Author: ahboyashreads

Translation: Deep Tide TechFlow

Deep Tide Guide: Compound, the pioneer of DeFi lending, has seen its total locked value drop from a peak of $12 billion to $1.2 billion. Now, with a new management team and an approved budget of $52 million, it is fully transitioning to focus on institutions and real-world assets. This is not just a self-rescue for a single protocol but also signifies an important turning point for the industry as DeFi shifts from a retail narrative to an institutional narrative, a crucial signal for investors interested in DeFi and RWA.

The protocol pioneered decentralized finance lending, but its locked assets have significantly declined from a peak five years ago. Now, as retail traders lose interest, it is seeking to attract institutions.

Compound Finance has undergone a major change in management and approved a record budget of $52 million to seek to revive growth. Previously, its total locked value fell from a peak of $12 billion in 2021 to $1.2 billion.

The protocol is shifting to institutional clients and developing real-world asset products, partner integrations, and credit infrastructures to meet the compliance and technical standards of traditional finance.

Industry executives stated that the new management team and substantial budget align with DeFi's broad shift towards servicing financial institutions. Previously, the overall asset scale of the industry had decreased due to a weak market and security vulnerabilities.

Compound Finance is one of the earliest decentralized finance (DeFi) lending protocols. On Monday, the protocol changed its leadership team and approved a budget of $52 million to attract new capital. Previously, the platform's locked asset value had fallen from a peak of $12 billion in September 2021 to $1.2 billion.

The company stated that it will now focus on attracting institutional users and will provide real-world assets, partner integrations, and credit infrastructure to traditional financial markets.

Founded in 2018, Compound pioneered decentralized lending, popularizing the concept of "earning yields through crypto deposits without intermediaries." The company stated that it has processed approximately $480 billion in deposits and loans since its inception. Data from DeFiLlama shows that over the past few years, it has lagged behind competitors like Aave, which holds $14.8 billion in TVL, more than 11 times that of Compound.

As an industry, DeFi is operating from a weakened starting point. A general pullback in the crypto market, yield compression, and a series of protocol vulnerabilities (including the $292 million loss due to the KelpDAO attack in April) have caused the industry's TVL to decline by more than a third since the beginning of the year, down to about $70 billion. However, Standard Chartered predicts that by 2030, the industry is still expected to reach $2.7 trillion, with tokenized real-world assets (RWA) being one of the fastest-growing subsectors.

Gal Stern, Chief Business Development Officer at deBridge, stated on Telegram, "Now is a great time to push for such initiatives. Real capital will flow to structural work and will also attract smart people from the institutional space who can explain it in terms that risk committees can understand. This combination is what can restore institutional confidence."

The new team includes Chief Operating Officer Christopher Donovan, who previously held the same position at Near Foundation. Steven Liu, who expanded Maple Finance's asset scale from $500 million to $5 billion, will join as Chief Product Officer, and former Coinbase Custody CEO Aaron Schnarch will serve as Executive Director. The company stated that other appointees come from Anchorage Digital, HSBC, Broadridge Financial, and Maple Finance.

Schnarch stated in a statement, "DeFi is an amazing innovation, but institutional adoption remains limited. Current products fall far short of the thresholds of traditional finance, particularly in terms of compliance and technical requirements."

Ran Hammer, Chief Business Officer at Orbs, believes this move is a reasonable response to the changing user base of DeFi.

Hammer stated, "Retail participation has now become just a small part of the past; on-chain has quietly become a venue for settlements, executions, and interactions between financial institutions. Since the summer of DeFi, this field has become completely different, essentially becoming a new financial layer for institutions. Therefore, bringing in management that speaks this language is the right direction."

This budget is the largest ever approved by the Compound decentralized autonomous organization (DAO), which may help to demonstrate its determination.

Himanshu Sahay, co-founder and Chief Technical Officer of crypto lending company Arch Lending, stated, "The $52 million budget along with a team with such extensive institutional experience is a serious initiative that should improve execution." However, he also noted that institutions want more than just credentials, "They are not underwriting teams; they are underwriting structures."