Customers can borrow crypto at a fixed 6% APR
Compound Treasury, a company streamlining access to the Compound DeFi lending protocol on behalf of institutional clients, announced a new lending service on Wednesday.
Treasury clients can now borrow U.S. dollars or dollar-pegged stablecoin USDC at a fixed 6% APR, using crypto as collateral.
The Compound protocol is one of the largest in DeFi, with more than $2 billion in total value locked, according to data from The Defiant Terminal. Among the loan protocols, only Aave and Maker are larger.
Maker TVL + Compound TVL + Aave TVL, Source: The Defiant Terminal
Overcollateralized Loans
Compound Treasury loans must be overcollateralized and users can only borrow dollars or USDC up to 90% of the value of their collateral.
“Institutions continue to face challenges when trusting opaque CeFi products or interacting directly with DeFi protocols to manage their balance sheet,” wrote Reid Cuming, vice president of Compound Treasury, in a blog post announcing the lending service. “Compound Treasury can now meet liquidity demands with a simple, reliable borrowing solution.”
Launched last year, Compound Treasury offers institutions a fixed 4% return on US dollar deposits by converting them to USDC and depositing them into the Compound protocol.
Earlier this year, Compound Treasury became the first DeFi product to receive a credit rating from one of the big three credit rating agencies. S&P Global Ratings classified Compound Treasury as a junk rating, citing regulatory uncertainty among other concerns.
Compound’s governance token, COMP, was unfazed by the news. It’s up 13% this month.
COMP price, Source: The Defiant Terminal
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