cETH
cETH is the token that users get in exchange of lending their ETH on Compound protocol. It is an ERC-20 token. [1]
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Overview
When the user deposits funds in the form of ETH into the pool, they get a corresponding amount of cETH, which represents their stake in the ETH-based lending pool. Unlike the deposited ETH, cETH can be freely traded and transferred. [2][1]
cETH is a type of cTokens, which are tokens that users get in exchange for depositing the corresponding asset on a pool in Compound protocol. cTokens are the primary means of interacting with the Compound Protocol; when users mint, redeem, borrow, repay a borrow, liquidate a borrow, or transfer cTokens, they will be utilizing the cToken contract. [3][4]
cTokens can also earn interest as each market has its own supply interest rate (APR). cTokens generate interest through their exchange rate mechanism. As time passes, the exchange rate of each cToken increases, resulting in a higher conversion value into its underlying asset. This occurs even if the quantity of cTokens held in an individual's wallet remains constant. [4]
