Compound Foundation (@Compound_xyz): State of Compound — July 2026

State of Compound — July 2026 A monthly read on what moved across Compound Welcome back to the State of Compound, the series covering recent activity across the Compound ecosystem. The Bottom Line: July was quiet on the surface and busier underneath. The book stayed clean, near-zero liquidations and no losses on a $557M loan book, even as borrowing activity more than doubled from June. Governance wound down low-activity markets and fine-tuned rates, the treasury search narrowed to six managers, and the Foundation published its first v4 program update with the build well underway. By the Numbers July v3 Snapshot Current Deposits: $1.66B Active Loans: $557M All-time Borrow Volume: $11.7B Market Signals Supply Activity: $848.8M in gross volume Borrow Activity: $609.0M in gross volume (more than double June's $289.5M) Zero protocol losses What's Shipping Compound enabled Chainlink's Smart Value Recapture on the cbBTC feed on Base. Proposal 593, executed July 24, captures the value that liquidations would otherwise hand to searchers and returns it to the DAO, across the Base AERO, USDC, USDS, and WETH markets. Chainlink reported on the July 8 Community Call that SVR has returned about 358 ETH to Compound to date, with its recapture rate up to 52% for the year. WOOF continued shipping tooling. The team ran a first demo of onchain partial liquidations and is preparing a mainnet version, and the integration kit that lets partners embed Compound markets is on track for a production release in early August. Governance The treasury search reached a shortlist. After reviewing a competitive field of submissions, the Treasury Management Committee named six managers for final evaluation on July 17: Coinbase Asset Management, Invesco, kpk, Steakhouse Financial, Upshift / Flowdesk, and Yearn. The mandate starts at $20–25M, split between a primary manager and supporting managers, with a recommendation memo for delegates and a Snapshot vote to follow. The TMC Transparency Thread detailed the $14M transfer to the Foundation's operational wallet for Vz4 Year 1, the consolidation of six legacy reserve assets into USDC, and a move to a 4-of-6 signing threshold. Risk Market hygiene continued. Governance deprecated the Linea and Mantle markets (Proposal 589, July 1) and the Polygon and Unichain markets (Proposal 591, July 20) after extended low activity. Each set collateral supply caps to zero and cut borrow collateral factors in half, while leaving liquidation factors unchanged so open positions keep the same buffer. On Polygon and Unichain, the wind-down went a step further, zeroing the supply rate so all borrower interest accrues to reserves and the last suppliers are nudged to wind down. Optimism rate update. Proposal 588 (July 1) reshaped the borrow curve on the Optimism USDC and USDT markets, and on the July 22 Community Call Gauntlet reported both moved from depleting their reserves to growing them. Gauntlet expects to bring the same configuration to more of Compound's Ethereum markets next. rsETH exposure continued to wind down. Proposal 590 (July 20) raised rsETH's borrow collateral factor to 80% on the Ethereum WETH market so existing looped positions can unwind in steps, partially repaying and pulling collateral out as they go, rather than clearing their full WETH debt in one repayment. Gauntlet is coordinating the wind-down with the Kelp team, with roughly a third of the outstanding borrow already unwound by late July. Building Toward v4 The Foundation published its first monthly v4 program update. It hired a new CTO and two engineers and appointed an independent Non-Executive Director to its board. The team is finalizing v4 specs and architecture, and building the first R&D Comet. Partnerships Lead Doo Wan Nam presented at WebX in Tokyo and a HashKey-hosted side event, part of a wider institutional push ahead of v4. What We're Watching Treasury Management recommendation memo and Snapshot ratification vote Optimism rate configuration rolling out to more Ethereum markets The remaining rsETH wind-down, in coordination with Kelp COMP rewards distribution moving to Merkl State of Compound is published by the Compound Foundation, a mission-aligned nonprofit supporting the growth of Compound, the protocol that helped invent onchain lending. Each edition resurfaces the protocol's recent work. See you next month. This update is for informational purposes only and is not financial, investment, legal, or tax advice.