Last year, in 2021, Compound’s Treasury decided to add services this would help institutions take advantage of cryptocurrencies and hopefully encourage them to get more involved in the digital asset industry. As part of this initiative, it launched an institutional cash management solution powered by the compound protocol.
The solution offered 4.00% PR on USD, as well as USDC, with daily liquidity as well. The project has attracted many clients, including banks, fintechs, and even other crypto companies, and it has proven that they can rely on Compound Treasury and use it as a predictable source of return.
Then, in May, the Treasury also became the first DeFi-backed company to receive a credit rating, with great levels of accountability and transparency, which further encouraged institutions to join and use its services. Now Treasury is taking the next step by launching a brand new service for institutions and allowing them to borrow money while providing crypto as collateral.
How it works?
The new service responds to a growing demand for liquidity and will allow institutions to use Bitcoin, Ether, and a number of supported ERC-20 tokens to borrow in USD or USDC. They would also get fixed rates, starting at 6% APR.
Institutions can borrow with an indefinite term and without a specific repayment schedule. This allows them the flexibility to draw on cash and pay off their balances as they see fit. Of course, they will have to be oversized to take advantage of these conditions.
Compound Treasury noted that liquidity is provided by its own customers in combination with the Compound Protocol. The Treasury holds over $3 billion in these assets, with over $285 billion in total transaction volume, since inception to date. The guarantee will not leave the control of the project, which will increase the security of customer funds simply by making them transparent at all times.
Institutions are increasingly getting into crypto
Institutions may be more inclined to join DeFi than CeFi, according to Compound, as they continue to face challenges when it comes to trusting opaque CeFi products. Of course, interacting with DeFi to manage their balance sheets comes with its own set of challenges. The market has, after all, been extremely volatile, with the bear market dominating the crypto sector since November 2021.
Available liquidity has decreased, and therefore the number of trustworthy options has been significantly reduced. But demand for liquidity remains robust, which means there is still hope for DeFi solutions.
Compound Treasury Vice President Reid Cuming said the Treasury is now able to meet this demand with a simple but reliable borrowing solution. At the same time, it continues to offer the same trusted service that has already garnered trust and interest from institutions over the past year. He added that the loan would expand the company’s cash management product, allowing it to meet the needs of even more customers.
The company wants to be the most reliable and transparent partner for institutions that decide to work with it in order to access the main advantages of the DeFi sector, and at present, it has taken an important step towards achieving this. this goal.
To learn more about Compound, see our Investing in Compound guide.