How to Lock TON Tokens on Compound: Step-by-Step Guide for Earning Interest

What Does Locking TON Tokens on Compound Mean?

Locking TON tokens on Compound refers to supplying your The Open Network (TON) cryptocurrency to Compound Finance’s decentralized lending protocol to earn interest. When you lock tokens, you contribute them to Compound’s liquidity pools, enabling others to borrow while you accrue compounding rewards. This leverages DeFi’s core principle: putting idle assets to work. Note that TON isn’t natively supported on Ethereum-based Compound—wrapping TON into an ERC-20 token (like wTON) is required first.

Prerequisites Before Locking TON on Compound

• TON Tokens: Acquire TON via exchanges like OKX or Bybit.
• Ethereum Wallet: Install MetaMask or Trust Wallet with ETH for gas fees.
• Wrapped TON (wTON): Use a cross-chain bridge (e.g., Multichain) to convert TON to ERC-20 format.
• Compound Account: Connect your wallet to app.compound.finance.

Step-by-Step Guide to Lock TON Tokens on Compound

Step 1: Wrap TON into ERC-20 Format

Visit a TON-Ethereum bridge like Multichain. Connect your wallet, select TON as the input token and Ethereum as the output network. Specify the amount, approve the transaction, and receive wTON in your wallet after confirmation (5-15 minutes).

Step 2: Connect Wallet to Compound

Navigate to app.compound.finance. Click “Connect Wallet” and authorize your MetaMask/Trust Wallet. Ensure you’re on the Ethereum mainnet.

Step 3: Supply wTON to Compound

1. Under “Supply Markets,” search for wTON.
2. Click “Supply” and enter the amount.
3. Approve wTON spending via a wallet pop-up (gas fee required).
4. Confirm the supply transaction—your wTON is now locked.

Step 4: Monitor and Manage Assets

Track accrued interest in your Compound dashboard. Use cTON tokens (Compound’s interest-bearing receipt) to withdraw or collateralize loans. Interest compounds every Ethereum block (~15 seconds).

Benefits of Locking TON on Compound

• Passive Income: Earn variable APY (e.g., 2-8% historically).
• Liquidity Access: Borrow stablecoins against locked wTON.
• Decentralization: Non-custodial control via smart contracts.
• Composability: Use cTON across DeFi apps like Uniswap.

Risks and Considerations

Smart Contract Vulnerabilities: Audited but not risk-free. Market Volatility: TON price swings affect collateral value. Bridge Risks: Wrapping relies on third-party security. Gas Fees: Ethereum transactions can be costly. Always test with small amounts first.

FAQ: Locking TON Tokens on Compound

Q: Can I lock native TON directly on Compound?
A: No. You must wrap TON to ERC-20 format first using a cross-chain bridge.

Q: How often is interest compounded?
A: Continuously—every Ethereum block (≈15 seconds).

Q: What’s the difference between supplying and locking tokens?
A: “Locking” is informal terminology for supplying assets to Compound’s liquidity pools.

Q: Can I lose my locked TON?
A: Only if wTON’s value drops severely when used as loan collateral, triggering liquidation.

Q: Are there alternatives to Compound for TON?
A: Yes! Explore TON-native DeFi like STON.fi or EVM-compatible chains via bridges.

Conclusion

Locking TON tokens on Compound unlocks passive income through a streamlined process: wrap TON, supply wTON, and earn compounding interest. While bridging adds complexity, the integration empowers TON holders to tap into Ethereum’s robust DeFi ecosystem. Always prioritize security—verify contracts, monitor market conditions, and start small to maximize rewards while minimizing risks.