April 14, 2024

Compound Treasury Allows Firms To Use Crypto To Borrow USDC/USD 

Compound Treasury, a famous cash management service, stated on September 14th that qualified institutions can now use digital assets to borrow USDC or USD using digital assets as collateral. Digital assets that are supported include BTC, ETH, and other ERC-20 assets. 

Compound Treasury Addresses Demand For Liquidity 

The firm said it made the recent move due to ongoing market volatility. This volatility has increased the demand of investors for liquidity. The clients of the DeFi-based firm are mainly fintech institutions, crypto companies, and banks. 

Reid Cuming, the firm’s Vice President, stated that the company is happy to address the issue of liquidity. Cuming added that the firm’s solution is reliable, simple and easy to use.

As per the official statement, the firm said this borrowing process would be as flexible as possible with a no repayment schedule and open-ended term. Qualified clients only have to ensure they have enough collateral. 

“Collateral given by borrowing entities will remain within the jurisdiction of Compound Treasury, hence enhancing the security and transparency of funds,” the statement added.

According to the company’s announcement, its clients will provide liquidity for the initiative. The Compound Protocol will also provide liquidity.

Currently, the Protocol has about $3 billion worth of assets, with a total transaction of around $285 billion since the firm started operating.

Additionally, the company announced that collateral is always under its control. This helps to increase the safety of funds and transparency.

Demand For Liquidity Rises Among Investors 

Earlier in May, S&P Global gave Computer Treasury a B-credit rating for its high sense of accountability and transparency in the sector. Moreover, Compound Treasury is the first to get such a rating from a famous agency.

In 2021, the cash management firm introduced a cash management feature for institutions. The Compound Protocol powered feature offers 4.00% APR on USDC and USD.

In addition, it also has a daily liquidity service for clients. According to the firm, crypto companies, banks, and fintechs depend on the Compound Treasury.

They depend on it because it is a yield source that is predictable. Meanwhile, several institutions are facing challenges in trusting unclear CeFi products.

Also, they find it hard to interact directly with DeFi platforms to help them evaluate their balance sheet. Also, recent market turmoil has lowered the amount of accessible liquidity and reliable choices for borrowers. 

However, the desire for liquidity remains consistent. The Compound Protocol powers the cash management services provided by Compound Treasury. 

Qualified institutions can receive a 4% APR on USDC and USD with daily liquidity. Also, they can decide to borrow by using BTC, ETH, and other supported ERC-20 digital assets as collateral.

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