Compound's COMP surges as project unveils $52M institutional pivot

Compound, one of the first protocols to make crypto lending work without a bank, has approved a record $52 million development budget and rebuilt its leadership around traditional-finance veterans. It is also wagering its next chapter on institutions, which is seen as a move away from retail yield-chasers who once drove DeFi. Its native token, COMP, seems to have received a boost as a result of the announcement, as it has gone up by over 10% in 24 hours. Projects that grew up serving retail now court banks, asset managers, and compliance departments to find their footing again, and Compound seems to be moving in that direction. Compound’s foundation wrote on X that the protocol is “entering its next era.” From $12 billion to $1.2 billion The total value locked (TVL) on Compound has fallen to around $1.2 billion, which is a decline of around 90% from the $12 billion the protocol held at its September 2021 peak per DeFillama. Compound TVL is down from its 2022 highs. Source: Defillama The vast majority of the TVL is on Ethereum, with Arbitrum coming a distant second. Compound’s figures are a far cry from Aave’s, which is the leading protocol in the DeFi lending space with a TVL of over $14.6 billion. Ironically, Compound helped invent this category when it launched in 2018 and, by its own accounting, has processed around $480 billion in deposits and borrowing since. However, the protocol’s growth stalled following the end of the incentive programs that helped to push up its metrics. While COMP received a boost, it still trades far below its glory days. It currently trades around $18; however, it is still down by 98% from its 2021 record. How does Compound plan on spending its $52 million? The budget passed through the Compound DAO, and $14 million is cleared for immediate use. The rest unlocks in tranches tied to milestones, a structure that keeps the development team on a performance leash funded by the treasury. The money splits roughly in two, with about $28 million for operations and the engineering behind a new protocol version, Compound V4, and $24 million for growth. Of that growth pool, $8 million to $10 million is earmarked for institutional partnerships rather than the old playbook of paying liquidity providers to boost headline numbers. V4’s centerpiece is a “hub-and-spoke” design, which routes capital through a central hub instead of walling it off in separate markets, an approach meant to give professional counterparties tighter risk controls. Compound stated that more than 10 partners have committed, with over 20 more in talks. A bench built from traditional finance The leadership overhaul reads as a statement of intent.