(Bloomberg) -- Investors haven’t lost all faith in the lofty promises of decentralized finance after the collapse of the TerraUSD stablecoin.

SCB 10X, the venture capital arm of Siam Commercial Bank, announced Thursday it deposited an undisclosed amount of funds into an institution-grade DeFi product called Compound Treasury that is promising a fixed annual return of 4%.

DeFi projects gained popularity over the past few years, hoping to replace traditional finance with the ability to facilitate borrowing and lending without an intermediary through the use of blockchain technology. But with the implosion of Terra -- one of the most ambitious DeFi experiments yet -- more than $80 billion has been wiped from the DeFi sector, according to data from tracker DeFi Llama.

Still, SCB 10X Chief Investment Officer Mukaya (Tai) Panich remains optimistic, adding that Terra’s meltdown would encourage regulatory clarifications for DeFi and stablecoins. “There will be more regulations that will bring in more institutions,” Panich said.

Terra’s collapse has already amplified calls for rules governing stablecoins in the US, UK and South Korea. For example, in the US, Treasury Secretary Janet Yellen said the de-pegging of Terra shows the urgency to have a regulatory framework on stablecoins as soon as this year. 

Plus, the bank’s investment is seen as an educational opportunity, Panich said.

“We would like to understand how the product works and how the protocol Compound integrates, so that in the future maybe we could use these as a way to integrate [DeFi] and make traditional finance more efficient,” Panich said in an interview. “For us when we invest into Compound Treasury, it’s not just because we want to get yields.”

Compound Treasury, developed by Compound Labs Inc., works by taking deposits in US dollars and converting them into USD Coin, a dollar-pegged stablecoin issued by Circle Internet Financial Ltd. It then transfers the tokens to its DeFi lending platform where the yield it generates from borrowers is used to pay accredited investors. 

Compound Prime, a subsidiary of Compound Labs that oversees Compound Treasury, recently received a B- long-term rating , or junk rating, from S&P Global Ratings. 

Robert Leshner, chief executive officer of Compound Labs, told Bloomberg that Compound Treasury already has a number of clients ranging from neobanks to crypto native institutions since its launch just about a year ago. SCB is one of the first national banks to participate in the product.

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