Key facts
- Compound Finance has approved a $52 million budget for its pivot to institutional clients.
- The protocol has appointed a new leadership team with experience in traditional finance and crypto.
- Compound aims to attract institutional users by offering real-world assets and credit infrastructure.
- The total value locked on Compound has fallen to $1.2 billion from a 2021 peak of $12 billion.
Compound Finance, a pioneering decentralized finance (DeFi) lending protocol, has undergone a significant strategic shift, appointing a new leadership team and approving a record $52 million budget to attract institutional capital. This pivot aims to revive growth after the total value locked (TVL) on its platform declined to $1.2 billion from a peak of $12 billion in September 2021.
The protocol's new focus involves developing offerings tailored for institutional clients, including real-world asset (RWA) integration, enhanced partner integrations, and robust credit infrastructure designed to meet the compliance and technical standards of traditional finance.
Industry executives note that this move aligns with a broader trend in DeFi, which has seen a decline in overall assets amid market weakness and security breaches. The sector's TVL has fallen by over a third this year to approximately $70 billion, though it is projected to reach $2.7 trillion by 2030, with tokenized RWAs expected to be a key growth area.
The new leadership team comprises individuals with extensive experience in both traditional finance and the crypto space. Christopher Donovan, formerly COO at the Near Foundation, takes on the COO role. Steven Liu, who previously scaled Maple Finance, joins as Chief Product Officer, and Aaron Schnarch, ex-CEO of Coinbase Custody, becomes an executive director. Other appointees come from firms like Anchorage Digital, HSBC, and Broadridge Financial.
Executives like Aaron Schnarch acknowledge that DeFi has faced limited institutional adoption due to shortcomings in meeting traditional finance's compliance and technical requirements. Ran Hammer of Orbs suggests that with retail participation diminished, DeFi is increasingly becoming a venue for financial institutions, making leadership with relevant language skills crucial.
The substantial budget allocation, the largest ever approved by Compound's DAO, underscores the protocol's commitment to this new direction. While the credentials of the new team are seen as a positive step, experts like Himanshu Sahay of Arch Lending emphasize that institutions will scrutinize the underlying structures as much as the leadership's experience.