Recreating Compound: V4 Platform Roadmap

[Compound_Foundation]

Recreating Compound: V4 Platform Roadmap

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Summary

TLDR: Today, the Compound Foundation unveils its proposed v4 roadmap. This roadmap reflects our thesis that DeFi and TradFi will converge, creating a massive opportunity for Compound to power lending across the financial ecosystem as the category defining lending protocol.

With v4, we plan to unlock new use cases. Key upgrades include:

• Partner integration suite: A standardized set of tools to embed lending and borrowing functionality into any partner’s user interface. This will include support for multiple Real-World Assets (RWA) use cases, starting with tokenized equities, and cross-chain capabilities to capture stablecoin liquidity and growth opportunities.

• Capital efficiency and liquidation upgrades: Best-in-class capital efficiency, positioning Compound as the leading venue for borrowers. Critical upgrades to the protocol’s liquidation and risk management mechanisms.

• Permissioned vaults and enhanced institutional tooling: Permissioned access, institutional-grade controls, flexible mandates, and resilient operational infrastructure to meet institutional standards.

• Elevated risk mitigation and governance: Agile and responsible decision making for the DAO that is commensurate with the speed of markets.

• UX improvements: Major usability upgrades, most notably the addition of Artificial Intelligence (AI) enhancements.

Our ultimate goal is to position Compound as the premier credit protocol for both DeFi and TradFi partners alike.

If approved by the DAO, this will be Compound’s boldest product bet since it pioneered decentralized finance in 2018. Accordingly, we are sharing this detailed proposal for feedback and perspective. We encourage ample discussion on the forum, as well as in two designated community calls that will be announced in January. In those calls, we will also share color from validation calls with potential clients and design partners. Once we incorporate pertinent feedback, we will post a revised proposal, timeline, milestones, and requested budget to fund this roadmap on behalf of the Compound DAO and community.

Context

We see an imminent opportunity to leverage our hard-earned reputation, the latest industry trends, Compound’s sizable warchest, and improving regulatory clarity to future-proof the protocol and position it for global mass adoption.

Strong signals from leading finance firms have surfaced this year that make one thing clear: financial institutions seek to integrate blockchain into their existing infrastructure as a foundational pillar that can unlock myriad use cases, and ultimately, revenue streams. The tokenization of traditional financial assets represents the first of many opportunities in this regard, hence our desire to capitalize on the moment.

BlackRock leadership has publicly framed the tokenization of stocks, bonds, and funds as a structural evolution of capital markets. BNY Mellon, Goldman Sachs, and JPMorgan are actively launching or piloting tokenized funds and onchain treasury products. Simultaneously, Coinbase, Kraken, and Robinhood are pursuing tokenized equity offerings and partnerships to support them.

These platforms already control user distribution and trust. Now, they are searching for differentiated onchain use cases such as lending, yield, capital efficiency, and risk-managed leverage to increase product stickiness and platform engagement. This creates a natural role for Compound: to sit at the confluence of DeFi and TradFi by providing battle-tested, institutional-grade lending infrastructure with straightforward integration capabilities.

This is the core insight around which we are designing v4. We plan to create an industry-leading distribution and integration layer that makes our technology accessible to partners across the ecosystem. Similar to how Stripe pioneered developer-friendly integration kits, Compound will offer standardized tooling to support mass distribution via partners.

A key component of v4 is a partner integration suite to embed lending and borrowing functionality into any partner’s user interface. Through this toolkit, we can power brokerages, wallets, fintechs, custodians, networks, and applications while radically simplifying the interaction with DeFi. We hope to thus deliver on the promise of DeFi, a cutting-edge technology that has demonstrated impressive staying power, but is still — more than eight years since it was first introduced — massively subscaled compared to traditional capital markets.

By enabling rapid and scalable integrations, we envision expanding access to a larger target audience, accelerating protocol adoption, and creating powerful network effects that increase Compound’s TVL, fee revenue, and long-term protocol resilience.

Our Motivation

To capture value in this new paradigm, we must pivot into supporting distribution through partners with established user bases. Compound’s existing v3 architecture was built for a specific use case: to borrow and lend stablecoins against crypto through Compound’s user interface.

As such, v3 does not have the requisite components to serve distribution partners, including end-to-end institutional support for tokenized equities, granular risk controls, permissioned capabilities, fit-for-purpose governance mechanisms that are robust and agile, or scaled integration options. For instance, if we were to add tokenized equities into v3, we would lack important customizations that institutions need to effectively manage the end-user experience, including market aware risk controls around events such as corporate actions, earnings, and economic releases, and support for permissioning actions such as redemptions and market maker borrows.

v4 therefore necessitates an intensive redesign as opposed to a much faster, incremental build on top of v3. In short, v4 is a bold bet on the future state of DeFi, and the financial industry as a whole. One that positions Compound to lead the next phase of DeFi.

What We’re Building

We structured the Compound v4 roadmap by five major feature tracks. Each track is designed to progressively expand Compound’s capabilities, composability, and reach while maintaining the protocol’s staple benefits of transparency, security, and capital efficiency.

Track 1: Partner Integration Suite

Objective:
Distribute Compound’s lending and borrowing infrastructure through integration partners, allowing users to access digital assets and equity-based credit markets from trusted front-end platforms.

Description:
To achieve distribution at scale, Compound will release an industry-leading partner integration suite — a modular collection of tools that allows partners ranging from DeFi frontends to financial institutions and asset managers to seamlessly embed Compound’s lending protocol.

The integration suite will abstract lending protocol complexity, providing APIs and modular components for onboarding, collateral management, loan management, and liquidation workflows. This will allow partners to flexibly deploy permissionless or permissioned markets, and route liquidity and risk management through Compound’s infrastructure for digital assets and tokenized assets, starting with equities.

Compound’s initial focus for RWAs will enable users to post tokenized equities as collateral and receive stablecoins. Users will also be able to lend their stablecoins as liquidity and earn yield on them. Cross-chain capabilities are an integral part of this feature track; to further capture stablecoin liquidity and growth opportunities, we plan to strategically expand support across top networks.

We will work with risk experts and partners to define LTV ratios and risk thresholds per asset class. The infrastructure will support automated collateral management, margin calls, and liquidations for our partners so they do not have to build out internal infrastructure or loan management capabilities to support credit markets.

Outcome:
Compound’s infrastructure becomes a distribution layer for credit markets that is accessible through multiple platforms, driving protocol adoption, liquidity depth, and TVL growth.

Track 2: Capital Efficiency and Liquidation Upgrades

Objective:
Position Compound as the most capital-efficient protocol for borrowing and lending in DeFi through research-driven upgrades to core risk and liquidation features.

Description:
Compound v4 will introduce enhanced risk management and liquidation models to improve capital efficiency and borrower power, while maintaining protocol safety. By adopting portfolio aware risk management and execution strategies that are battle tested in traditional finance but novel to DeFi, Compound v4 will expand the protocol’s risk warehousing capacity and meaningfully improve capital efficiency. Potential areas we are exploring include robust liquidation mechanisms and dynamic LTV calibration, supported by next generation oracle design and adaptive pricing feeds to ensure accurate, resilient collateral valuations during market volatility.

Outcome:
A next-generation borrowing and lending experience that increases borrowing capacity, lowers collateral requirements, and reduces liquidation risk. These improvements will drive higher engagement and expand TVL, all while preserving Compound’s hallmark security, transparency, and institutional-grade risk management.

Track 3: Permissioned Vaults and Enhanced Institutional Tooling

Objective:
Enable institutional investors, asset managers, and strategic distribution partners to engage with Compound through compliant permissioned vaults and lending pools.

Description:
This feature track introduces permissioned access to meet institutional standards, combining flexibility, compliance, and operational control. Key capabilities include:

• Customizable permissioned vaults structure: Customization to enable partner-specific mandates, set exposure limits, and tailor risk parameters to meet specific investment strategies.

• Compliance and regulatory alignment: Support partner-specific Know Your Customer (KYC)/Anti-Money Laundering (AML) requirements and ensure all participation aligns with applicable regulatory standards.

• Expanded and custom asset support: Allow institutions to engage with a broader array of tokenized assets and collateral types, unlocking diversified exposure and credit opportunities.

• Operational reliability and automation: During risk or liquidation events, participants benefit from high uptime, programmatic API access, automated alerting, and automated workflows to execute portfolio adjustments rapidly and securely.

By offering institutional-grade controls, flexible mandates, and resilient operational infrastructure, Compound positions itself as the trusted bridge between DeFi and TradFi, enabling professional capital flows, curated participation, and large-scale adoption of tokenized assets.

Outcome:
Position Compound as the trusted onchain credit platform for professional and institutional integrations with customizable, institutional-grade tooling.

Track 4: Elevated Risk Mitigation and Governance

Objectives:

A) Enable granular, asset-level, rapid use, customizable risk controls to mitigate industry and asset-level risk for the Compound protocol.

B) Enhance governance process to support agile, adaptive decision making that will result in accelerated protocol development, reduced governance overhead, and improved long-term protocol resilience.

C) Employ a third party risk manager that has the ability and credibility to re-allocate liquidity across assets and markets as a function of supply/demand, broader market conditions, and risk events.

Description:
We seek to overhaul the risk management framework and the governance architecture of the protocol from the ground up.

1. v4 will introduce a major upgrade to Compound’s risk mitigation framework, enabling isolated margin assets, asset-specific supply and borrow caps, and emergency asset-level pauses. v4 elevates many of the current market-level risk mitigation capabilities while enabling risk managers to optimize overall portfolio risk.

This granular configurability allows risk managers to respond to both day-to-day and market-driven risks with much greater precision and speed, strengthening user protection and reducing systemic exposure. Granular configurations create a safe and isolated environment for introducing new, experimental, or higher-risk asset classes while preserving the integrity of the broader protocol.

2. In terms of governance, we propose introducing an agile, tiered decision-making structure with Compound Foundation leading low-level decision making (e.g., roadmap sequencing) and execution on behalf of the protocol. This includes mechanisms that allow faster governance execution to help solve problems illustrated by long governance lags, such as those posed in the recent Elixir case. The DAO introduced and approved Elixir in 2024, however, v3’s governance lacked fine-tuned risk controls. As a result, we needed to pause all markets to address the extenuating market conditions.

   Had these features been in place when the Elixir event occurred, the risk manager’s monitoring systems would have acted immediately to contain the risk by removing any idle capital in markets involving risky assets as collateral. This would have capped the borrow amount and prevented any future borrowing from taking place immediately. It would have also maximized utilization within the pool, increasing borrow rates and incentivizing borrowers to repay, and reducing capital at risk.

v4’s more nuanced risk mitigation mechanisms can enable the risk manager to make targeted changes that are isolated to the affected markets. Instead of pausing entire USDC, USDT, and USDS comets, in v4, the risk manager can pause the isolated market pairs and allow all the other markets to continue functioning as normal.

3. The risk manager ensures that protocol risk is strictly dictated and supported by real, executable market liquidity. Its role is to make sure liquidations can occur at scale, lenders can exit within predictable liquidity bounds, and oracles are performing in line with expectations. To do this, the risk manager is responsible for continuously monitoring market depth, liquidation capacity, utilization changes, and concentration risk.

By analyzing these signals, the risk manager can implement parameter changes that re-allocate liquidity across isolated markets, adjust supply caps, borrow limits, and interest rate models to slow excessive growth, discourage risky borrowing, and accelerate deleveraging during periods of market stress. The risk manager operates strictly through parameter changes and capital reallocation rather than holding custody of any assets.

Outcome:

Improved protocol safety, faster governance execution that minimizes delays in risk operations and enables rapid responses to risk events, and reduced governance workload and churn, allowing faster deployments and more predictability.

Track 5: UX Upgrades and AI Integration

Objective:
Position Compound as the most user-friendly protocol for borrowing and lending in DeFi by modernizing our user experience.

Description:

Compound v4 will upgrade to a streamlined and accessible borrowing and lending experience for both crypto-native users and those new to DeFi. Key upgrades include:

• Enhanced lending and borrowing workflows: Simplify with intuitive, end-to-end flows that guide users through lending, borrowing, and collateral management. By upgrading these processes, we will reduce friction to use Compound, improve transparency and understanding of existing positions, and accelerate decision making when action is needed.

• Embedded use cases: Expand Compound into a one-stop DeFi platform, enabling swaps and other yield generation opportunities. In this regard, we plan to integrate complementary financial products to boost engagement, retention, and protocol stickiness.

• AI-enabled support: Embed AI into critical workflows (e.g., margin calls, collateral management, and loan management) to help users select the most appropriate actions, optimize capital allocation or borrow amounts, and make informed risk decisions with deeper understanding.

Outcome:
Deliver a next-generation borrowing and lending experience that drives higher engagement, greater protocol stickiness, and expanded TVL.

Path Forward: Governance and Community Process

• Outside-in feedback: We appreciate this is a bold and comprehensive roadmap which requires careful community evaluation and discussion. We request feedback from key value chain participants concurrently to meetings with prospective partners and key market players.

• Forum discussion/Request for Comments (RFC): We will post this roadmap for open discussion in the Compound Governance Forum and share it with key delegates of the Compound community. We would like to solicit the community’s feedback, ideas, and concerns.

• Dedicated community calls: We will host two dedicated community calls on this topic. These will serve as opportunities for live Q&A, as well as a forum for additional feedback from the community.

• Revised roadmap: Once we incorporate feedback, we will post a revised proposal, timeline, milestones, and requested budget to fund this roadmap.

• Temperature check/Snapshot poll: The Foundation will run a non-binding vote (Snapshot) to measure community support for passing to the final proposal stage.

• Formal governance proposal and onchain vote: Once ample interest is secured, we will create a governance proposal with executable details (e.g., budget, implementation phases, code/contracts) for onchain voting.

• Milestone/budget release framework: For large feature rollouts, we plan to do a phased release of funds based on attainment of defined milestones (e.g., audit completion, first equity tokens minted, partner integrations).

• Transparency and reporting: Scheduled updates on progress, risk metrics, usage, and TVL growth; post-mortems for delays or under-performing elements; community updates should market dynamics necessitate any change in priorities.

Closing

Compound has spent eight years earning its reputation as the most trusted and battle-tested lending protocol in DeFi. Buoyed by powerful industry tailwinds, we are well-positioned to be the credit protocol that powers the next wave of retail use cases. However, our success is predicated on aggressively investing in the capabilities that partners require today.

This proposal represents a significant commitment of resources, and a meaningful evolution in how the protocol operates. We don’t take that lightly, and we recognize that the community may have questions or alternative perspectives on the priorities outlined here.

We will host two community calls in the coming weeks to discuss this proposal in depth. Following community feedback, we will publish a revised proposal with a detailed budget, milestone framework, and implementation timeline for formal governance consideration.

This is a bold bet on Compound’s future. We believe it’s the right one, and we look forward to pressure-testing it with the community.

[FairAndSquare]

the most capital-efficient protocol

Does that mean collaterals will be borrowable?
With V3, a lender with no borrowing requirements has no business dealing with Compound since collaterals doesn’t earn a dime.

How about Marketing?
developing the tools / interface is only part of a successful equation, online presence( twitter) and advertising is equally key.

[bryancolligan]

Thank you for this ambitious post. As someone who has been working directly with RWAs the last year, Curious how you will tackle some of the challenges with RWAs.

Why RWAs? Is there demand?

What market research supports pivoting to RWAs vs strengthening permissionless DeFi lending?
Aave’s RWA product (Horizon) is reportedly <1% of Aave borrowing. Why will Compound be meaningfully different?
What returns should the DAO expect, and on what timeline (90/180/365 days)?

Partner validation: who is actually committed?

You cite major institutions/platforms (Anchorage, BlackRock, BNY, Goldman, JPM, Coinbase, Kraken, Robinhood).
Which are committed design partners today?
Do you have signed scope / LOIs / expected volume ranges (even anonymized)?

Legal + compliance: who is liable?

RWAs, especially tokenized equities, have heavy regulatory and operational landmines.
Do you have an opinion of counsel memo detailing jurisdictions supported/excluded, the legal structure, and who carries compliance liability (DAO vs Foundation vs partner vs vault operator)?
Compound assets still have legal fuzziness around the handoff. How is the DAO expected to take on tokenized equities complexity if an APA-style asset transfer is difficult?

Integration kit: what is actually being built and who operates it?

“Stripe-like integration” sounds good.
Is this delivering SDKs, APIs, identity/custody rails, liquidation rails, compliance rails?
Who operates these components, and what is the liability surface especially for RWAs?

Scope control: this is six companies’ worth of work

The roadmap spans RWA risk modeling, cross-chain capture, capital efficiency redesign, permissioned vault stack, governance overhaul plus a third-party risk manager, and UX plus AI.
What is the smallest shippable experiment that proves demand in 90 days?

Liquidations: how do RWAs liquidate at scale?

Tokenized equities introduce market hours, halts, transfer restrictions, and extremely thin onchain liquidity.
Who is contractually obligated to bid in liquidations?
At what size, spread, and with what fallback when markets are closed?

Governance + accountability: checks, balances, removal

Given community concerns (missing spend accounting, unclear roadmap history, comms channels), asking for more trust is hard.
What are the checks and balances?
What are the removal mechanisms if the Foundation or a risk manager becomes unresponsive?
What are the 5 KPIs for v4 with targets at 90/180/365 days, and what is the kill-switch if they’re missed?

Budget clarity: no double-paying

Will the v4 budget overlap with the existing $9.5M approved Foundation budget or is this a new budget?
Which line items are incremental vs already funded?

Foundation performance to date

Before approving and backing a major new bet, what are the measurable results achieved in the last 6 months across new markets and assets added, TVL, token price, partnerships, integrations, and distribution wins?

[Compound_Foundation]

Thank you for all feedback received so far - on the forum as well as via delegates. We are working on an FAQ and will share it here ahead of our community call this week.

[PGov]

The CGWG in collaboration with the Foundation, have gone through the many questions about v4 covering topics ranging from specific product tracks to the v4 budget to clarifications from the original roadmap. Together, we have made a good faith effort below to answer each of these questions. Several of them were similar in nature; in those situations, we paraphrased and bucketed the questions together to simplify this FAQ.

As a reminder, we have a community call tomorrow (Wednesday 21st January at 12:30ET) where we will carve out time to address any questions on the proposed v4 buildout. We will have another follow-on community call dedicated to this topic as well. We also encourage those in the community to respond to this post or reach out to us directly with any further questions or comments. We appreciate all of the engagement from the community, and your eagerness to contribute to this effort.

The initial roadmap noted that the Foundation would lead “low level” decisions. How are those defined? What about decisions that would still remain with the DAO — how are those defined?

At the highest level, the DAO will retain approval authority over strategic direction including the long-term vision for the protocol, major upgrades such as Compound v4, token economics, governance structure, and any changes that materially affect protocol risk frameworks or COMP holder value. These decisions define what Compound is and the constraints under which it operates.

We propose that the Foundation be empowered to lead day-to-day execution and iteration in alignment with the DAO-approved long-term vision. These are the “low level” decisions referred to in the v4 roadmap. The Foundation’s decision-making authority would be to execute against the roadmap and grow the protocol. Examples include:

• tuning parameters within approved risk bounds in concert with the risk manager
• initiating, negotiating and executing partnerships
• managing network expansion
• making operational decisions such as hiring, budgeting, and vendor selection

These are decisions that benefit from speed, expertise, and continuous optimization, hence our desire to consolidate them under the Foundation’s purview.

How is a third-party risk manager for v4 selected and what’s the “kill switch” for the DAO if their reallocations aren’t performing?

Third-party risk manager selection remains a DAO governance decision, consistent with current practices. The DAO will be able to switch risk managers if it chooses to do so.

The DAO selects a risk manager whom they trust, depending on factors such as track record, price, and the risk manager’s history of serving the DAO. Given that the risk manager works closely with the Foundation on strategic initiatives, the Foundation may elect to recommend a risk manager to the DAO.

For v4, the third-party risk manager will have more effective levers to mitigate risk and maximize capital efficiency. These features are currently being designed by Compound’s service providers and include parameters to reallocate liquidity in real-time, as well as emergency actions to mitigate downside risk. These proposed levers are designed in part to help mitigate situations such as the Elixir de-pegging event last year. Therefore, we recommend that the DAO consider additional factors like the risk manager’s track record of reallocating liquidity at scale to maximize sustainable growth and the strategic partners that the risk manager can introduce to Compound.

I have doubts about AI-enabled support. Wouldn’t it be better to focus on simplifying UI/UX instead? I’m concerned that AI hallucinations will give users bad financial advice on critical workflows and functions such as margin call and collateral management. Can you address these concerns?

While the idea of lending protocols is a huge innovation that has attracted sustainable followership, one of the pitfalls of the DeFi industry in scaling to date has been the relative complexity in interacting with it. The proposed future integration of AI is designed to aid users within defined workflows, providing real-time, plain English explanations, scenario modeling, and Q&A support. Nonetheless, we will exercise discretion and judgment upon AI integration into our proposed v4 product, and expect to roll this out in a phased approach and as the technology is further solidified .

For example, when a borrower’s position approaches liquidation thresholds, AI assistance can help users understand their current risk by explaining liquidation levels, recommending collateral top-up ranges (e.g., minimum, sufficient, or conservative buffers), and clearly showing how each option would impact their position. All outputs will be derived from protocol parameters and directly reference official Compound documentation, removing the need for users to search through extensive technical materials. In this way, AI enhances user understanding and decision making without introducing execution risk, acting as an intelligent interface to the protocol.

Besides ETH Mainnet, what other top networks do we expect to prioritize for v4? Will this be based on v3 markets or are there other factors driving the selection?

We are considering five primary factors when deciding which networks to prioritize in v4. The factors and associated questions for network expansion are:

• Technical feasibility and complexity: We need to assess the engineering effort required to support a new network. Expanding to EVM-compatible chains represents a lower-complexity path, while non-EVM environments (e.g., Solana or Move-based chains) require a significantly higher investment and specialized expertise. Network prioritization must align with the Foundation’s ability to deliver v4 safely, efficiently, and at scale.
• RWA & Stablecoin liquidity and growth: We will evaluate the depth, quality, and growth trajectory of RWA growth and stablecoin liquidity on each network. Robust stablecoin markets are a prerequisite for lending, borrowing, and TVL growth. Networks with insufficient liquidity will be deprioritized until market conditions improve, as expansion without strong stablecoin demand adds noise rather than meaningful protocol growth.
• Ecosystem incentives and alignment: We will assess whether the network’s Foundation, DAO, or Labs are willing to provide financial, technical, or GTM support to build and scale v4. Incentives must align with Compound’s long-term vision and justify the opportunity cost of expansion. Where incentives are limited, we must critically assess whether the network’s strategic priorities are compatible with Compound’s growth objectives.
• Competitive landscape and product market fit: We will analyze existing lending and credit infrastructure on the network. Where incumbents are strong, expansion must be justified by a clear differentiation whether through v4’s architecture, superior risk framework, capital efficiency, or distribution advantages. If Compound cannot offer a compelling improvement over existing solutions, expansion may not be accretive.
• Partnership opportunities: Successful expansion requires strong partners across technical enablement, distribution, and business development. We prioritize networks where partnerships can ensure user demand and capital commitments ahead of launch. The goal is not to go from zero to one, but to enter with conviction, launching v4 with momentum, liquidity, and clear adoption pathways rather than a slow, speculative rollout.

This analysis will be a precursor to kicking off business development discussions with select networks, a process that will occur in tandem with getting the DAO’s decision on our proposed v4 roadmap. At that point, we will share with the DAO a Foundation-recommended shortlist of network expansion possibilities for review.

Will the published roadmap include a specific budget and runway for the 5 tracks beyond the initial $6M approved for this year? It would be great to have specific milestones laid out that trigger the phased release of these funds for the roadmap.

Yes. This is an ambitious and bold bet on Compound’s future, and will require significant budget against milestones, beyond the operational budget approved for the Foundation ($6M annual run-rate approved in summer 2025, or ~$3.5M currently given COMP prices). Once proposed and upon approval by the DAO’s vote, we expect to structure three key budgetary items for approval:

1. V4 product build
2. Marketing and GTM activation
3. Grants/incentives to execute against strategic partnership opportunities

In making these requests, we will add granularity where appropriate, maintaining some flexibility when it comes to areas like grants/incentives to scale partnerships and growth.

A key learning from the last six months has been around the aggressive nature of some peers’ market activity. Namely, other protocols regularly offer large incentives to win deals, and often communicate that they can execute those deals without any additional governance steps. Accordingly, we’ll propose giving the Foundation authority to negotiate competitive deal terms on Compound’s behalf.

Who will handle the onboarding of integration partners? How will that work?

The Foundation will own partner positioning holistically, developing messaging, positioning, and sales collateral that clearly articulates where Compound adds value for partners and their users, and how we differentiate versus competing lending and credit infrastructure.

Onboarding itself is designed to be practical, repeatable, and scalable, avoiding the pitfalls of extreme customization that often result in failed production or prolonged onboarding cycles once a deal is signed. The Foundation will support partners through three complementary onboarding tracks:

1. Self-service developer integration: We will produce comprehensive, developer-first documentation with clear architecture diagrams, code snippets, and step-by-step guides that enable even junior developers to quickly test, integrate, and deploy against Compound’s APIs (for illustrative purposes, consider Stripe’s or AWS’s developer documentation). The goal is to reduce integration time and dependency on Foundation engineers while maintaining a high-quality implementation experience.
2. AI-enabled developer support: AI-powered developer assistance will be trained and fine-tuned on Compound’s documentation, APIs, and historical integration questions. The Foundation will proactively compile and maintain structured Q&A libraries to address common integration challenges, minimizing repetitive manual support and enabling a hands-off, scalable support model for engineering and product teams.
3. White glove technical onboarding: For strategic partners requiring deeper customization or accelerated timelines, the Foundation will provide direct engineering and product support to ensure integrations move efficiently from design to production. This includes guidance on architecture, risk parameters, and operational readiness. White glove onboarding will only be used where absolutely necessary so as not to cause a drag on the team, allowing us to maintain focus on technical execution and product roadmap.

We are designing our partner onboarding experience for execution at scale, with clear ownership, measurable outcomes, and minimal operational drag on the core team.

Tell me more about how you plan to achieve goals around capital efficiency and liquidation upgrades.

Effective execution of this track will be based on extensive research and market testing. In December 2025, the Foundation, in collaboration with the Compound Grants Program (CGP), funded a grant for Platonia to conduct mechanism-design research and produce a detailed implementation specification. That work will be complete by the end of this quarter. At that point, the Foundation will seek to leverage this research and productize it as part of Compound v4’s design.

We asked Platonia to provide a preliminary high-level overview with more insight:

All major DeFi lending protocols rely on liquidation designs that are structurally inefficient. They incur excessive execution costs during routine liquidations yet often still fail to execute reliably during periods of market stress. As a result, protocols are forced to set high liquidation penalties which in turn constrain collateral factors.

If the risk of the loan book can be warehoused more cheaply and reliably, the protocol can pass that efficiency back to users in the form of increased borrowing power.

At its core, this is a risk management and execution trading problem. Well-established principles from TradFi, particularly around hedging and market microstructure, point toward a more efficient design space than what exists in DeFi today.

To address this, we plan to introduce two complementary liquidation execution strategies:

1. Direct liquidity taking: Optimized for speed and certainty when immediate risk reduction is required and analogous to intermarket sweep (ISO) style orders in TradFi or aggregator orders in DeFi.
2. Passive delta hedging: Optimized for minimizing execution costs when market conditions allow for a more gradual and cost-efficient approach.

These strategies are coordinated by a dedicated liquidation module that dynamically selects the appropriate execution path to reduce liquidation costs, improve execution reliability and enable higher collateral factors without increasing protocol risk.

How do you plan to bootstrap liquidity for permissioned vaults? We saw last year that liquidity fragmentation is not very good for these offers.

This requires aligned partners, targeted capital, and sustainable economics. The Foundation’s approach is designed to avoid fragmentation and drive durable liquidity. First, liquidity will be anchored through partner alignment. Permissioned vaults will be launched alongside strategic partners whose users and balance sheets are natural liquidity sources. Incentives will be co-designed with partners such as yield enhancements, fee sharing, or co-funded rewards so liquidity provision directly supports partner product goals and creates long-term alignment rather than opportunistic capital.

The Foundation will use its DAO-approved grants budget to seed liquidity where it matters most. Grants will be targeted at specific marquee partners, structured with milestones or vesting to encourage long-dated commitments. Grants can also be used to de-risk early participation rather than to subsidize fragmented, short-term flows.

Liquidity incentives will be designed for durability. This includes tenure-based rewards, fee participation from vault activity, and dynamically adjusted incentives based on utilization and demand. The goal is to transition vaults quickly from incentive-driven bootstrapping to self-sustaining, fee-based liquidity incentives. Finally, we are exploring how to tap into Compound v3’s existing liquidity as well. For example, we may be able to design Compound v4 vaults in such a way as to benefit from v3 liquidity. This is still a nascent line of thought and needs further development to validate its merit.

Combined, this approach maximizes our chances for successful permissioned launches with durable, high-quality liquidity, minimizing fragmentation and positioning Compound as a reliable, scalable credit layer for institutional and partner-led adoption.

“Why RWAs? Is there demand? What market research supports pivoting to RWAs vs strengthening permissionless DeFi lending?”

Industry data shows the tokenized equities market cap expanded rapidly in 2025. One report notes it surged from $32M to around $831M over the year, and predicts its continued growth will lead to a multibillion-dollar market and higher total addressable market than crypto at present, which signals market interest and increased onchain activity. As a back of the envelope example, if only 1% of the global equities market were tokenized, it could represent more than $1.3 trillion in onchain assets.

Additional proof points come from the industry itself. Robinhood is actively deploying tokenized US stocks and ETFs on blockchain infrastructure. Deployments are nearing 2,000 tokenized assets on Arbitrum, a clear signal of institutional and retail interest in tokenized equities. Tokenized equity products such as Backed Finance’s xStocks surpassed $300M in onchain trading volume within just weeks of launch in mid-2025, another indication of real trading demand.

These trends reflect demand signals from both TradFi players and DeFi infrastructure builders, suggesting that tokenized RWAs are moving from niche experimentation toward meaningful market adoption and that lending/borrowing products built on them could unlock significant new utility and revenue.

“Aave’s RWA product (Horizon) is reportedly <1% of Aave borrowing. Why will Compound be meaningfully different?”

First, it’s important to note this proposal is not a pivot away from permissionless DeFi lending. The primary volume on Compound for the foreseeable future is expected to remain crypto-native lending and borrowing. Compound v4 upgrades the protocol to support faster integrations, modular partner deployments, and additional asset classes without compromising core DeFi functionality, which would benefit permissionless DeFi lending and RWA markets alike.

Based on discussions with partners, we see growing demand for a default, battle-tested lending and borrowing layer for RWAs similar to how Morpho became Coinbase’s onchain credit partner. V4 positions Compound to capture this opportunity - meaningfully expanding our total addressable market - while continuing to strengthen its core crypto lending markets.

“What returns should the DAO expect, and on what timeline (90/180/365 days)?”

It is difficult to provide precise short-term revenue projections, especially given the longer development cycle and the necessary time to ink high-value partnerships and integrations. But it is important to acknowledge that a significant investment in the future of Compound is necessary to maintain its competitiveness. In a recent RFP (top 5 fintech with $200B+ of assets on their platform), we discovered significant technical and incentives gaps when compared to top DeFi protocols (AAVE, Morpho). Funding and building a competitive vision is an urgent matter to prevent Compound from continuously falling behind. This proposal should be viewed as a long-term investment in Compound’s competitiveness and growth, rather than a short-term yield play.

Final timelines are contingent on successful completion of independent smart contract audits, phased rollouts, and partner-by-partner risk validation to ensure protocol safety and regulatory alignment. This staged approach provides flexibility to incorporate audit findings, partner feedback, and market conditions before progressing to broader deployment.While it is difficult to attach a timeline to returns, we can share our general timeline for milestones:

• 0–6 months: Delivery of first v4 tracks including technical capabilities such as a beta integration suite and early proof of concept integrations
• 6–12 months: Growing adoption, initial mainnet partner deployments, and measurable increases in usage and engagement
• 12+ months: Clear ROI driven by protocol upgrades, expanded distribution, partner integrations, and compounding organic growth

We anticipate exponential growth in 2027 as the technical foundation and distribution strategy mature and begin to scale.

“You cite major institutions/platforms (Anchorage, BlackRock, BNY, Goldman, JPM, Coinbase, Kraken, Robinhood). Which are committed design partners today? Do you have signed scope / LOIs / expected volume ranges (even anonymized)?”

We are engaged in active discussions with four distinct partner segments that align directly with Compound v4’s distribution and integration strategy:

• CeFi: Exchanges, custodians, and fintech platforms
• DeFi: Networks, ecosystems, and complementary protocols
• DeFi-native users: Yield aggregators and onchain asset managers
• TradFi: Banks, broker-dealers, and custodians

Across these groups, we have executed NDAs and/or are participating in formal RFP processes with multiple competitors. These discussions are substantive and ongoing, covering technical integration requirements, risk frameworks, incentives, and long-term partnership structures. At this stage, no binding commitments have been made, not due to lack of interest, but because Compound does not yet have:

• DAO-approved funding for incentives
• Production-ready v4 infrastructure required to pilot integrations

This proposal exists precisely to unlock both.

Importantly, in several RFPs and partnership processes, Compound is competing directly with Aave and Morpho, both of which can currently offer:

• $100M+ multi-year incentive programs
• Advanced, partner-ready technical infrastructure already developed

These organizations employ 60-120 FTEs. Without a commitment from the DAO, these discussions will either stall or default to competitors that are already resourced to execute at scale. The choice before the DAO is therefore explicit: fund this strategy to compete and win these partnerships, or accept that Compound will be structurally disadvantaged versus Aave and Morpho in future integrations.

This proposal is designed to give Compound the tools, incentives, and credibility required to convert active partner interest into durable, long-term adoption.

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[PGov]

“RWAs, especially tokenized equities, have heavy regulatory and operational landmines. Do you have an opinion of counsel memo detailing jurisdictions supported/excluded, the legal structure, and who carries compliance liability (DAO vs Foundation vs partner vs vault operator)? Compound assets still have legal fuzziness around the handoff. How is the DAO expected to take on tokenized equities complexity if an APA-style asset transfer is difficult?”

This question set conflates protocol design, partner integration, and regulated asset structuring. The v4 roadmap intentionally separates them.

Compound v4 remains a permissionless lending protocol.

The roadmap does not propose that:

• the DAO issues, originates, custodies, or directly holds RWAs or tokenized equities;
• the DAO becomes a regulated intermediary; or
• protocol usage itself creates compliance obligations for the DAO.

Any RWA-related deployment is partner-led and jurisdiction-specific. In all cases:

• the partner determines jurisdiction, licensing, asset structure, and disclosures;
• the partner or its appointed operators bear KYC/AML, custody, and regulatory liability; and
• the protocol remains neutral infrastructure.

This is consistent with current market practice across leading DeFi protocols.

Where legal analysis is required, the Foundation coordinates with external counsel retained for the relevant jurisdiction or structure on a case by case basis.

The roadmap does not assume that tokenized equities are transferred to, or held by, the DAO. Assets would typically remain within partner-controlled SPVs, trusts, vaults or similar. Protocol exposure, where applicable, is achieved via abstractions defined by partner counsel (such as claims or notes). Governance approves parameters and markets, not asset conveyance. If APA-style (asset purchase agreement) transfer mechanics are impractical, that constrains the deployment model; it should not shift complexity or liability onto the DAO.

“‘Stripe-like integration’ sounds good. Is this delivering SDKs, APIs, identity/custody rails, liquidation rails, compliance rails? Who operates these components, and what is the liability surface especially for RWAs?”

The goal is to provide a partner integration suite that abstracts away crypto complexity, allowing both Web2 and crypto-native partners to embed Compound’s lending and borrowing infrastructure without deep protocol expertise. The integration suite is expected to include:

• Technical documentation containing APIs for loan creation, collateral management, borrowing, repayments, and liquidations. Two integration options will be available:
  • Backend-first integrations designed for fintechs and Web2 companies, where crypto primitives are abstracted away and partners interact via familiar APIs
  • Smart contract interfaces for crypto-native teams that want direct onchain composability and deeper control

This dual-track approach ensures Compound can serve fintechs, custodians, and broker-style platforms while remaining fully composable for DeFi-native builders.

Compound’s intent is not to replace or operate identity, custody, or compliance providers, but to integrate cleanly with them. Here are our current expectations for building for these solutions:

• Identity and compliance (KYC/AML): Handled by partners or their selected providers; Compound provides permissioned hooks and interfaces where required
• Custody: Remains with the partner or their custodian of choice with Compound having access to liquidate or mint/burn collateral as needed
• Liquidation and risk rails: Operated at the protocol-level by Compound smart contracts, ensuring consistent risk management across integrations with customizability for partners to finetune specific markets to meet their internal risk thresholds and user expectations

This separation allows Compound to remain protocol-centric while supporting regulated workflows.

Compound will own and maintain the integration suite and protocol-level infrastructure, including:

• Lending and borrowing logic
• Risk controls and liquidation mechanisms (with partner customization)
• Core smart contracts and APIs

Integration partners will:

• Own the end-user experience (UX)
• Manage customer onboarding, custody, compliance, and distribution
• Assume responsibility for user-facing regulatory obligations

This mirrors successful industry precedents (e.g., Coinbase’s integration with Morpho), where the protocol provides permissionless financial infrastructure while the partner controls the customer relationship and compliance surface.

For RWAs and tokenized equities specifically, this model should limit Compound’s liability exposure by ensuring that regulated activities such as custody, KYC/AML, and asset issuance remain with appropriately licensed partners, while Compound operates as the underlying permissionless onchain credit infrastructure.

“The roadmap spans RWA risk modeling, cross-chain capture, capital efficiency redesign, permissioned vault stack, governance overhaul plus a third-party risk manager, and UX plus AI. What is the smallest shippable experiment that proves demand in 90 days?”

Given the necessary hiring and development required, the first time milestone we’d propose is within 180 days (rather than the 90 days suggested in the question). At this point, success will be defined by:

• Finalizing technical scope and requirements with design partners
• Development of an early integration suite (API + smart contract interfaces) sufficient for partners to conduct design testing
• Standing up one or two pilot integrations (crypto-native or fintech-style) using existing crypto collateral (not RWAs) to validate:
  • Integration friction
  • Partner UX ownership
  • Lending/borrowing flows
  • Liquidation and risk hooks

This pilot validates real demand for Compound as an embedded credit layer, independent of RWAs.

“Tokenized equities introduce market hours, halts, transfer restrictions, and extremely thin onchain liquidity. Who is contractually obligated to bid in liquidations? At what size, spread, and with what fallback when markets are closed?”

There is no fully standardized liquidation model today across the industry, including for large institutions and leading protocols. This is the beauty of innovating in a bleeding-edge technology that is poised to recreate credit markets on a global scale.

It is important to note that our partners are actively working through these same questions and there is no one size fits all answer. Instead, they are seeking flexible infrastructure and a collaborative design partner that can support multiple liquidation models as the market matures. Even regulated issuers, broker-dealers, and custodians are still experimenting with:

• How liquidation should be triggered
• Who should intermediate execution
• How onchain logic maps to offchain settlement
• What happens during market closures or halts

Rather than committing to a single liquidation path, the strategic goal is to enable multiple partner-compatible liquidation models, including:

• Contractual liquidation paths where execution is handled by regulated counterparties rather than onchain liquidity
• Redemption- or settlement-based flows that avoid reliance on AMMs
• Agreed-upon liquidity support from issuers, custodians, or market makers
• Conservative upstream risk controls that reduce the frequency and urgency of liquidation events

Partners broadly agree that forced liquidation during closed or halted markets is undesirable.

Risk must be managed primarily through:

• Conservative collateral parameters
• Risk isolation
• Borrowing constraints

Liquidation should be treated as a process, not an instant transaction to preserve user trust and experience. This mirrors how margin risk is managed in TradFi and reflects strong partner alignment.

“Given community concerns (missing spend accounting, unclear roadmap history, comms channels), asking for more trust is hard. What are the checks and balances? What are the removal mechanisms if the Foundation or a risk manager becomes unresponsive? What are the 5 KPIs for v4 with targets at 90/180/365 days, and what is the kill-switch if they’re missed?”

We appreciate these concerns, thank you for flagging them. The Foundation, since its creation, has been addressing these historic issues head on via regular community calls, the Inaugural Transparency Report, and roadmap publication (amongst other things). The v4 roadmap is designed to rely not on trust, but rather on explicit control mechanisms.

Checks and balances

• All material actions remain subject to onchain governance approval
• Budgets are time-bounded, scope-restricted, and revocable
• The Foundation, risk managers, and service providers act as agents, not principals

Removal mechanisms

• Any Foundation mandate, risk manager, or service provider can be:
  • Removed by governance vote
  • Defunded by halting future tranches
  • Replaced without protocol changes
• No role proposed is permanent or insulated from removal

Non-performance or unresponsiveness is addressed by replacement, not escalation.

KPIs and kill switch

KPIs will be set out explicitly in the funding proposal, not inferred from the roadmap. They will include:

• Delivery milestones (e.g. code shipped, integrations live)
• Adoption metrics (e.g. partners onboarded, markets enabled)
• Economic indicators (e.g. utilization, incentive efficiency)

Funding is tranche-based. Failure to meet milestones stops subsequent funding. There is no irrevocable commitment.

Governance sequencing

From a sequencing perspective, the roadmap defines direction and capability, not pre-approved deployments.

Each material implementation will still require:

• separate governance approval;
• explicit disclosure of jurisdictional and liability assumptions; and
• the ability for delegates to reject specific proposals without blocking the strategy.

The roadmap defines direction and capability, not irrevocable commitment.

“Will the v4 budget overlap with the existing $9.5M approved Foundation budget or is this a new budget? Which line items are incremental vs already funded?”

First, just for clarity, the COMP-denominated Foundation’s budget was set at $9M in July 2025 for an 18 month period. Considering current market dynamics, the effective budget is actually ~$5M for those 18 months.

The v4 proposal will clearly separate the already-approved Foundation operating budget and incremental, v4-specific spend. No cost item is funded twice. Incremental spend will be limited to:

• v4-specific R&D related and integration work
• Marketing and partner incentives tied to new capability
• Discrete external services required for v4 execution

Core Foundation operations already approved are not rebadged under v4. A breakdown will be provided prior to any vote.

“Before approving and backing a major new bet, what are the measurable results achieved in the last 6 months across new markets and assets added, TVL, token price, partnerships, integrations, and distribution wins?”

As the Foundation relayed in our monthly calls and Inaugural Transparency Report, our immediate focus has been stabilization, risk reduction, and structural clean-up given the state of affairs Compound has been in, all while attracting top-talent and forming a lean team.

We have not allocated time or budget towards short-term growth maximization; we are looking to re-establish Compound as a lasting DeFi brand. This is documented in the Inaugural Transparency Report, including actions taken during and following v2 deprecation, legal and operational risk management, and governance, treasury, and execution groundwork necessary to enable future expansion.

Those activities were prerequisite work and in many cases challenging. They were not pursued in order to optimize short-term TVL or headline growth metrics, though they did generate millions of value to the DAO across new revenue streams and cost savings.

The v4 roadmap marks a deliberate shift from defensive execution to growth-oriented capability building. It should be assessed on whether it credibly enables that transition, not on whether a different growth strategy should have been pursued during the clean-up phase.

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[Nazzy]

Hi Compound Foundation team,

The Compound v4 Roadmap presents a bold and necessary vision for transitioning Compound from a strong DeFi lending protocol into a premier credit infrastructure for both DeFi and TradFi partners alike.

That vision is strategically compelling. However, for it to succeed at scale, community communication and external visibility need to be elevated to the same level of priority as protocol expansion. I’d like to highlight two areas that appear underutilized relative to v4’s ambition:

1.Discord Announcement Structure

The v4 proposal and other major updates are currently distributed across multiple forum threads with deep technical detail. While this is valuable, many contributors and community members lack a clear, structured announcement channel that distils critical updates in real time.

This gap affects:
• Awareness of key milestones and calls to action
• Participation in Snapshot polls and governance stages
• Alignment across working groups, delegates, contributors, and external partners

A consistent announcement format (e.g., major update → short summary → next steps → links + dates) would significantly improve engagement and enable the community to meaningfully contribute to roadmap feedback and governance decisions.

2. Twitter & External Visibility

The v4 vision explicitly aims to leverage Compound’s reputation, industry trends, partner ecosystems, and improving regulatory clarity to position the protocol for global mass adoption. However, current Twitter and external visibility do not yet reflect this strategic momentum, particularly when compared to peer protocols shaping the DeFi + TradFi narrative.

More intentional external communication would help:
• Signal credibility to potential integration partners and institutional audiences
• Increase external developer and ecosystem participation
• Translate forum discussions into digestible, public-facing milestones and narratives

This is not simply a marketing concern, external visibility directly influences partner interest, liquidity growth, and long-term adoption, all of which are core objectives of v4.

Why This Should Be a Priority

The v4 roadmap represents a substantive shift in how Compound intends to operate, integrate, and grow. However, internal strategy alone cannot drive adoption if the community and broader market are not aligned or aware.

Compound’s strength has always been its community and decentralized governance. In an increasingly competitive landscape, that strength must be amplified through clear communication, structured announcements, and consistent external visibility.