DeFi Lender Compound Takes Bite of Institutional Crypto Loans Pie

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DeFi lending platform Compound is adding a new crypto loans service for institutions to its on-chain Treasury product.

Decentralized Finance 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 3 Arrows Capital and others went bust. But that popular narrative misses an important point about crypto lending marketsCompound Treasury's borrows and loans love in and out of smart contracts, meaning the entire position is transparent to the public .

"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."

 

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