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Compound Puts $52 Million Into Institutional DeFi

With a new budget and TradFi talent, Compound wants to attract institutional players as TVL falls and rival Aave stays bigger.

By Mike Hesp
• 2 min read
Compound Puts $52 Million Into Institutional DeFi

Key Takeaways

  • Compound Finance approved $52 million and appointed a new leadership team to bring in capital again.
  • The protocol is shifting its focus from retail to institutional users, with plans for real-world assets and credit infrastructure.
  • The total value locked on Compound fell to $1.2 billion, while the DeFi sector lost more than a third of its TVL this year.

Compound Finance has appointed a new leadership team and approved a budget of $52 million (€44.9 million) to attract capital again. The DeFi lender, one of the oldest protocols in the sector, has seen the value locked on the platform fall to $1.2 billion (€1 billion), far below the peak of $12 billion (€10.4 billion) in September 2021.

From Retail to Institutional

The crypto company now wants to focus more clearly on institutional users. That includes plans for real-world assets, partner integrations, and credit infrastructure for traditional financial markets.

Compound launched in 2018 and helped put decentralized lending on the map. The protocol made it possible to earn yield on crypto deposits without intermediaries and, according to its own figures, has processed about $480 billion (€414 billion) in deposit and lending volume since launch.

The shift fits into a broader change in DeFi. According to the text, retail interest has declined in recent years, while institutional players are placing more emphasis on compliance and technical requirements. That makes Compound's move logical, especially now that rival Aave with $14.8 billion in TVL is much larger.

Pressure on DeFi Remains High

The sector as a whole is still under pressure. Total TVL in DeFi has fallen by more than a third since the start of this year to about $70 billion (€60.4 billion), partly because of a correction in the crypto market, lower yields, and a series of protocol exploits, including the $292 million (€252 million) hack at KelpDAO in April.

At the same time, market expectations point to room for growth over the longer term. Standard Chartered expects DeFi could reach $2.7 trillion (€2.3 trillion) by 2030, with tokenized real-world assets among the fastest-growing segments. That matters for Compound, because the new budget and experienced hires are meant to help it better serve that institutional demand.

New Leadership With TradFi Experience

The new team includes Christopher Donovan, who was previously COO at the Near Foundation, Steven Liu, who grew Maple Finance from $500 million (€431 million) to $5 billion (€4.3 billion) in assets, and Aaron Schnarch, former CEO of Coinbase Custody. People are also joining from Anchorage Digital, HSBC, Broadridge Financial, and Maple Finance.

According to Schnarch, DeFi's current products still fall short for institutional adoption, especially when it comes to compliance and technical requirements. That is exactly the gap Compound is now trying to close with more capital, more experience, and a clearer focus on the market where the next growth phase is expected to come from.

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