Compound Launches on Unichain With wstETH, weETH, ezETH, BTC and UNI Collateral

Compound is live on Unichain, adding a new lending and borrowing venue that accepts wstETH, weETH, ezETH, BTC, and UNI as collateral against ETH borrowing. Compound Labs confirmed the deployment on May 13, 2025, marking the protocol’s first market on the Uniswap-native L2.

Compound is now live on Unichain

Compound Labs announced the Unichain deployment via its official account, directing users to the new WETH market. The deployment makes Compound III’s familiar supply-and-borrow mechanic available on Unichain for the first time, with ETH as the single borrowable asset in the market. For related coverage, see Coinbase Files to Launch U.S. Single-Stock and ETF Perpetual Futures.

The official dashboard confirms the market at app.compound.finance/?market=weth-unichain. Users supplying any of the five listed collateral assets can borrow ETH against those positions, subject to each asset’s collateral factor and liquidation parameters set by Compound governance. For related coverage, see Solana Hits 7-Month High Above $110 as SOL Open Interest Jumps.

What the deployment makes possible

Unichain is Uniswap Labs’ purpose-built L2, designed to minimize cross-chain liquidity fragmentation for Uniswap-native assets. Adding Compound lending directly on Unichain means borrowers no longer need to bridge collateral to Ethereum mainnet or Arbitrum to access Compound’s ETH market, reducing friction for DeFi users already operating on Unichain. For related coverage, see Crypto Rallies After Fed's First Rate Increase Since 2023.

Which assets can be used as collateral

The five supported collateral types span liquid staking tokens (LSTs), liquid restaking tokens (LRTs), wrapped Bitcoin, and the UNI governance token. Each asset class carries distinct smart contract, liquidity, and oracle risk profiles that Compound governance must price into the collateral parameters.

ETH-linked collateral: wstETH, weETH, and ezETH

wstETH is Lido’s wrapped staked ETH, the largest LST by market share. weETH is ether.fi’s wrapped restaking token, and ezETH is Renzo Protocol’s restaking receipt token. All three accrue ETH-denominated yield through staking or restaking, making them natural collateral choices in an ETH-borrow market where collateral and debt are positively correlated, reducing liquidation risk relative to volatile assets.

BTC and UNI collateral

Wrapped Bitcoin adds non-correlated collateral to the market, serving users who hold BTC exposure but want ETH leverage or liquidity without selling. UNI, the Uniswap governance token, was trading at $9.12 with a 4.72% 24-hour gain at the time of the market data snapshot, giving the token a market capitalization above $5.66 billion. Its inclusion alongside Unichain’s Uniswap affiliation is notable: UNI holders can now use their governance tokens as productive collateral on the same network that Uniswap built.

UNI market snapshot

$9.12

What the Unichain deployment means for Compound users

Deploying on Unichain extends Compound’s collateral surface into the LRT category, which has been one of the faster-growing segments in ETH-denominated DeFi. Protocols such as Nostra Finance have demonstrated that new money markets accepting LRTs face oracle and liquidity risks that standard LST deployments do not, a consideration Compound governance will need to price into weETH and ezETH collateral parameters over time.

What users should verify before interacting

Collateral support alone does not define borrowing capacity. Each asset’s collateral factor, liquidation threshold, and price oracle source are set separately by Compound governance and may differ from mainnet equivalents. Users should confirm current parameters directly on the Unichain WETH market dashboard before supplying collateral or opening borrow positions.

The crypto Fear & Greed Index stood at 71 (Greed) at the time of the launch snapshot, a market backdrop that tends to increase leverage demand and raise the risk of position concentration in newer, less-liquid markets. LRT collateral in particular can experience depeg events during volatility, which tightens liquidation buffers for weETH and ezETH positions. The addition of manual borrow controls seen in other DeFi protocols reflects a broader trend toward more granular risk management in lending markets, a standard Compound governance may apply to the Unichain deployment in future proposals.

Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice. Cryptocurrency and digital asset markets carry significant risk. Always do your own research before making decisions.