Compound Finance, a decentralized finance lending protocol, has replaced its leadership team and approved a $52 million budget to attract institutional users and expand into real-world assets, following a sharp decline in the value of assets locked on its platform.
The changes come as assets locked on the platform fell from $12 billion in September 2021 to $1.2 billion, according to DeFiLlama, reflecting broader challenges in the DeFi sector. Compound’s leadership transition includes Christopher Donovan, previously at the Near Foundation, as chief operating officer, and Steven Liu, who scaled Maple Finance to $5 billion in assets, as chief product officer.
The protocol has processed $480 billion in deposits and borrowing volume since its inception but now faces stiff competition, with Aave holding $14.8 billion in total value locked—11 times Compound’s current level. The DeFi sector as a whole has seen TVL fall by over a third to $70 billion since the start of the year, according to industry data.
New executives have emphasized the need to address gaps in compliance and technical infrastructure to meet institutional demands. Aaron Schnarch, former CEO of Coinbase Custody, said current product offerings fall short of traditional finance standards, while Gal Stern of deBridge highlighted the importance of initiatives to restore institutional confidence.
Compound’s strategy follows a series of high-profile DeFi hacks, including the $292 million breach of KelpDAO in April, which has heightened scrutiny over security and governance. The protocol aims to leverage its new leadership and budget to position itself as a bridge between DeFi and traditional finance.
Standard Chartered projects the DeFi sector could grow to $2.7 trillion by 2030, though such forecasts remain speculative. The effectiveness of Compound’s plans to attract institutional capital and expand into real-world assets remains unconfirmed, with challenges in compliance and technical requirements yet to be fully addressed.
Written by Sarah Whitmore
Ethereum Desk
