Compound Treasury announces the option to borrow USD or USDC using crypto assets as collateral

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Compound Treasury, an institution powered by the Compound Protocol, announced on Wednesday, September 14, that they will allow borrowing on USD or USDC using ETH, BTC and other ERC-20 tokens as collateral. This option has been opened for accredited institutions with fixed rates starting at 6% APR (annual percentage rate). Currently, Compound Treasury offers a 4% APR for borrowing USD and USDC.

Compound Labs took to Twitter for the announcement. “Starting today, to meet the growing demand for liquidity, institutions can now borrow from Compound Treasury, using digital assets as collateral”, it said.

According to the management of Compound Treasury, this step was taken to support the demand for liquidity and counter market volatility. Compound Labs backs Compound Treasury and has notable clients like fintech companies, banks, blockchain developers, etc. 

The vice president of Compound Treasury believes that the new borrowing option will continue to serve their customers in this time of volatility. The borrowing option will be an open-ended term with a flexible no repayment schedule for the clients. As per the company, the only requirement is that the clients remain 'overcollateralized' through crypto assets. 

According to the borrowing terms, the collateral will stay under Compound Treasury’s control until repayment to increase both parties' security and transparency. Compound Treasury has also proposed a plan to avail USD or USDC from their clientele and its own funds to fulfil the lending requirements. 

Currently, Compound Treasury holds $3 billion of assets and has acquired more than $285 billion since the operations commenced in the company. This major move by the company came only after it was rated B by S&P Global in May 2022. It is the first time such a DeFi company has received ratings from a major agency. 

The borrowing mechanism works with proper blockchain integrations of the transaction and the control over collateral being transferred to the lending authority. “Introducing borrowing expands our cash management product to meet more needs of our clients,” vice president Reid Cuming said. The program is expected to provide a stronger DeFi loan procedure to the clients and Compound Treasury itself. The clientele adding to the treasury funds will also benefit from the collective interest in APR. 

Shashank is the founder at yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash