Compound Treasury + Bitwave Enabling Enterprise Access to DeFi
Opening the Door to Decentralized Finance with Bitwave
About the Partnership
Offering a fixed 4% on USD and USDC, Compound Treasury lets clients benefit from the transparency and liquidity on the Compound Protocol through a compliant counterparty providing white-glove service. Yield and liquidity are backed by the Compound Protocol, an audited, trusted source with over $3 billion in assets, and more than $285 billion in total transaction volume since launch.
The blockchain’s scale is unlimited, but time isn’t.
There’s a common fallacy that since blockchains are immutable ledgers, all the data needed for data accountants to do their jobs is readily available. But it doesn’t always work that way in practice. Unlike bank statements, extracting accounting data from block explorers is often easier said than done. The Compound Treasury team experienced this firsthand.
Though now a sunsetted product from Compound, Compound Treasury provided an institutional cash management solution powered by the Compound Protocol, offering a 4.00% APR on USD and USDC with daily liquidity. The workflow itself was fairly straightforward:
1. Compound Treasury converted US Dollar wires to USDC or received USDC directly and supplied it to the Compound protocol
2. The USDC then earned continuous interest, paid out block-by-block, with a portion of the net yield paid out in USDC and another in the Compound’s governance token, COMP.
When it became time to reconcile the yield from the interest-bearing assets, a unique challenge was revealed. “Manually tracking interest paid in two different assets that accrue every 12 seconds in a spreadsheet is a nightmare,” said Operations Associate Dean Swennumson.
While pursuing a credit rating with S&P, Compound Prime, the company behind the Compound Treasury product, brought in the accounting firm, Armanino LLP, to conduct an audit. It was during this process that Compound Prime realized that automating its accounting processes would be a prerequisite to scaling its Treasury offering.
A robust digital asset accounting platform with unrivaled technical expertise and customer support
After a brief period of due diligence, Compound Treasury finally landed on Bitwave.
“Bitwave has tremendous accounting and technical knowledge of DeFi applications and their underlying protocols. It was clear right away that they had a far greater deal of comfort and understanding of the smart contracts powering the Compound protocol than their competitors,” Swennumson continued.
The most decisive factor in the selection process was Bitwave’s flexible platform and robust DeFi Module that the solution team could tweak to support Compound Treasury’s unique business case: accounting for COMP accruals while the interest-earning assets remained locked in the Compound protocol.
Massive time savings and audit-readiness
Compound Treasury was up and running with Bitwave in a couple of months, and its impact was immediately clear. Swennumson observed, “The biggest benefit for our accounting team – outside of the platform’s flexibility – was the ability to track interest accruals block-by-block while assets remained supplied, instead of running calculations when assets were redeemed from the protocol. On top of that, we saved several hours a week manually processing and reconciling our transactions due to Bitwave’s direct integration with QuickBooks.”
Outside of the day-to-day accounting, Bitwave also played a major role in Compound Treasury’s yearly audit cycle – an area that Bitwave naturally excels at since it sources data directly from the blockchain.
"All the auditors we’ve spoken to want to see direct ownership; they want to see funds move, and they want to see the transaction signatures to prove ownership. So taking all that information directly from the blockchain instead of a manual spreadsheet-intermediary saves us and the auditors time. All transaction information they need is instantly verifiable,” Swennumson finished.
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