Compound Blue Update & Next Steps (01-26-2026)
Summary
Compound Blue launched in early 2025 as a collaborative pilot between Compound and Morpho to explore vault-based lending infrastructure on Polygon. The initiative leveraged Morpho’s vault architecture with Compound branding and incentives to test alternative deployment models and gauge demand for isolated lending markets on L2 networks.
Gauntlet has managed these vaults since inception, handling dynamic parameter optimization, risk management, and real-time monitoring across four primary vaults: compWETH, compUSDC, compUSDT, and compPOL. The trial attracted $188.73M in peak TVL (May 2025) and served as the launchpad for the first Apollo ACRED RWA looping strategy in DeFi.
When Compound Blue launched, Compound faced uncertainty around its future direction. Over the past year, Compound’s outlook has shifted significantly. The protocol now operates under strong leadership with a clear roadmap and active growth plans. With TVL declining organically following the tapering of incentives, and considering the attention and maintenance cost required maintaining a separate Morpho-based deployment no longer aligns with the DAO’s strategic direction.
With these considerations, we recommend a staged wind-down of Compound Blue through the following steps:
- Jan 26: Publish Compound Blue Deprecation forum proposal
- Jan 30: Initiate Snapshot proposal to gauge delegate sentiment
- Feb 6: Publish a banner on Compound Blue UI informing users of the deprecation plan
- Feb 6 - Mar 6: 4-week wind-down period for users to close positions
- Ad-hoc: Provide forum updates at each milestone
Compound Blue Summary
(as of January 26, 2026)
| Metric | Value |
|---|---|
| Peak TVL | $188.73M (May 23, 2025) |
| Current TVL | $7.69M |
| Cumulative Fee Revenue | $113,019 |
| Cumulative Borrow Volume | ~$242M |
| Total Markets | 16 |
| Total Users | 6,843 |
| Incentive Spend | 25,565 COMP (approved March 11, 2025) |
Fee Revenue by Vault
| Vault | Revenue |
|---|---|
| compUSDC | $51,502 |
| compWETH | $33,347 |
| compUSDT | $26,252 |
| compPOL | $1,918 |
Deprecation Plan
1) Create a Snapshot Vote to gauge community sentiment
- Set caps to zero across all Compound Blue vaults to inhibit new borrows
- Repayments, withdrawals, and liquidations remain active
2) Wind-down period
- Users will have 4 weeks to withdraw funds and close positions
- Gauntlet will continue monitoring vaults throughout the wind-down period
3) Communicate to users
- Illustrative UI banner on Compound Blue: Compound Blue is being deprecated through governance. The DAO no longer supports Compound Blue and is not responsible for covering losses or distributing rewards. Users remain solely responsible for managing their positions. New deposits and borrows are disabled, but repayments and withdrawals will remain available. For continued lending activity, you are encouraged to use Compound V3.
4) Frontend closure
- Following the wind-down period, vaults will be fully deprecated
- Accumulated fees and any residual funds will be sent to the DAO
- Users will still be able to interact with the vaults on the Morpho frontend
Timeline
| Milestone | Target Date | Outcome |
|---|---|---|
| Forum post | Jan 26 | Share the Compound Blue deprecation plan |
| Community discussion | Jan 26 - Jan 30 | Collect feedback, answer questions |
| Snapshot vote & sentiment check | Jan 30 | Gauge community sentiment |
| Publish UI banner | Feb 6 | Inform users of the Snapshot vote outcome |
| Wind-down period | Feb 6 - Mar 6 | 4-week withdrawal window |
| Frontend wind down | Mar 6 | Complete deprecation |
Next Steps
We welcome community feedback on the proposed plan and timeline. Following discussion, we intend to initiate a Snapshot vote on January 30th to gauge support for Compound Blue deprecation.