How to Earn Interest on AVAX with Compound: Step-by-Step Guide

Unlock Passive Income with Your AVAX Holdings

Earning interest on your Avalanche (AVAX) tokens doesn’t require active trading or complex strategies. By leveraging Compound Finance – a leading decentralized lending protocol now available on Avalanche – you can put your idle crypto to work. This step-by-step guide will show you exactly how to earn interest on AVAX through Compound’s secure, transparent platform. Whether you’re new to DeFi or a seasoned user, you’ll learn how to generate passive income while maintaining full control of your assets.

Prerequisites Before You Start

• Avalanche-Compatible Wallet: MetaMask (with Avalanche network configured) or Core Wallet
• AVAX Tokens: Purchased from exchanges like Coinbase, Binance, or Kraken
• Gas Fees: Small amount of AVAX for transaction costs
• Compound Account: No registration needed – just connect your wallet

Step 1: Configure Your Wallet for Avalanche

First, set up your crypto wallet to interact with the Avalanche network:

1. Install MetaMask or Core Wallet
2. Add Avalanche Network:
   • Network Name: Avalanche Mainnet
   • RPC URL: https://api.avax.network/ext/bc/C/rpc
   • ChainID: 43114
   • Symbol: AVAX
   • Explorer: https://snowtrace.io/
3. Transfer AVAX tokens from your exchange to your wallet address

Step 2: Connect to Compound Finance

Navigate to Compound’s Avalanche interface:

1. Visit app.compound.finance
2. Click “Connect Wallet” in top-right corner
3. Select your wallet provider (MetaMask/Core)
4. Approve the connection request in your wallet
5. Switch to Avalanche network if prompted

Step 3: Supply AVAX to Earn Interest

Once connected, deposit your AVAX:

1. On Compound’s dashboard, locate “Supply Markets”
2. Find AVAX in the list and click “Supply”
3. Enter the amount of AVAX to deposit (leave some for gas fees)
4. Approve the transaction in your wallet (one-time action)
5. Confirm the supply transaction (gas fee applies)
6. View your supplied balance under “Your Supplies”

Interest Mechanics: Your AVAX earns variable APY based on market demand. Interest compounds every block (~2 seconds) and appears as cAVAX tokens in your wallet.

Step 4: Monitor and Manage Your Earnings

• Track APY: Check real-time rates on Compound’s dashboard
• View Earnings: Interest accrues continuously in your cAVAX balance
• Withdraw Funds: Click “Withdraw” on your supply position anytime
• Reinvest: Compound earnings by supplying additional cAVAX

Step 5: Maximize Your AVAX Earnings

Boost returns with these pro tips:

• Compare rates across DeFi platforms like Aave or Benqi
• Use yield aggregators that auto-compound your interest
• Diversify with other supported assets (USDC, ETH, BTC.b)
• Monitor gas fees – transact during low-congestion periods

Frequently Asked Questions (FAQ)

Is supplying AVAX on Compound safe?

Compound is audited and battle-tested, but DeFi carries inherent risks like smart contract vulnerabilities and market volatility. Only supply what you can afford to lose.

How often is interest paid?

Interest compounds every Avalanche block (~2 seconds). Your cAVAX balance increases continuously.

Can I lose my AVAX?

Funds are secure if Compound operates normally, but extreme market conditions could trigger liquidation if you borrow against your collateral. Pure supplying has no liquidation risk.

What’s the minimum deposit?

No minimum – but ensure you have enough AVAX left for transaction fees (0.01-0.1 AVAX typically).

Are there taxes on earned interest?

Yes – interest earnings are taxable events in most jurisdictions. Consult a tax professional.

How do I withdraw my AVAX?

Go to “Your Supplies” on Compound, click “Withdraw,” enter amount, and confirm the transaction.

Start Earning Today

With Compound Finance now on Avalanche, earning interest on AVAX is simpler than ever. By following this guide, you’ve learned how to transform idle tokens into passive income in under 10 minutes. Remember to stay updated on APY fluctuations and network conditions. Your journey to making your crypto work for you starts now – supply your AVAX and watch your balance grow!