Author: ahboyashreads
Compiled by: Deep Tide TechFlow
Deep Tide Guide: Compound, the pioneer of DeFi lending, has seen its total value locked (TVL) plummet from a peak of $12 billion to $1.2 billion. Now, it is overhauling its management, approving a $52 million budget, and fully pivoting towards institutional clients and real-world assets. This is not just a rescue attempt by a single protocol; it reflects an industry inflection point where DeFi is shifting from a retail-focused narrative to an institutional one, sending a crucial signal for investors interested in DeFi and RWA.
The protocol pioneered decentralized finance lending, but its locked assets have significantly declined from their peak five years ago. Now, with retail traders losing interest, it is seeking to attract institutions.
Compound Finance has undergone a major management reshuffle and approved a record $52 million budget in a bid to revive growth. This comes after its total value locked (TVL) dropped from a peak of $12 billion in 2021 to $1.2 billion.
The protocol is pivoting towards institutional clients, developing real-world asset products, partnership integrations, and credit infrastructure to meet the compliance and technical standards of traditional finance.
Industry executives say the new management team and substantial budget align with a broader shift in DeFi towards serving financial institutions. The sector's overall asset size had previously declined due to weak markets and security breaches.
Compound Finance was one of the earliest decentralized finance (DeFi) lending protocols. On Monday, the protocol replaced its leadership team and approved a $52 million budget to attract new capital, following a plunge in its platform's locked asset value from a peak of $12 billion in September 2021 to $1.2 billion.
The company stated it will now focus on attracting institutional users and providing real-world assets, partnership integrations, and credit infrastructure for traditional financial markets.
Founded in 2018, Compound pioneered decentralized lending, popularizing the concept of earning yield on crypto deposits "without intermediaries." The company said it has processed approximately $480 billion in deposits and borrowings since its inception. Data from DeFiLlama shows that over the past few years, it has fallen behind competitors like Aave, which holds over $14.8 billion in TVL, more than 11 times that of Compound.
As an industry, DeFi is operating from a weakened starting point. Affected by a broader crypto market downturn, compressed yields, and a series of protocol exploits—including a $292 million hack of KelpDAO in April—the industry's total TVL has fallen by more than a third since the start of the year to around $70 billion. However, Standard Chartered Bank predicts the industry could still reach $2.7 trillion by 2030, with tokenized real-world assets (RWA) being one of the fastest-growing segments.
Gal Stern, Chief Business Development Officer at deBridge, said on Telegram: "It's a good time to push initiatives like this. Real capital will flow to structural work, and it will also bring in smart people from the institutional world who can explain things in language risk committees understand. This combination can restore institutional confidence."
The new team includes Chief Operating Officer Christopher Donovan, who previously held the same role at the Near Foundation. Steven Liu, who grew Maple Finance's assets 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 said other appointees come from Anchorage Digital, HSBC, Broadridge Financial, and Maple Finance.
Schnarch stated in a release: "DeFi is an incredible innovation, but institutional adoption remains limited. Current products fall far short of traditional finance's thresholds, especially in compliance and technical requirements."
Ran Hammer, Chief Commercial Officer at Orbs, believes this move is a logical response to changes in DeFi's user base.
Hammer said: "Retail participation is just a fraction of what it used to be. On-chain has quietly become a place for settlement, execution, and interaction between financial institutions. The space is completely different since DeFi Summer, essentially becoming a new financial layer for institutions. Therefore, bringing in management that speaks that language is precisely the right direction."
The size of this budget is the largest ever approved by the Compound decentralized autonomous organization (DAO), which may help demonstrate its resolve.
Himanshu Sahay, Co-founder and Chief Technology Officer of crypto lending firm Arch Lending, said: "$52 million plus a team with so much institutional experience is a serious move that should improve execution." However, he also noted that institutions want more than just credentials, "They aren't underwriting the team; they are underwriting the structure."
