Quick summary: Our recommendation is to use eToro to short Compound. They have the most popular cryptocurrencies on offer, great support, and have an easy system for shorting cryptocurrencies in general.

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While there are a lot of options out there for buying COMP, shorting is a different story. Luckily for us here in Australia, we do have a few crypto brokers and exchanges that allow for CFDs and shorting.

One of those brokers is eToro, which we’ll be using for this guide. Let’s get started!

How to Short Compound in Australia

A quick recap first on what shorting actually is: The main objective of shorting or short selling is to make a profit (of course). The idea is to sell a stock/cryptocurrency hoping it will drop in value so you can buy it back later for cheaper, thus creating a net profit.

Shorting Compound can be done in 4 easy steps:

  1. Choose a crypto broker or exchange
  2. Create an account
  3. Fund your account
  4. Short Compound

1. Choose a cryptocurrency exchange

As mentioned before, for this guide we’ll be using eToro as they offer the ability to short the most common cryptocurrencies.

You can, of course, use any other crypto broker to follow along, they all work very similarly.

2. Create an account on the cryptocurrency exchange

Let’s start with just signing up with eToro.

Sign up with eToro

The sign-up process is very easy, as is the verification that needs to be completed afterwards so you can get started.

3. Funding your eToro account

Next is funding your account. You have several options when it comes to depositing AUD into your eToro Account. These include a bank transfer, credit card, debit card, PayPal, and more.

4. Short Compound

Now for the actual shorting:

  • Starting off at the search bar at the top, find Compound by entering the name or symbol.
  • Then on the crypto page/section, on the right side, hit the TRADE button to enter the trading interface.
  • At the top of the trading interface: Click on sell to short sell the stock.
  • Enter the amount for which you want to sell Compound and click on “Open Trade”.

Once you’re ready to close the trade, hopefully when the value of Compound has dropped, go to your Portfolio, find the Compound trade, and click on the red cross to close the trade.

If your assumption/prediction was right, then the profit will be added to your account after closing the trade. If you were wrong on the other hand, you’ll incur a loss which will be debited from your eToro account.

Congratulations, now you know how to short Compound!

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Disclaimer: Trading, investing, and dealing with digital and cryptocurrencies might involve a lot of risks. Their prices are volatile and performance is unpredictable. Their past performance is no guarantee of future performance.

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Where to Short Compound (COMP)

Aside from eToro, the other major exchange you can use is Binance.

While Binance tends to be a bit more complex compared to eToro, they do have more cryptocurrencies on offer.

Frequently Asked Questions

Can I short Compound on Binance?

Yes, you can short Compound on Binance. They have over 300 cryptocurrencies on offer and specialise in the crypto market. They also have a great app and competitive fees.

About Compound

COMP is the Compound Protocol governance token and was distributed starting in June 2020. It is an ERC-20 token, which was issued on Ethereum.

The main purpose of COMP tokens is protocol governance. COMP token holders can propose, debate and implement changes to Compound without any reliance on the Compound team. COMP owners can also delegate voting rights to any address of their choosing.

Compound is a blockchain protocol that allows users lend or borrow cryptocurrencies. It establishes money markets through the pooling of assets and algorithmically setting interest rate based on demand and supply.

Users must deposit their crypto assets to Compound in order to supply or lend them. The crypto assets will then be aggregated into a liquidity fund. After users make the deposit, they will get cTokens back. The cTokens will be held by users and they will begin earning interest.

After assets have been provided to Compound, users can use them as collateral. Compound allows users to borrow money based on the collateral value of the assets that have been deposited. Because Compound uses an overcollateralization model, you can never borrow more than what is collateralized.

Compound functions in the same way as a bank, but it's more accessible. Compound does not require users to share any private or personal information. Anyone who has an internet connection can sign up to Compound and begin using the protocol. You only need to have some crypto assets on a Crypto wallet like Metamask.

Compound offers a higher return rate than traditional banks. If you have money in savings, it will only give you 0.05% APY. Compound could offer up to 4% depending on the assets you provide.

The higher interest rates offered are due to the increased risks associated with the Compound smart contracts.

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