Compound Foundation's new USDC lending market offers up to 87 percent loan-to-value ratios, marking the first deployment from its $52 million institutional capital program while a delegate challenges the market's governance structure.
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Compound opens USDC market at 87% LTV under $52M institutional plan
The first product from Compound's $52 million institutional capital program went live Sept. 8, a USDC lending market that lets borrowers pledge ETH, wstETH, WBTC and cbBTC at loan-to-value ratios reaching 87 percent.
"With today's Institutional Market launch, we are taking the first step toward building infrastructure to meet institutional client demands, including better capital efficiency, clearly defined risk, and a much higher standard of service," said Aaron Schnarch, executive director of Compound Foundation.
The market runs on Compound v3, with ETH at 87 percent LTV, wstETH at 85 percent, and both bitcoin assets at 81 percent. Each asset carries a $10 million borrow cap, with liquidation factors from 93 percent on ETH to 86 percent on the bitcoin assets and penalties from 5 percent to 10 percent. Compound holds $1.53 billion in total value locked with $638 million borrowed, sixth among lending protocols on DefiLlama and up 23 percent over 30 days. Ethereum carries $1.42 billion of that, or 93 percent. COMP trades at $20.88, up 9 percent over seven days, for a market cap of $212 million.
The launch is the first milestone met in public from the program COMP holders approved on May 8 with 1.88 million COMP in favor and none against. Only $14 million of the two-year budget went to the Foundation's multisig; the remaining $38 million sits in reserve against milestones that include a staffed engineering team and a production v3 integration kit. Whether the rest follows is a DAO decision, not a Foundation one.
The market was oversubscribed on day one, with DeFi Saver, K3, KPK and Yearn taking part, though Compound gave no figure for how much was subscribed. "Compound is combining the capital efficiency of onchain markets with the level of service institutional participants expect," said Marcelo Ruiz de Olano, co-founder and CEO of KPK. Borrowing is open to anyone, with approval and a 100,000 USDC minimum deposit applying only to boosted supplier rewards of 200,000 USDC paid pro rata over three months against a $20 million supply cap.
The Institutional Market runs under a control structure the DAO never voted on. The Treasury Management Committee administers the market, and a separate Safe holds authority over its collateral and parameters. Compound delegate ugurmersin filed a proposal on Sept. 9 asking COMP holders to transfer ultimate control to governance, writing that the DAO "does not currently appear to have ultimate control over Institutional Comet" and that he could find no governance authorization for the current structure. The proposal would require administrators to publish a full permissions map within 10 business days and transfer ultimate authority within 30.
Compound sits behind Aave's $17.5 billion and Morpho Blue's $9.6 billion in a lending category holding $50.2 billion across 639 protocols, with 3.1 percent of the total. The protocol has processed approximately $480 billion in deposits and borrowing volume since 2018 but now holds less than a tenth of Aave's deposits. The institutional market is Compound's attempt to win back size on terms and service rather than rates, with the Foundation describing it as the first in a planned series built around different collateral types and borrower profiles. The Foundation has also described the market as an Institutional Comet built under v3.5, outside the V4 roadmap the DAO funded, to test an institutional use case.
This article is for informational purposes only and does not constitute investment advice.
