Grow Compound on a different path

Ideas
2

Fixed Income Summit:

Last June, The AlphaGrowth team attended the Fixed Income Summit in Boston on behalf of the Compound Community. The tl;dr – Institutions we met have Capital to the tune of Billions that they are looking to earn interest on, but there are systematic risks and challenges that need to be addressed before their capital can be deployed onto Compound.

3 Risks:

Our conversations with stakeholders identified three risks that we need to address prior to onboarding new TradFi Accounts:

  1. Smart Contract Risks – Hacks & Exploits.

Institutions cannot calculate “Risk Adjusted Returns” for each strategy because they can’t quantify smart contract risk.

Solution: Remove Smart contract risk from the investment equation. Provide “Smart Contract Insurance” which returns funds to victims in the event they lose funds to a smart contract exploit. DeFi Insurance Talk at ETHDenver ‘25 by Eric Waisanen

  1. Fixed Rate Risks

Institutions do not like variable interest rates on Lending/borrowing. A deposit of even $20M significantly impacts the Earn APR on the majority of comets. An institution looking to park a Billion dollars of liquidity would practically wipe out all APR for earning on the base asset.

Solution: Compound can Integrate with on-chain Interest Rate Derivative products to accommodate fixed interest rates one client at a time:

  1. Regulatory Risks

Legal uncertainty associated with Digital assets exists in multiple jurisdictions.

Solution: In the US, the Office of the Comptroller of the Currency [OCC] authorized Banks to engage with Digital Assets. Forbes - Shift in Banking Regulations

Expanded scope of the Growth Program- TradFi Business Unit

@RossGates dives deep into the scope and functioning of the TradFi arm of the Compound Growth Program. This was first envisioned to be an independent SubDAO within the Compound DAO, but with the community opting against the SubDAO format, this was absorbed back within the Growth Program’s Scope for 2025 Renewal.

You can read more about our objectives for TradFi here. As we move forward to propose Renewal (And Expansion) of the Compound Growth Program, TradFi will be one of our key areas of focus [AlphaGrowth] [2025 SubDAO] Road to TradFi