Proposal TL;DR

Compound, a blue chip protocol with laudable heritage, is one of the most important protocols in decentralized finance (DeFi). It established the standard for decentralized governance across the entire crypto ecosystem and was a core catalyst for a step change in innovation across DeFi. But while its brand remains prominent, protocol growth has stagnated, driven by increasing competition, challenging regulatory environments, and execution efficiency. With the rapidly evolving regulatory landscape and improving market sentiment, there is a unique opportunity now to re-establish Compound as the leading global protocol for decentralized lending.

Today, we propose to establish the Compound Foundation to achieve this goal. The Compound Foundation would support the Compound protocol and broader community, including the DAO, in connection with its mission to promote and accelerate education and adoption of DeFi technology and related financial and social tools.

In order to achieve this, the Compound Foundation’s core goal will be to provide strategic leadership and direction for the protocol, which includes steering product direction and growth based on market feedback and trends, acting as an ambassador for Compound globally, and orchestrating execution across decentralized stakeholders and service providers. The Foundation model has proven successful with peers across the industry, and we believe it can drive considerable impact to Compound’s followership, user base, and protocol usage with time.

Given this ambitious mandate and the anticipated time to establish the Foundation and set up operations, we propose an 18 month plan (July 1, 2025 - December 31, 2026). Running an effective Foundation can have meaningful costs; however, our approach seeks to first establish a small team, demonstrate impact for Compound protocol users through results, then follow up with additional opportunities for growth. Therefore, we are requesting a lean budget of $6M per year ($9M for the duration of this proposal) to help drive protocol growth and strategy, foster governance participation, and reignite momentum. Our proposed operating model is straightforward: stay lean, deliver results before asking for more, and make every initiative count.

Over the last few months, we had the chance to meet 30+ Compound stakeholders, and heard about the necessary steps for the Foundation to take while sharing our vision and ideas. We also benefited from a robust public dialogue over the Compound forum since the proposal was posted for discussion on May 16th, as well as in a special community meeting we hosted on May 21st. 

We are grateful for the feedback and support, and hope to gain the community’s support and move to execution starting July 1st.

Onchain Actions Summarized

This proposal authorizes the Comptroller to transfer a total of approximately $9M worth of COMP to support the Compound Foundation.

Based on the 30-day TWAP of $44.655 per COMP (as calculated here), the proposal initiates an immediate grant of ~$3M in COMP via grantComp. It then establishes a Sablier stream using createWithTimestampsLT, which unlocks four additional tranches totaling ~$6M in COMP across 2026.

The scheduled unlock dates and tranche values for the Sablier stream are as follows:

• January 1, 2026 – $1.5M in COMP
• April 2, 2026 – $1.5M in COMP
• July 2, 2026 – $1.5M in COMP
• October 1, 2026 – $1.5M in COMP

OpenZeppelin has reviewed and confirmed these actions are correct in their report to the Compound community.

Introduction

Compound was the first DeFi protocol to truly demonstrate the power of on-chain finance. Launched in 2018, it pioneered algorithmic money markets, key token models, and fully decentralized governance. Many of the patterns we now take for granted in DeFi—permissionless lending, token-based DAO voting and governor contracts, autonomous protocol upgrades—were either created or popularized by Compound. Compound pioneered what we now recognize as modern decentralized finance. Legacy isn’t given, it’s earned. Compound built its reputation by consistently doing the right thing and avoiding unnecessary risks.

Even today, Compound’s brand maintains a strong legacy, as a cornerstone of DeFi. The protocol has been integrated across several ecosystems and applications, and it continues to secure $2B+ in Total Value Locked (TVL).

At the same time, there is clear opportunity to reignite growth and build on this legacy. Protocols like Aave have grown their deposits to ~16x that of Compound through rapid feature development, aggressive expansion, and dedicated ecosystem support.

Data as of May, 2025

Compound has an opportunity to accelerate its trajectory. Focus, consistency, and timely execution will be key. These will help us deliver protocol features and ease of use, developer incentives, next level governance, and broader ecosystem engagement to unlock growth across both protocol usage and network participation.

Timing has never been more important. Crypto is moving into the mainstream as legal frameworks are being drafted and implemented in key jurisdictions, including the US and the EU, stablecoins are becoming foundational financial infrastructure, tokenized assets are gaining incredible momentum and may unlock new use cases, crypto companies successfully debut on the public markets, and institutions are integrating crypto financial services globally. There’s a vibrant and expanding developer ecosystem. With the right support, Compound, with its solid brand and product, can be a foundational infrastructure component in an on-chain future. But there’s urgency and focus required to revitalize Compound’s growth.

To achieve this, we propose the creation of a Compound Foundation—a mission-aligned, non-profit entity focused on supporting the Compound ecosystem to the benefit of all participants in decentralized finance.

Vision

Promote mainstream global adoption of responsible Decentralized Finance (DeFi), with Compound at the forefront of lending protocols.

Mission

The Compound Foundation will serve as the operational and strategic backbone of the Compound protocol, driving execution, ecosystem engagement, and growth, while preserving a level of decentralization and transparency that sets Compound apart from many protocols that have yet to reach this degree of community ownership. The Compound Foundation will regularly interface with Compound users, including DAO members, to ensure that all participants are being heard and stakeholders are engaged to ensure collective success.

Team

Aaron Schnarch has been asked to step in and serve as Executive Director of the new Compound Foundation. Approval of this proposal by the DAO will also include Aaron’s appointment as Executive Director of the Compound Foundation.

Aaron’s background includes roles such as Chief Operating Officer of Anchorage Digital and Chief Executive Officer of Coinbase Custody, after a successful tenure in the institutional financial technology industry, where he built front-to-back applications for capital markets and wealth management, and oversaw enhancements of corporate governance and investor experience for public companies.

With his track record building products such as Prime Onchain Wallet, Coinbase’s institutional-grade web3 wallet built on MPC technology, Aaron will bring executive leadership, focus on growth through product and execution, and be instrumental in serving as the ambassador of the Compound protocol to the marketplace. At the Foundation, Aaron’s responsibilities will include setting up the new entity, serving as its ambassador, attracting and managing top talent, and providing executive oversight of the product roadmap and execution.

Initially, Aaron will be the sole contributor, with one of his first priorities to build out the Foundation’s organizational structure and full-time working team as outlined below.

Goals and Guiding Principles

While the Foundation will pay close attention to market dynamics and user needs, we plan to operate under these guiding principles:

• Bias for action, aligned with context: Move quickly on high-quality decisions, grounded in data, analysis and community input
• Redefine product strategy. Identify, direct, and drive protocol and application improvements. These may include new protocol evolutions, market incentives, revamped user experience, and more
• Ensure Compound’s seat at the table. Build strategic partnerships to expand Compound’s reach and integration across the DeFi and traditional finance ecosystems
• Design for diverse risk profiles. Meet users where they are by offering products tailored to varying risk appetites and levels of sophistication, while upholding Compound’s reputation for security

Proposed OKRs

These OKRs are focused on the 18 month scope of this proposal and are based on our guiding principles, although they may evolve based on new information and strategic market opportunities.

As a follow up to feedback in the forum, we have added additional operational milestones to evaluate the Foundation’s progress over the first two quarters of operations:

• Have we formally stood up the Foundation, including all Legal frameworks?
• Have we transferred and activated soft assets that can help us reignite market traction?
• Have we hired key team members demonstrating strong experience and pedigree?
• Have we published and communicated a clear product roadmap?

Proposed Organizational Structure

We plan to keep the core Foundation team lean during the initial 18 month phase.

*Additional roles may be defined by verticals including Legal & Compliance, Community, Product & R&D, and Operations. Does not include external resources, such as legal counsel, accounting, finance, and other functions, as needed

Expected Implementation Timeline

Budget & Funding Request

Compound is not among the first DAOs to consider establishing a Foundation, and therefore we have ample prior art in assessing the appropriate funding request. One example is the Uniswap Foundation, which asked the DAO for a sizable budgetary approval of up to $74M ($14M operating budget and $60M for grants), with two recent approved proposals amounting to $170M+. Another example is dYdX, which secured $30 million in DYDX tokens from the community treasury for a three-year operational runway, supporting a roadmap aimed to enhance the dYdX ecosystem.

We are sensitive to the current size of the Compound DAO treasury as well as its recent performance, and therefore take a lean approach. Our ask of $6M per year ($9M to end of 2026), which will be funded by COMP, reflects this approach, and will focus on establishing the entity and demonstrate impact as outlined above before seeking to fund additional growth opportunities.

While specific funding decisions may evolve as we set the Foundation and learn more, we estimate using the funds as follows:

*Represents proposed budget. Any potential excess funds could be potentially redistributed to invest in other areas, including exploring setting up a DUNA, and shared transparently with the community.

**Inclusive of COMP vesting. In order to incentivize a highly qualified team, the Compound Foundation will offer competitive compensation packages (including both fiat and COMP vesting scheme), which will be determined by the Board of Directors.

This funding is requested through the Compound Treasury, in native COMP units, with payments streamed via Sablier to promote transparency and accountability. The Foundation will convert a majority of the Initial COMP payment into stablecoins and fiat as deemed responsible.

To support the funding and immediate needs of the Foundation, we would like to propose 30% payment (~$3.0M) once the vote is approved, with the remainder paid in four installments (or ~$1.5M) the first day of each quarter starting January 1st, 2026. To promote transparency, a high-level financial report (e.g. use of funds) will be published bi-annually