[AlphaGrowth] Compound Protocol’s brand premium (observations)

Ideas
1

TLDR
Interesting observation on Compound Protocol’s brand premium. As APRs return to beta, the interest rates are ~12% higher on markets where users have to trust a 3rd party to deposit funds into Compound on their behalf.

Details
Currently the Compound Growth Program is running equivalent incentive programs in OKX natively (where OKX DeFi deposits users funds directly into Compound) and on VaultCraft (where VaultCraft offers an auto-compounding vault that deposits users funds into the corresponding Compound market)

The numbers in green circles represent identical campaigns across the two platforms. Found on OKX’s DeFi page for Compound Compound Bonus Event | Web3 DeFi Campaign | OKX

OKX-Compound Reward Rates

Native OKX Rewards
Native OKX Rewards1157×592 61.5 KB

VaultCraft-Compound Reward Rates

VaultCraft Vaults
VaultCraft Vaults1157×414 37.3 KB

APR Comparison

Asset OKX Native TVL ($M) OKX APR VaultCraft TVL ($M) VaultCraft APR
USDT on Arbitrum $24.5 15% $4.1 25%
USDC on Arbitrum $48.71 12.4% $4.27 25.8%
USDC on Optimism $15.7 12.4% $4.26 23.6%
ETH on Arbitrum $22.59 11.5% $4.3 22.9%

Per the above “APR Comparison” Table, APRs for an identical position on the two different platforms differ by 10-13% based on the asset being lent. Showing the premium of interacting directly with Compound is worth about 10% APR in trust. As VaultCraft’s reputation & trust grows maybe we’ll see these interests rates reach parody at equilibrium.

As a note, both of these campaigns are being financed from the Grants we have received on ARB and OP. OKX and Vaultcraft take no part of the grants and pass it all to the users.

Thoughts from the community on this phenomena are welcome for discussion.

4 Likes
2

Thanks for the observations here. Do we believe this is an apples-to-apples comparison given the differences in TVL across Compound versus VaultCraft?

4

In a way … yes, both of these campaigns were run on a third-party platform (OKX Defi). Both happening on the same page, using same Compound Markets distinguishable only by the name of what OKX users were depositing in Compound/Vaultcraft

The only difference is that OKX directly included the Compound brand in its product, while Vaultcraft did not mention Compound.

This of course leaves more room for experimentation, what if Vaultcraft had conveyed a direct relation to Compound in some way, apart from the exclusive VaultCraft terminology? But this again reinforces the observation of adding Compound branding to increase credibility in the eyes of users.

This helps us in making a stronger argument with partners in the future to directly put forward Compound brand and make it more visible to users.