Table of Contents
In the latest development for Compound Treasury, institutional clients can now borrow from the DeFi protocol, using digital assets as collateral.
An Increasing Demand For Liquidity
There has been a growing demand for liquidity in the industry. To meet this increasing demand, Compound Treasury has announced that it is starting an institutional lending program, where major institutions will be able to borrow funds by staking their digital assets as collateral. As the first DeFi-backed company to have a high credit rating from a major agency, Compound Treasury is known for its high levels of transparency and accountability in the industry. The new program will allow accredited institutions to borrow USD or USDC at fixed interest rates, starting at 6% APR. The digital assets accepted as collateral include Bitcoin, Ether, and supported ERC-20 tokens.
The Compound Protocol powers the Compound Treasury. There has been FUD in the market over the volatility around DeFi protocols. However, the demand for liquidity has prevailed. Speaking on the new lending program, Compound Treasury VP, Reid noted,
“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.”
The program will offer a more flexible repayment structure so that close-ended terms and a rigid schedule do not bind institutional clients. As a result, borrowers will be able to draw liquidity and repay balance at their convenience, as long as they remain overcollateralized. The platform currently holds over $3 billion in assets and has conducted transactions of over $285 billion since its inception. Since the collateralized digital assets never leave the Compound Treasury, it ensures fund safety and transparency for clients and maintains liquidity.
Winning Over Institutional Clients
The Compound Treasury was launched back in June 2021 by DeFi development company Compound Labs to enable non-crypto business and financial institutions to benefit from the many use cases of DeFi and offer more quality services to their large user base. Soon after its launch, the platform was offering an institutional cash management solution powered by the Compound Protocol at 4% APR on USD and USDC with daily liquidity. Since then, it has been a trusted source of yield since the platform received a B- credit rating from S&P Global Ratings, making it the first institutional DeFi offering to be rated by a major credit rating agency. It is also a milestone of mainstream adoption for the crypto industry as a whole.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.