Treasury powered by compound protocol introduces borrowing for institutions

  • Compound treasury allowed institutions to borrow in USD or USDC using crypto as collateral.
  • Providing liquidity to institutions will earn a 6% APY for compounded cash.
  • Compound Finance saw a steady decline in earnings, with the loan-to-value ratio hitting -13.4%.

Institutions loom large in the crypto space because they tend to bring not only high volumes and flows, but also the credibility that crypto lacks, which keeps financial institutions at bay. Now that the presence of these institutions has increased considerably, more and more companies are also turning to them.

The compound treasury provides borrowings to institutions

Cash management solutions for institutions backed by the compound protocol, Compound Treasury, currently allow borrowing in USD and USDC at an APR (annual percentage rate) of 4.00% serving clients such as corporations financial technology and cryptography.

Building on this, Compound Treasury launched the Borrowing Service for Institutions to meet the growing demand for liquidity. These institutions have the ability to use digital assets such as Bitcoin, Ethereum, and other ERC-20 supported assets as collateral to borrow from the Treasury at an annual rate of 6.00%.

In addition, with the exception of the fixed rate, the other services that accompany the loan offer these institutions great flexibility with regard to indefinite terms and no repayment schedule. Institutions can set the duration at their convenience as long as their loan is over-guaranteed.

Commenting on the launch, Vice President of Compound Treasury, Reid Cuming, said:

“Compound Treasury can now meet the demand for liquidity with a simple and reliable borrowing solution, while continuing to provide the same trusted service we have provided to interest earning clients over the past year. The introduction of the loan expands our cash management product to meet more of our clients’ needs.”

Compound Finance takes a hit

Part of the same compound governance, Compound Finance, which also provides lending and borrowing services, has noted a growing lack of interest from investors day by day.

As of November 2021, bearish market conditions caused overall deposits and loans on the protocol to drop to $2.65 billion and -$358 million, respectively.

Compound funding Loans and deposits

This caused the protocol’s Loan-to-Value (LTV) ratio to drop to -13.4%. In comparison to its competitors, such as AAVE and MakerDAO, it is the lowest of all protocols.

The persistent downtrend further aggravates Compound’s condition, which could be revived once the situation improves.

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