Compound Founder’s New Venture Superstate To Bridge Traditional and Blockchain Finance

Compound’s Founder and CEO, Robert Leshner, has announced the launch of a new venture, Superstate (@superstatefunds). “Superstate’s mission is to create regulated financial products that bridge traditional markets & blockchain ecosystems,” said Leshner, signaling a significant shift in the financial industry.

“Currently, the primary limiting factor to DeFi is that crypto-native assets are the only interoperable assets,” Leshner stated, reflecting on the challenges facing the decentralized finance (DeFi) sector. However, Leshner sees a future where “hundreds of trillions of ‘offline’ assets will find their way onto blockchains,” with Superstate spearheading this migration.

Taking an audacious first step in realizing this vision, Superstate filed a preliminary prospectus with the U.S. Securities and Exchange Commission (SEC) for the Superstate Short-Term Government Bond Fund. “This is the first step on a long journey to upgrade financial markets,” Leshner announced, suggesting significant changes to financial market systems.

Joining Leshner in this venture are industry veterans and former colleagues @rmcuming, @HiltnerJim, and @Dean_Swennumson. Together, they’ve previously built and led the Compound Treasury product, implying a solid foundation for Superstate’s ambitious goals.

Superstate’s innovative vision has captured the attention of prominent investors, including Parafi Capital (@paraficapital), 1kx (@1kxnetwork), Cumberland (@CumberlandSays), Coinfund (@coinfund_io), and Distributed Global (@DistributedG), all of whom have led the seed round of funding. “Thank you to our investors for believing in our vision,” Leshner gratefully acknowledged.

As the DeFi sector expands and evolves, market-watchers will be keenly following Superstate’s progress in merging traditional finance with blockchain technology. With Leshner’s new venture off to a promising start, the countdown has begun for a fresh chapter in the financial and blockchain industry.


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Altcoin Watch: Top 3 Tokens to Watch This Week XRP, ALGO, and COMP

Less volatility was experienced in the digital currency ecosystem over the weekend, but a bearish sentiment is still the general outlook.


The combined cryptocurrency market cap was still down 1.75% to $917.22 billion at the time of writing, a far cry from the $1 trillion benchmark that is used to judge the ecosystem’s moderate health.

With the general regressive pathway of major digital assets, here are some of the altcoins to watch this week.


XRP’s growth is the biggest of the top 10 tokens in the past week, as it is up 32.47% to $0.4975 within the same timeframe. The XRP community has remained ever optimistic about the potential of its affiliated firm, Ripple Labs Inc, to win the long-protracted lawsuit with the US Securities and Exchange Commission (SEC).

The negative impacts of the lawsuit have significantly battered the digital currency, but the prospect of winning the case has made investors remain optimistic about its likely future price growth. Ripple and the SEC have asked to court to pass judgment on the case, creating an avenue for investors who trust the company will win to bag some of the coins.

This move is somewhat dangerous as the tables may turn the other way. However, a win can be massive and current buyers are choosing to focus on this.

Algorand (ALGO)

Algorand has been a steady blockchain builder in the broader crypto ecosystem, and with the partnership, it hit with FIFA for the upcoming World Cup, the protocol is billed to gain more global recognition. This recognition can drive up its adoption across the board and thus spell a good omen for the ALGO coin.

The coin is one of the best performers over the past week, up 34.32% to $0.3815, and is worth watching for short to learn term price gains.

Compound (COMP)

Compound is one of the most dominant Decentralized Finance (DeFi) protocols that has stood the test of time compared to related protocols. Its legacy, consistency, and innovative growth have made the COMP token more resilient.

COMP is currently changing hands at $61.84, up 25.65% over the past 7 days. With Ethereum’s transition to Proof-of-Stake (PoS) following the Merge, DeFi enthusiasts may consider Compound as a legacy platform to meet their lending needs.

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DeFi Lending Protocol Compound Launched its Compound III Version

Decentralized Finance (DeFi) lending protocol Compound has announced that it has officially launched its Compound III (V3) on the Ethereum mainnet.

Compound III is an EVM-compatible protocol that enables supplying crypto assets as collateral to borrow the base asset.

Unlike in the past, this new version only supports one “underlying asset” for lending. It provides other encrypted assets as collateral, getting rid of the “mixed risk model that users can borrow any asset”.

Currently, ETH, WBTC, LINK, UNI, and COMP have been used as collateral to lend the underlying asset USDC.

Since Compound V2 uses the pool risk model as the way most loan agreements like Aave currently work, users can borrow any digital asset, but poorly performing assets can threaten other assets in the Compound lending protocol, resulting in the insecurity of investors’ funds.

Therefore, this upgrade allows users to limit the size of individual collateral assets within the market to limit risk.

This improved security comes at a price. The collateral provided will no longer earn interest.

Compound founder Robert Leshner said that although users can no longer earn interest through collateral, they can borrow more, improve capital utilization, reduce liquidation risk, and spend less on Gas Fees.

Users can earn interest by providing lower-risk underlying assets. With this upgrade, Compound III’s main competitor was no longer Aave, but MakerDAO.

Official data shows that Compound III has accumulated about $1.03 million in assets and lent 56,000 USDC within 24 hours of its launch.

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DeFi Remains One of The Biggest Losers in H1

The crypto winter is almost wearing off based on several indices, and looking back to the outlook in the first half of the year. The Decentralized Finance (DeFi) ecosystem can be tagged as one industry’s biggest losing sectors. 


The combined Total Value Locked (TVL) in the DeFi ecosystem opened the year at a value of $169.1 billion, but at the time of writing, this value has dropped to $67.66 billion. The onslaught experienced over the past few months was encompassing, with investors exhibiting caution concerning their locked funds.

Decentralized Finance offers quite a lot of opportunities that tend to rival what the traditional financial ecosystem presents. One of these is lending; an offshoot adapted to decentralized and centralized lending platforms. This was one of the weak links that generally impacted the broader digital currency ecosystem in the second quarter (Q2) with the most prominent lending platforms crumbling with the liquidity pressure that was ushered in.

Meeting customers’ obligations became extremely difficult following the ripple effect of the Terra USD (UST) and LUNA token crash back in May. While the known decentralized lending platforms like Compound (COMP), JustLend (JST), and Venus (XVS) are still operating, the impact currently being felt is in the slump in their individual TVLs.

Compound, for instance, opened the year with a TVL of $8.92 billion, which is currently pegged at $3.08 billion. This plunge comes at more than a 150% slash and is representative of what most of the DeFi protocols faced in the first half of the year.

The outlook and projections for the rest of the second half of the year are bullish and are based in part on the forthcoming migration of Ethereum (ETH) from the Proof-of-Work (PoW) consensus model to the Proof-of-Stake (PoS) network. With this event, analysts are projecting that the positive upgrade for Ethereum can also serve as a good prop-up for other DeFi protocols.

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Celsius Makes More Repayments and Withdrawal: Sources

Celsius Network has repaid partial debts to decentralized finance and lending platforms Aave and Compound respectively, as it continues to tackle the potential insolvency issue. - 2022-07-12T105517.938.jpg

According to tracker Etherscan, the crypto lender repaid $78.1 million worth of USDC stablecoin to Aave and $35 million worth of stablecoin DAI on the platform Compound.

The Block reported that Celsius also withdrew 6,083 wrapped bitcoin (worth approximately $124 million) from Aave and transferred them to an Ethereum address known to interact with centralized exchanges regularly.

The Block also added that the fund transfer to Aave was made in four transactions. It further reported that the crypto lender has cleared its debt last week on MakerDAO before withdrawing $440 million in wrapped bitcoin.

The crypto firm has started clearing debts to free up its collateral in decentralized-finance applications.

However, the troubled crypto firm still owes $72 million in USDC to Aave and $50 million in DAI to Compound, according to on-chain data gathered from its wallets.

While data from Nansen and Etherscan data showed that digital wallets belonging to Celsius paid back more than $300 million worth of debt to various platforms since July 1, 2020.

Celsius has frozen withdrawals since the beginning of the recent market downturn in June, while other crypto firms, Voyager Digital Ltd. and Three Arrows Capital, recently filed for bankruptcy.

Celsius had positioned itself in the market by promising more than 18% in interest to peoples’ holdings who gave it their digital coins. The crypto lender, in turn, lent those coins out, Bloomberg reported.

Besides clearing debts, the crypto lender has also started the restructuring process.

Celsius has hired new lawyers to advise the troubled cryptocurrency lender on restructuring, according to a report from the Wall Street Journal (WSJ).

The much-needed restructuring plan has come as it seeks to escape the recent turmoil in crypto markets, the WSJ said, citing people familiar with the matter.

According to the WSJ report, Kirkland & Ellis LLP lawyers have been called on board to advise Celsius on options, including a bankruptcy filing.

The lawyers have replaced the company’s previous lead restructuring counsel, Akin Gump Strauss Hauer & Feld LLP.

Since the company’s stagnation due to the market plunge, it has been in an unstable liquidity position. As part of its recovery efforts, Celsius has also appointed Citigroup to advise it on potential financing options.

The WSJ reported that Celsius is also reshuffling its board as they appointed two new directors last week.

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Robinhood Rolls Out Tokens Offerings, Adding SOL, SHIB, MATIC & COMP

To meet customer requests for a broader selection of cryptocurrencies, American financial services company Robinhood has listed Shiba Inu (SHIB), Solana (SOL), Polygon (MATIC), and Compound (COMP).

Upon listing, Shiba Inu surged by more than 20%, increasing its market capitalization by $1.2 billion, according to CoinMarketCap.  

Source: CoinMarketCap

The listing comes nearly a week after the company officially rolled out its long-awaited cryptocurrency wallet, providing access to more than 2 million customers. 

Steve Quirk, Robinhood’s chief brokerage officer, pointed out that the latest move showcases the firm’s commitment to the crypto space. He added:

“We’re excited to add more choices for our customers as we work to make Robinhood the best place to invest in crypto. As a safety-first company, we have a rigorous framework in place to help us evaluate assets for listing, and we remain committed to providing a safe and educational crypto platform.”

As an algorithmic and autonomous interest rate protocol meant to develop open financial applications, Robinhood saw it fit to add Compound to meet customer needs.

Furthermore, Solana prompts processing speeds to nearly 65,000 transactions per second by merging proof-of-history and proof-of-stake consensus mechanisms.

By adding the new cryptocurrencies, Robinhood seeks to revamp its dwindling crypto trading revenue. For instance, according to Bloomberg, cryptocurrencies generated about $48 million in transaction-based revenue for Robinhood in the fourth quarter of last year – a 79% drop from the $233 million reported in the second quarter.

Furthermore, the company intends to incorporate the Bitcoin Lightning Network for faster BTC transactions. 

Shopify, a global e-commerce giant, recently inked a deal with digital payments platform Strike to enable Bitcoin lightning payments, Blockchain.News reported. 

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XRP, Uniswap (UNI), the Graph (GRT) and Three More Altcoins Approaching ‘Opportunity Zones’: Santiment

Analytics firm Santiment is highlighting possible entry points for half a dozen altcoins amid a general downtrend which has given the crypto markets an extended pullback throughout January.

In its weekly Insights newsletter, Santiment says that while most crypto investors are feeling pain, opportunities exist for those with patience and some handy cash.

The data firm says that the market value to realized value (MVRV) metric, which reveals the average profit/loss for coins in circulation, is helpful when hunting for crypto bargains.

“MVRV is a great metric to gauge how deep traders are into pain or euphoria zones.

We commonly like to look at an asset’s 30-day MVRV, specifically, because it reveals what weekly swing traders can likely take advantage of, as far as mid-term trading goes… Blending in how much pain short-term, mid-term, and long-term traders are experiencing all together, can paint an even clearer picture.”

Looking at the MVRV metric, Santiment names six altcoins that can potentially bounce as traders feel pain.

One crypto asset on the list is open-source digital currency XRP, which the insights firm says is primed for a rally after a strong move down.

“The polarizing project is at its most negative average MVRV level since late June. It was last in positive territory in mid-December, making it a solid candidate to have a price upswing to bring traders some relief.”

Source: Santiment

When it comes to decentralized exchange Uniswap (UNI), the crypto insights firm says,

“Uniswap’s average MVRV is at all-time negative MVRV levels.

An uptick in the general crypto markets may go very well for a mostly respected altcoin like UNI.”

Source: Santiment

Decentralized blockchain indexer The Graph (GRT) is also at MVRV lows, with Santiment noting,

“Its average MVRV was last positive in late November.”

Source: Santiment

Looking at decentralized crypto lending and borrowing protocol Compound (COMP), Santiment says,

“Compound is also at its most negative average MVRV level since late June.”

Source: Santiment

As for layer-2 ZK (zero-knowledge) rollup protocol Loopring (LRC), the analytics firm says LRC still has some upside potential.

“Loopring has already been in the midst of a nice-sized bounce compared to the rest of the altcoin pack over the past week, [but it] is still in a nice, deep negative average MVRV spot.”

Source: Santiment

Last on the list is lending and borrowing protocol Aave (AAVE), which also hasn’t seen much positive price action in more than two months.

“AAVE is sitting at near all-time negative levels, which is great to see if you’re considering buying.”

Source: Santiment

You can read the full report here.

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Blue Chip DeFi Tokens Recover From Market Turbulence

Key Takeaways

  • DeFi blue chips are leading the market.
  • Sushi, Uniswap, Aave, and Compound have all posted double-digit gains today.
  • DeFi has had a difficult few months after an extended period of consolidation.

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Sushi, Aave, Uniswap, and Compound have posted substantial gains today. 

DeFi Tokens Rise

DeFi blue chips are regaining momentum.

Sushi, one of the biggest multi-chain decentralized exchanges, has started to recover after going into freefall since the start of November. Internal issues in the protocol’s development have weighed heavily on its price, resulting in a drop of more than 63%. 

After Sushi CTO Joseph Delong resigned from the project on Dec. 8, several proposals have been put forth for the future governance of the protocol. Out of these, one putting decentralized finance evangelist Daniele Sestagalli and his team in a leading role has proven popular. Sestagalli is the co-founder of several successful protocols grouped under the so-called “DeFi 2.0” label, including Abracadabra.Money, Wonderland.Money, and Popsicle Finance.

Since the proposal went live, the SUSHI token has rallied. It’s up 16% today, extending gains of more than 25% over the last three days, according to data from CoinGecko. 

SUSHI/USD chart. Source: CoinGecko

Uniswap, another decentralized exchange, has also seen its token jump after launching on the Ethereum scaling solution Polygon. The UNI token has risen 11% on the day, breaking its December downtrend. Uniswap has also launched on the Layer 2 Optimistic Rollup solutions Arbitrum and Optimism in a bid to overcome Ethereum’s weighty gas fees.

The DeFi market recovery has extended beyond decentralized exchanges. Aave and Compound, two lending platforms often referred to as “DeFi banks,” also show strength. While Aave is leading the pair after rising 16.5%, Compound has also put in a double-digit gain of 11.3%. Aave has had a particularly busy year after deploying to new networks like Polygon and Avalanche and launching permissioned pools for institutions. Another lesser known DeFi protocol called Convex Finance, an Ethereum-based app for earning yield on Curve Finance tokens, has also outpaced most of the leading projects; it’s up 22% today. 

The recent rise from DeFi tokens follows months of weak price action. Many DeFi tokens shed more than 50% of their value following the May market crash and have had difficulty recovering. Time will tell whether these tokens can rally further amid uncertain market conditions. 

Disclaimer: At the time of writing this feature, the author owned ETH and several other cryptocurrencies. 

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Coinbase Launches Ethereum-Based DeFi Yield Product for Global Customers – Here Are the Eligible Countries

Coinbase is adding decentralized finance (DeFi) investing for users in dozens of countries around the world.

In a new blog post, the US-based exchange announces that customers can earn variable-yield interest by holding the Dai (DAI) stablecoin. Coinbase says the DeFi yield feature aims to make access simple and affordable.

“Accessing DeFi protocols can require expensive network fees and involve a somewhat complex user experience.

Coinbase is making DeFi more customer-friendly… with just a few taps and without the network fees.”

Coinbase is making the new feature available to many countries globally – with one notable exception.

“Earning DeFi-powered yield on Dai is now available for eligible Coinbase users in over 70 countries, including the United Kingdom, Germany, and Spain.

DeFi Yield is not currently available for customers in the United States.”

According to the official Coinbase DeFi yield webpage, the Ethereum-based DAI is deposited into smart contract DeFi platform Compound (COMP) but investors retain access to their funds without any lock-up period.

Coinbase adds that the annual percentage yield (APY) is based on the rates offered by Compound and that the crypto exchange cannot guarantee against possible losses.

Coinbase also says it plans to add additional assets and ways for holders to earn in the future.

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Compound crisis averted? Securing exposed COMP could be just the start

As the decentralized finance (DeFi) market continues to pique the interest of investors across the globe, a few incidents have shone a major spotlight on the vulnerabilities various platforms operating within this space are continually exposed to. 

For example, it has recently been unveiled that due to a buggy system upgrade, prominent DeFi money market Compound had put approximately $150 million worth of the native COMP tokens at risk of a third-party hack.

Even though the error was recognized fairly early as Compound’s developers submitted a fix for the protocol’s bug soon after, it’s worth noting that the upgrade is governed by a seven-day time lock, as a result of which no tangible efforts to resolve the issue could have been enacted until Oct. 7. The proposal to fix the bug has since successfully passed and is set to be executed on Oct. 9, but that may not be the end of this story.

Taking to Twitter after the bug was uncovered, Compound founder Robert Leshner admitted that 202,472.5 COMP, worth approximately $64 million at the time of writing, was at risk due to the protocol’s “drip function” being called into action for the first time in over 60-days. The drip function is designed to make any tokens held in Compound’s Reservoir available to users, with 0.5 COMP being accumulated by the Reservoir per block.

Following the incident, Leshner noted that a vast majority of all COMP tokens in existence today — that are currently “reserved for users” — are held in the platform’s aforementioned reservoir system. This revelation may have had a large role to play in COMPs depreciating value, so much so that after the initial identification of the bug, the price of COMP quickly crashed from $330 to $286, only to make a strong recovery thereafter, according to data from Cointelegraph Markets Pro.

That said, since Oct. 3, the token has steadily declined with the digital asset’s value dropping from a price point of around $350, taking its 30-day losses to a staggering 40% from a local top of around $525.

When asked to provide his take on the severity of the problem and what he believes may happen to the platform’s native asset pool over the course of the coming few days, Leshner told Cointelegraph that all that needs to be said in relation to the matter had already been covered “sufficiently,” thus declining to comment on the matter any further.

The DeFi community has a say

To gain a better overview of what this entire incident means for the crypto ecosystem at large, Cointelegraph reached out to Winston, a pseudonymous moderator for DeFi yield farming aggregator Harvest Finance. In their view, even though for the most part, the community has been quite honest in returning a bulk of the funds, such reliance can not always be depended upon to bail platforms out all the time.

He further added: “This debacle could have, undoubtedly, been handled better by the team but it also goes to show how sometimes these ‘security features’ can hamper a project rather than helping it.” Winston continued on by saying that he hopes lessons will be learned:

“Many protocols will start to consider the advantages of having a shorter time lock to not only prevent things like this from happening but also to make them more flexible and able to move swiftly.”

SushiSwap developer Mudit Gupta criticized Compound’s use of time-locks for governance-related purposes, claiming that only around 100 people were aware of the threat posed by the drip function since the bug was discovered on Sept. 30, with no action having been taken since due to the time-delay function being in place.

Gupta went on to further warn DeFi users about the various risks associated with upgradable smart contracts, claiming that they are, by their very design, not meant for “large [DeFi] primitives.” Adding that he also views “upgradability as more of a bug than a feature.”

That being said, it should be noted that SushiSwap too was on the receiving end of a hack recently, that saw a nefarious third party agent compromising the supply chain of the platform’s token launchpad MISO to a tune of $3 million. Not only that but at the end of September, reports also surfaced that a hacker had identified a vulnerability that might have placed more than $1 billion worth of user funds held by SushiSwap under threat.

Technical bugs aren’t new

George Harrap, the co-founder of Solana-based portfolio visualization platform Step Finance, told Cointelegraph that crypto bugs, exploits and hacks aren’t really anything new within this space, adding that such instances are just a part and parcel of an industry where everything is digitized.

Also, in a Tweet, Leshner issued a stern warning to the recipients of the erroneous tokens, stating that any wrongful acquisitions would potentially be met with real-world consequences — primarily in the form of action being taken by the United States Internal Revenue Service (IRS). On the matter, Harrap said:

“What’s more interesting is the reaction of Compound’s founder than the bug itself where he threatened to DOX users. That’s not a good example for anything in DeFi and I think is the cause for many to reconsider their involvement in Compound.”

Providing a somewhat alternative take on the matter, Rotem Yakir, DeFi developer at Orbs, a public blockchain infrastructure designed for close integration with Ethereum Virtual Machine- (EVM)-based layer ones, told Cointelegraph that the Compound saga serves as a crucial reminder of the disadvantages of being a completely decentralized platform, failing to elaborate any further on the statement. However, he did add:

“Comp is one of the most prominent projects in the DeFi space and although this might hurt, it will not kill them and they will become stronger in the end.”

It is worth noting that even though Leshner’s tweets stated that roughly 117,000 COMP — worth $37.6 million — had been returned to the protocol after the detection of the initial fault, developer banteg noted that one-third of the funds that were placed at risk by the drip function had already been claimed by users at roughly 3:30 pm UTC on Sunday.

In banteg’s estimation, the total value of COMP tokens that were placed at risk as a result of the bug now stands at a whopping $147 million.

Related: DAOs can solve important dilemmas but more education is required

Thus, with all of this striking data now available for everyone to see, the incident is likely to set a precedent for how such incidents within the DeFi ecosystem could play out. DeFi enthusiasts are hoping that the situation will reach some sort of resolution, especially after the votes on the proposals to reverse the bug have succeeded — with the misplaced assets hopefully returning to where they rightfully belong — as it otherwise stands to potentially mar the image of the sector.