DeFi Lender Compound Takes Bite of Institutional Crypto Loans Pie

Compound will take bitcoin as collateral against stablecoin loans made by institutions.

AccessTimeIconSep 14, 2022 at 1:00 p.m. UTC
Updated May 11, 2023 at 5:39 p.m. UTC

Decentralized Finance (DeFi) lending platform Compound is trying to grab a slice of the institutional crypto borrowing business that rocked centralized competitors from Genesis to BlockFi.

The longstanding crypto loans protocol is adding a borrowing service for institutions that will accept their troves of cryptos such as bitcoin and ether as collateral against stablecoin loans. The institutions will pay interest on their loans, generating yield for the DeFi users whose stablecoins Compound lent out.

All this might sound like a recipe for the leverage-tinged disaster that shook centralized crypto lending companies earlier this year when their loans to Three Arrows Capital and others went bust. But that popular narrative misses an important point about crypto lending markets.

Compound Treasury's borrows and loans love in and out of smart contracts, meaning the entire position is transparent to the public (a notable difference from the centralized lenders). Additionally, the positions are overcollateralized to protect against flakes and fluctuations in asset price.

"The unique differentiator is that we will be sourcing liquidity from both institutions and the Compound protocol to offer this service," said Reid Cumming, Compound's vice president of treasury. "It’s a new DeFi hybrid."


Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

CoinDesk - Unknown

Danny is CoinDesk's Managing Editor for Data & Tokens. He owns BTC, ETH and SOL.

Learn more about Consensus 2024, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to to register and buy your pass now.

Read more about