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Compound
2026-08-18 08:29:00

Compound approves $52 million budget and pivots from retail lending to institutions and RWA

Compound Finance’s DAO approved a $52 million budget on Aug. 17, the largest in the protocol’s history, alongside a management shake-up and a strategic pivot away from retail lending. The move comes after a steep contraction in the protocol’s total value locked, which fell from roughly $12 billion at its 2021 peak to about $1.2 billion now, a 90% drop. Over the same period, Aave’s TVL reached about $14.8 billion, putting it more than ten times ahead of Compound. According to the report, the new budget will fund compliance-focused infrastructure for institutional clients, including whitelisting systems, legal entity integration, risk management frameworks, and KYC/AML tooling. CoinDesk was cited as saying the target audience is traditional financial institutions that want onchain lending access but must operate within compliance constraints. The shift also highlights a deeper tension. Compound built its identity around permissionless lending, where users can borrow and lend without KYC or approval. Institutional participants tend to want the opposite: verified counterparties, legal recourse, formal custody structures, insurance coverage, audit documentation, and clearer regulatory pathways. The report frames Compound’s move as part of a broader DeFi push toward institutional capital as token incentives weaken, retail liquidity fades, and protocols look for steadier revenue sources.

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Compound approves $52 million budget and pivots from retail lending to institutions and RWA