cTokens & Supply
When you supply DAI to Compound, you receive cDAI — an interest-bearing token. The exchange rate between cDAI and DAI increases every block as borrowers pay interest. You never "claim" interest; your cTokens simply become worth more DAI over time.
📈 Watch Your cTokens Appreciate
Your Supply
1,000 DAI
cDAI Received
45,662.1
Exchange Rate
0.02190
Redeemable Value
1,000.00 DAI
Interest Earned
$0.00
How cTokens Work — Step by Step
1
Supply DAI
Send 1,000 DAI to Compound's cDAI contract
→
2
Mint cDAI
Receive cDAI at current exchange rate (~0.0219 DAI/cDAI)
→
3
Rate Grows
Each block, borrower interest increases the exchange rate
→
4
Redeem
Burn cDAI, receive more DAI than you deposited
🔬 Under the Hood: Exchange Rate Formula
exchangeRate = (totalCash + totalBorrows − totalReserves) / totalSupply
As borrowers pay interest, totalBorrows increases (accrued interest), which pushes the exchange rate up.
Your cToken balance stays constant, but each cToken is worth more underlying asset. This is why cTokens are
composable — they're standard ERC-20 tokens that can be used as collateral elsewhere.