It turns out that Compound Labs, a company that develops the major DeFi platform Compound Finance, has launched a new corporation, “Compound Treasury.” Increase institutional investors’ access to the DeFi (decentralized finance) market.
What is Compound Finance?
Compound Finance is an Ethereum-based lending / borrowing platform. Users who provide liquidity will receive the governance of COMP tokens as an additional reward. The current operating capital of Compound Finance is equivalent to 740 billion yen.
Compound Treasury has partnered with leading custody company Fireblocks and USDC issuance management company Circle to convert US dollars from financial institutions such as fintech companies and Neobank to stable coin USDC. Providing a new deposit service for Compound Finance.
USDC deposited in Compound Finance is said to be guaranteed a fixed interest rate (annual interest rate) of 4% on loan.
Currently, the annual interest rate on USDC lending at Compound Finance is 1.68%. So why can we offer a fixed rate of 4%, Compound Labs founder Robert Leshner explains on social media:
Current interest rates are low, but reach nearly 4% annually. Historical market data could be a little higher.
If lower, the difference will come from Compound Labs marketing costs.
Compound Labs and Compound Treasury are separate companies from Compound Finance and have different financial management. (Compound Finance is managed by COMP holders)
Right now, rates are at a “generational low”, and still come pretty close to 4.00%. Historical market data over the past cycle puts them quite a bit higher.
If rates are lower, think of the difference as a marketing expense. pic.twitter.com/OAK42uIF1j
— 🤖 Leshner (@rleshner) June 28, 2021
The deposited USDC can be withdrawn at any time and there is no lockup period. In addition, there is an advantage that the Compound Treasury side has removed the hurdle that institutional investors and companies access from the Web3 wallet.
In addition, this service does not apply to stocks other than USDC whose prices fluctuate. “K’s service is like a savings account and is limited to stable coin yields. Compound Treasury customers should not expose to cryptocurrency volatility,” Leshner told CoinDesk. did.