TL;DR
- Compound approved a record $52 million budget and renewed its leadership team to attract institutional capital to the DeFi ecosystem.
- The protocol lost nearly all of its $12 billion TVL from 2021, now down to just $1.2 billion, while Aave multiplied its own more than 11 times.
- The new leadership team includes former executives from HSBC, Coinbase Custody, Anchorage Digital, Broadridge Financial and Maple Finance.
Compound Finance, one of the most established decentralized lending protocols in the industry, approved a $52 million budget and completely renewed its leadership team with the goal of attracting institutional capital. With this decision, it will attempt a strategic shift toward real-world assets, integration with partners and credit infrastructure for traditional financial markets.
The protocol was a pioneer in decentralized lending since its launch in 2018, popularizing yield generation on crypto deposits without intermediaries. Since then, it has processed approximately $480 billion in deposits and loan volume. However, its total value locked (TVL) collapsed from a peak of $12 billion in September 2021 to the current $1.2 billion, while competitors such as Aave accumulate more than $14.8 billion according to data from DeFiLlama.
Compound’s Institutional Approach
The sector context is far from favorable. TVL across the entire DeFi ecosystem fell by more than a third since the beginning of the year, to approximately $70 billion, driven by a broad correction in cryptocurrencies, yield compression and a series of exploits, including the $292 million hack of KelpDAO in April. Nevertheless, some projections from Standard Chartered estimate that the sector will reach $2.7 trillion by 2030, with tokenized real-world assets being one of the fastest-growing segments.
Compound’s new leadership team brings in Christopher Donovan as chief operating officer, former COO of Near Foundation; Steven Liu, who scaled Maple Finance from $500 million to $5 billion in assets, as chief product officer; and Aaron Schnarch, former CEO of Coinbase Custody, as chief executive officer. Names from Anchorage Digital, HSBC and Broadridge Financial also join the team.
Institutions Evaluate Structures, Not Teams
“DeFi is a remarkable innovation; however, it has achieved limited institutional adoption,” Schnarch stated in a press release. “Current offerings do not meet the standard of traditional finance, particularly regarding regulatory compliance and technical requirements.”
Ran Hammer, chief business officer at Orbs, interpreted Compound’s bet as a logical response to the ecosystem’s transformation. “Retail participation is a fraction of what it once was, and the chain has quietly become a space for settlement, execution and interaction among financial institutions,” he said.
The approved budget is the largest in the history of Compound’s decentralized autonomous organization, a signal of commitment that analysts consider necessary, though insufficient on its own: institutions, warned Himanshu Sahay of Arch Lending, evaluate structures, not teams.
