Decentralized Finance or the DeFi market as it is more popularly called has had an exciting 12 months with several developments pushing it to the new levels of adoption. With more players entering the market, the number of updates has only gone up. Compound Labs, the creator of the Compound money market on Ethereum recently announced the launch of ‘Compound Treasury’ to add to the burgeoning list of DeFi honchos.
While other organizations in the DeFi space target the retail customer base, Compound Treasury aims to set up a foundation for institutional DeFi growth. CT enters a niche overlooked by asset managers like Bitwise who have DeFi pointers for big investors. Compound Labs has partnered with Fireblocks and Circle to allow fintech firms to send funds in the form of USD Coin.
Compound Treasury founder Robert Leshner recently stated in an interview:
“This is our path to sustainability as a company. … If the interest rates in Compound earn more than 4% over time, the business will make money. It’s the ability to offer a new financial product that fintechs have been clamoring for. It’s [profit gains] going to be only stablecoins. Because customers should never be exposed to the risk of cryptocurrencies.”
Compound Treasury will enable large holders of dollars to access the interest rates available in the USD Coin market encompassed in the Compound protocol. The 4 percent earnings mentioned by Leshner will come from COMP governance profits. At the time of writing, COMP was trading for $268.
Officials have assured users that the company will handle all the complexities of the DeFi trade keeping all security details intact. The Treasury is similar to a savings account where users can join or leave whenever they want. A lack of a “lock-up” period stood out as a lucrative deal for most digital asset holders.
Sources from Compound Protocol added that offering a “dollar on-ramp” to the protocol would pave the way for users to enjoy a profitable return on their investments. Apart from Treasury, other products such as Circle Yield are also used in the ecosystem.