposit limits?

No minimums, but consider gas fees. Maximum supply limited by Compound’s liquidity pools (currently >$100M wDOT capacity).

Can I lose my DOT?

Funds are generally safe if you: 1) Use official Compound app 2) Verify contract addresses 3) Avoid phishing sites. Bridge transfers carry additional risk.

Tax implications?

Interest earnings are typically taxable income. Consult a crypto tax professional in your jurisdiction.

Pro Tips for Success

• Start with a test transaction ($10-20 worth)
• Bookmark Compound’s Governance page for rate updates
• Use Ledger/Trezor for large deposits
• Monitor gas fees via Etherscan for optimal timing

By following this guide, you’ve unlocked a powerful way to put idle DOT to work. As Compound evolves, expect streamlined DOT integration – but the wDOT method remains your gateway to DeFi yields today. Always prioritize security: double-check URLs, enable 2FA, and never share seed phrases.