Compound Protocol-powered Treasury introduces borrowing for institutions

  • Compound Treasury enabled borrowing for institutions in USD or USDC using crypto as collateral.
  • Providing liquidity to the institutions will accrue a 6% APY for Compound Treasury.
  • Compound Finance has been noting a consistent decline in profits, with the Loan-to- Value Ratio hitting -13.4%.

Institutions have an important place in the crypto space as they tend to bring not only high volumes and inflows but also the credibility that crypto lacks, which keeps financial institutions at bay. Now that these institutions’ presence has grown significantly, more and more companies are also catering to them. 

Compound Treasury brings borrowing to institutions

The cash management solutions for institutions backed by the Compound Protocol, Compound Treasury presently allows borrowing USD and USDC at a 4.00% APR (Annual Percentage Rate) serving clients such as fintech and crypto companies.

Building further on that, Compound Treasury launched the borrowing service for institutions to meet the rising demand for liquidity. These institutions have the provision of using digital assets such as Bitcoin, Ethereum and other supported ERC-20 assets as collateral to borrow from the Treasury at a 6.00% APR.

Furthermore, except for the fixed rate, other services that come with borrowing provide these institutions a lot of flexibility in regards to open-ended terms and no repayment schedule. Institutions can set the term for these at their own convenience as long as their loan is overcollateralized.

Commenting on this launch, the VP of Compound Treasury, Reid Cuming, stated,

“Compound Treasury can now address demand for liquidity with a simple, reliable borrowing solution, while continuing to provide the same trusted service we’ve delivered to clients earning interest over the past year. Introducing borrowing expands our cash management product to meet more needs of our clients."

Compound Finance takes a hit

All part of the same Compound Governance, Compound Finance, which also provides lending and borrowing services, has been noting an increasing lack of interest from investors by the day. 

Beginning November 2021, the bearish market conditions have resulted in the overall deposits and loans on the protocol falling to $2.65 billion and -$358 million, respectively.

Compound Finance Loans and Deposits

This has resulted in the Loan-to-Value (LTV) ratio of the protocol falling to -13.4%. In comparison to its competitors, such as AAVE and MakerDAO, this is the lowest for any protocol.

The persisting bearishness is further worsening the condition of Compound, which may be revived once the situation improves.

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