Clients Can Borrow Against Crypto At A Fixed 6% APR
Compound Treasury, a business that streamlines access to the Compound DeFi lending protocol on behalf of institutional clients, announced a new borrowing service Wednesday.
Treasury clients can now borrow US dollars or the dollar-pegged USDC stablecoin at a fixed 6% APR using crypto as collateral.
The Compound protocol is one of the largest in DeFi, with more than $2B in total value locked, according to data from The Defiant Terminal. Among lending protocols, only Aave and Maker are larger.
Maker TVL + Compound TVL + Aave TVL, Source: The Defiant Terminal
Overcollateralized Loans
Compound Treasury loans must be over-collateralized, and users can only borrow dollars or USDC worth up to 90% of their collateral’s value.
“Institutions continue to face challenges trusting opaque CeFi products or interacting directly with DeFi protocols to manage their balance sheet,” Compound Treasury vice president Reid Cuming wrote in a blog post announcing the borrowing service. “Compound Treasury can now address demand for liquidity with a simple, reliable borrowing solution.”
Compound Treasury launched last year, offering institutions a fixed 4% yield on deposits of US dollars 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 a Big Three credit rating agency. S&P Global Ratings gave Compound Treasury 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
