Compound bets $52 million, new leadership team in switch to institutional focus

Compound Finance, a prominent decentralized finance (DeFi) lending protocol, has undergone a leadership overhaul and announced a $52 million budget to pivot towards attracting institutional users. Following a sharp decline in the value of assets locked on the platform, from a peak of $12 billion in September 2021 to $1.2 billion, the company is shifting its focus towards real-world assets, partner integration, and credit infrastructure for traditional financial markets.

Compound, which pioneered decentralized lending in 2018, has processed approximately $480 billion in deposits and borrowing volume since its inception. However, it has faced stiff competition from rivals like Aave, which holds over 11 times its total value locked (TVL) at $14.8 billion, according to DeFiLlama data. Despite a broader industry downturn, with DeFi's TVL falling by more than a third to around $70 billion since the start of the year, the sector is projected to reach $2.7 trillion by 2030, with tokenized real-world assets among the fastest-growing segments.

The new leadership team includes Christopher Donovan, formerly of the Near Foundation, Steven Liu, who scaled Maple Finance from $500 million to $5 billion, and Aaron Schnarch, the former CEO of Coinbase Custody, who now serves as an executive director. This strategic shift is seen as a response to the changing user base of DeFi, with retail participation dwindling, and the platform evolving into a settlement and interaction hub for financial institutions.

The $52 million budget, the largest approved by Compound's decentralized autonomous organization (DAO), underscores the company's commitment to this institutional focus. However, experts suggest that institutions will demand more than just credentials, looking for robust structures rather than teams.