Preliminary Financials: The Foundation’s Execution to Date
The Foundation operates under an 18-month mandate and has been active for approximately seven months.
Within that timeframe, it set up operations, built a team, constructed the first reconciled multi-year financial baseline, established reporting discipline, negotiated USD 4M cost savings, introduced revenue streams generating USD 2M to date, achieved the first profitable month since 2020, negotiated substantial treasury recovery in a distressed scenario, stabilized governance under adversarial pressure, and unveiled an ambitious v4 roadmap with 10+ public partnerships announcements.
This was achieved while operating with approximately half of the anticipated budget given market dynamics.
While far from a completed turnaround, this is consistent, measurable progress after years of stagnation. The direction of travel is changing.
Elixir Recovery
We are pleased to report on a significant recovery of funds to the DAO.
Prior to Foundation’s existence, the DAO approved a curated lending market which extended credit secured by deUSD and sdeUSD. At the time, deUSD was presented as a dollar-referenced asset and integrated into markets on the basis of its publicly described structure. Following a severe dislocation and loss of confidence in deUSD, liquidity deteriorated and collateral values impaired materially. This left the protocol with USD 15,568,062 of exposure across deUSD and sdeUSD positions.
Through sustained engagement and negotiation with Elixir — the team that developed deUSD and sdeUSD tokens — over several months, supported by Gauntlet and outside counsel, USD 12,065,248.60 was recovered. This represents approximately 78% of the protocol’s total exposure.
The total recovery figure consists of USD 11,654,780.60 from Elixir, and a thoughtful contribution of USD 690,000 from Gauntlet’s Compound insurance fund (USD 279,532 utilized for liquidations, the remainder USD 410,468 given back to Compound). The Foundation would like to thank Gauntlet for their decisive action in exercising their fund, which represents approximately one third of their annual fees.
In distressed unwind scenarios of this nature, recoveries are often low. Achieving this level of recovery required proactive outreach, careful planning with outside counsel, structured negotiation, and coordinated technical and financial analysis.
The recovery materially preserved DAO treasury value and substantially mitigated downside risk arising from the deUSD collapse. Many delegates assumed the funds were not recoverable. However, with the help of the community, the Foundation generated a different outcome. Active treasury protection is a core component of protocol stewardship. This recovery proves that continued engagement and negotiation can protect ecosystem capital during periods of stress.
Recovered funds are due to be received on or around 16 March 2026 to a new multi-sig created for this purpose with key signers from CGWG, ChainSecurity, Gauntlet, and the Foundation. Following receipt, the Foundation will coordinate with delegates via the CGWG on next steps for the recovered funds.
Current Protocol Financial Position
The data is unambiguous: between FY2021 and FY2025, Compound recorded net losses in every financial year. According to the analysis conducted by Gauntlet, FY2021 reflected ~USD 280M in net losses. FY2022, FY2023, FY2024, and FY2025 remained negative, with deficits narrowing but persisting.
Of note, incentive spending totaled USD 400M+, spiking during new product launches. This spend did not yield profitability. Incentives exceeded USD 300M in FY2021 (launch of v2), USD 41M in FY2022, and USD 29M in FY2023 (launch of v3). Over multiple cycles, these treasury deployments did not produce lasting growth or profitability, evidencing a critical need for product innovation. Please note also that these figures do not include expenditure by Compound Labs during the same period (which was also significant), which further strengthens the signal of January 2026’s profitability.
At the same time, Compound’s position versus peers widened unfavorably. TVL and revenue remained far below competitors that expanded product breadth and distribution. Revenue streams were concentrated and sensitive to incentive levels and market cycles. Product evolution materially lagged relative to the peer set.
Equally significant was the absence of consolidated protocol-level financial reporting prior to the Foundation’s arrival. Financial data was fragmented across initiatives and counterparties. There was no income statement view of protocol health capturing revenue, incentives, operating costs, and net performance across time.
As pertinent information for effective DAO operations, the Foundation took action to establish that baseline: collecting and reconciling financial data into a coherent reporting framework. Governance decisions can now be grounded in financial data rather than guesswork.
Evidence of Stabilization
The Foundation is proud to share that preliminary trends indicate stabilization.
January 2026 recorded USD 0.9M in net profit, the first profitable month since 2020 based on credible data. This is an early indication of operational viability and suggests that break-even or better performance can be achieved within the existing structure.
In parallel, structural improvements have begun to affect the revenue mix and cost base. Two new revenue streams have been introduced (OEV capture and v2 depreciation), totaling approximately USD 2M in net new revenue to date, and diversifying protocol revenue. Approximately USD 4M in aggregate cost savings has been negotiated, including USD 2M in auditor-related savings per annum.
The protocol now operates with consolidated financial reporting, clearer separation of incentives and operating costs, improved revenue attribution, and forward modelling tied directly to product initiatives.
The Foundation is hard at work on additional initiatives to support this trend, and will share those with the DAO over the coming months.
v4: Structural Reset and Growth Ambition
Compound’s underperformance also has a structural component. Limited product surface area, constrained distribution channels, and revenue concentration restricted sustainable growth relative to peers. The data suggests that incentives masked these constraints.
v4 is designed as a structural reset. It aims to expand the protocol’s addressable market, improve capital efficiency, strengthen liquidation and risk mechanics, enable institutional-grade participation via permissioned markets and native support RWA integrations, and diversify revenue streams.
With v4, the Foundation is striving for material growth to reposition Compound as a financially viable and competitive protocol with broader distribution, diversified revenue, and sustainable unit economics.
Building on the recent governance vote, the Foundation will present a comprehensive v4 plan for the DAO’s review on a special community call over the coming few weeks.
Forward Path
Compound now operates with financial visibility, capital discipline, strengthened governance guardrails, and a clearly articulated growth strategy. The next step is executing on growth.
The Foundation intends to return to governance soon with a full-spec v4 proposal, including technical scope, execution sequencing, growth projections, milestones, and a budget tied to measurable deliverables. Capital allocation will be structured against outcomes. Resource requests will be evaluated in the context of historic spend, current financials, attracting and retaining top talent, and capital expenditure and size of competitors.
As Compound stabilizes, the Foundation moves towards execution of an ambitious and governance-accountable growth strategy.
Gauntlet Data
| Year | Revenue | Operating Expenses | Avg Comp Price | COMP Incentives Spend | Incentive Expenses | Net P/L |
|---|---|---|---|---|---|---|
| 2021 | $34.4M | N/A** | $388 | 811K COMP | $314.4M | ($279.9M) |
| 2022 | $8.6M | $7.0M | $81 | 507K COMP | $40.9M | ($39.3M) |
| 2023 | $8.4M | $7.8M | $50 | 574K COMP | $28.7M | ($28.0M) |
| 2024 | $18.5M | $9.8M | $63 | 197K COMP | $12.5M | ($3.8M) |
| 2025 | $16.7M | $13.1M | $45 | 220K COMP | $10.0M | ($6.4M) |
| 2026 (Jan) | $1.9M | $0.7M | $25 | 12K COMP | $0.3M | $0.9M |
Revenue Sources
- Reserves (V3)*: Interest income collected through Compound V3 reserve factors across all deployed markets plus liquidation income
- V2 Deprecation*: Revenue from the wind-down of Compound V2 markets (2025 onwards)
- Aera*: Yield generated from treasury management via Aera vaults
- OEV (Oracle Extractable Value): Revenue from Chainlink SVR integration capturing oracle update value (2025 onwards)
- Avantgarde: Yield from the COMP yield strategy pilot program
*Note: Internal Gauntlet data
**Note2: Compound Labs expense data is not available. We understand that 100% of the 2021 expenses were incurred by Compound Labs
Operating Expenses
- Service Providers: OpenZeppelin, SSP (Chain Security, Certora, Zero Shadow), Gauntlet, AlphaGrowth, Woof, Compound Foundation, CGWG, Community Multisig, Tally
- Grants: CGP, Sandbox
- Bug Bounty: Immunefi
- Incentive Spend: COMP Incentives used to drive growth
- Avg Comp Price: price of COMP token throughout the year averaged