Compound Pivots to Institutions With $52M as DeFi Demand Cools

CoinEdition2026/08/17 21:03

By:CoinEdition

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Compound Finance approved a $52 million budget and overhauled its leadership as the DeFi lender looks to attract more institutional investors.

The move comes as assets locked on Compound have fallen to about $1.2 billion from a peak of $12 billion in September 2021. The protocol plans to focus on real-world assets, partnerships and credit infrastructure for traditional financial institutions.

Compound helped pioneer DeFi lending after launching in 2018. It has since processed about $480 billion in deposits and borrowing, but has lost ground to larger rivals. Aave now holds about $14.9 billion in assets, more than 11 times Compound’s total, according to DeFiLlama.

The shift comes as the broader DeFi market faces weaker demand, lower yields and security exploits. Sector-wide total value locked has fallen by more than a third this year to about $70 billion.

Compound’s new leadership includes Christopher Donovan, Steven Liu and Aaron Schnarch, the former CEO of Coinbase Custody. Executives from Anchorage Digital, HSBC, Broadridge Financial and Maple Finance have also joined the team.

Schnarch said institutional adoption has been limited by gaps between DeFi products and traditional finance standards. Compound plans to address those gaps through stronger compliance and technical infrastructure.

According to CoinMarketCap data, COMP rose 11% over the 24 hours to $17.97 as of Aug. 18.

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1. Crypto outperformed traditional equity indexes following the rate hike, but elevated interest rates remain a key constraint on cross-asset allocation. From September 12 to 18, BTC, ETH, and SOL gained 4.83%, 3.84%, and 9.96%, respectively, while the S&P 500 edged down 0.08%. The U.S. Dollar Index rose 1.11%, and the 10-year U.S. Treasury yield closed at approximately 4.998%. Improving risk appetite is therefore coexisting with elevated discount rates, raising the bar for RWA allocation: investors need to compare not only returns on the underlying assets, but also on-chain liquidity and collateral efficiency. 2. Growth in tokenized equities is occurring even as the overall RWA market remains under pressure. As of September 18, Distributed Asset Value across RWAs stood at $38.503 billion, down 1.13% week over week, while tokenized equities reached $3.056 billion, up 6.03%. This week's data are better explained by capital reallocating across different RWA segments than by a broad-based expansion of the entire RWA market. 3. For exchanges, the opportunity lies in connecting spot holdings, collateral, and derivatives. Reality's distributed asset value stands at approximately $155 million, while eligible rTokens can already be used within Bitget's UTA margin framework. Across CoinGlass's verifiable sample of 177 TradFi instruments, open interest reached approximately $11.498 billion, up 2.06% week over week, even as weekly trading volume declined 7.60%. The medium-term opportunity remains intact, but deeper utilization will depend on liquidity, collateral use, and sustained trading activity. 4.Assets to watch: BTC, ETH, SOL, NEAR, ZEC, gold, tokenized U.S. equities, COST. 5.Key metrics to watch: rToken collateral utilization, the durability of TradFi open interest and trading volume, and next week's employment and consumer data.

Bitget•2026/09/21 06:38