The most common reason a Compound III deposit earns "no interest" is that you deposited the asset as collateral instead of as the base asset. Compound III (Comet) is designed so that each market has only one borrowable asset, called the base asset. Only the base asset earns deposit interest. Any other asset you deposit counts as collateral, which raises your borrowing limit but earns no interest itself. If you have no intention of borrowing and just want your crypto to earn yield, but you deposited an asset other than USDC (or even USDC through the wrong entry point) as collateral, then you really will earn zero interest.
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The practical difference between base asset and collateral
In Compound III's USDC market, the base asset is USDC. When you deposit USDC, your account balance becomes positive, and that balance earns interest at the market's current deposit rate, with interest also denominated in USDC. This is the only position in Compound III where your money can truly "make money."
Collateral is a different matter. Assets like ETH, WBTC, LINK, and UNI can be deposited into the same market as collateral, but their function is to unlock borrowing power, not to generate yield. The official documentation puts it bluntly: collateral assets do not earn or pay interest. A 2026 tutorial lists this as a pitfall that "almost every new user falls into": collateral earns no interest, and if you are not borrowing, supplying collateral is "strictly worse" than holding the base asset or putting your crypto elsewhere.
This design is intentional. Compound III abandoned V2's multi-asset pool model in favor of a single borrowable asset per market, aiming to isolate risk, reduce gas costs, and simplify liquidation logic. The trade-off is that collateral no longer earns deposit yield.
How to confirm which type you deposited
When using the Compound III interface, the key is which entry point you used. If you want your asset to earn yield, you need to choose Supply Base Asset or a similar option, and the asset you deposit must be that market's base asset (USDC in the USDC market). If you chose Supply Collateral, or deposited a non-base asset, then that asset is only collateral and will not earn interest.
After depositing, you can check the sign and location of your account balance. Compound III account balances are signed integers: a positive base asset balance means you supplied base assets and are earning interest; a negative balance means you are borrowing and paying interest. Collateral balances are listed separately and do not participate in interest calculations. If you see your USDC balance is positive but the "interest" column shows zero, first check whether that USDC was deposited as collateral. Some frontends may default to categorizing USDC as collateral when you deposit it, requiring you to manually select "supply as base asset."
If you actually want to borrow
Then depositing collateral is a necessary step. Collateral earns no interest, but it lets you borrow the base asset. Compound III sets two factors for each collateral type: the borrow collateral factor determines how much you can borrow, and the liquidation collateral factor determines when you get liquidated. The latter is always higher than the former. What you actually need to watch is the liquidation factor, not the borrow factor, because the borrow factor is just the line where the interface stops you from borrowing more, while the liquidation factor is the line where the protocol takes your collateral.
But if you have no borrowing needs and just want your stablecoins or ETH to earn yield, Compound III is not the right place (at least for non-base assets). Depositing ETH as collateral without borrowing means you take on smart contract risk and liquidation risk (though liquidation risk is extremely low when not borrowing) in exchange for zero yield. The same ETH placed in other protocols that offer collateral yield, or simply held directly, at least avoids this "deposited for nothing" problem.
How to check if interest is accumulating normally
If you have confirmed you deposited the base asset but the interest still looks wrong, check two things. First, the market's current deposit rate, which is determined by the base asset's utilization rate. When utilization is high, rates are high; when utilization is low, rates can be very low or even close to zero. Second, whether COMP rewards are being mistaken for "interest." COMP rewards are incentives set by governance and distributed to suppliers and borrowers in some markets. They need to be claimed separately, are not part of the deposit rate, and are not guaranteed to continue. Do not add the dollar value of COMP rewards directly into "interest" when judging base asset returns.
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References
- Conic Finance·Use Compound v3 to Lend — Step-by-Step Guide (2026), 2026-10-29
- Compound Docs·Collateral & Borrowing, 2026-10-29
- Compound Docs·Interest Rates, 2026-10-29
- Bitpush·Interview with Compound core developer: Reviewing the latest version of Compound, 2026-10-29
- Instadapp Guides·Using Compound v3, 2026-10-29
