0/ FTX introduced $COMP spot, futures and leveraged tokens yesterday effectively allowing traders to take a short position on $COMP.

The introduction of futures for $COMP is much welcome as it facilitates proper price discovery.

1/ The Jun26 and Sep25 futures are in backwardation ie lower than spot indicating the market believes $COMP price is over extended. This seems reasonable given how much $COMP has rallied and current mkt cap to TVL ratios look fair to high depending on which measure you use.

2/ Some investors (us included) are also skeptical that the volume surge on Compound is sustainable arguing that a collapse in its price will drive away miners. That is a risk, but what is interesting is since the FTX listing, $COMP has risen from $160 to $220.

3/ The steady rise in $COMP is creating a virtuous cycle for Compound with TVL now over 4X the pre-COMP volumes. Even factoring in slower d-o-d growth TVL should hit $1B by the end of June. Assuming that happens, the valuation comparisons looks less rich. Shortsellers beware.

4/ I have been discussing valuation in a TVL context because it is a good proxy for fees gnerated and is a easy metric to access. Some analysts have argued $COMP looks overvalued on a DCF basis. DCF is an unreliable tool when volumes are going up 4X in 4 days.

5/ The other relevant question is what will the other DeFi platforms do? So far, the other platforms have not lost volumes to Compound, but the threat exists as users are incentivized to migrate. The valuation of $COMP vs the other DeFi tokens needs to be viewed in this context.

6/ Synthetix, Republic, Curve and Balancer have teamed up for their own yield farming programme https://defirate.com/ren-synthetix-curve-btc-yield-farming/. Aave is considering a similar incentive system for its own $LEND token.

7/ In my view, Maker has to do the same and consider allocating a substantial % of its fee burn to user incentives. That will dilute the "fees" that go to $MKR holders, but if that drives more volumes to Maker (or stem the outflow to Compound), it is a better outcome.

8/ Polychain and a16z are both major holders of $COMP and $MKR and are well aware of these dynamics. If $COMP wins at the expense of $MKR, it dilutes their returns.

9/ For now, Compound holds the trump cards. The $COMP incentive was a brilliant move. Now the other DeFi protocols have to make their next moves. Doing nothing is a bad strategy. A thoughtful incentive redistribution to users is a win-win for the platform and its users.

10/ This is also not a zero-sum game among DeFi protocols. TVL in DeFi has spiked since $COMP incentives started. There are still volumes to take more centralized crypto lending platforms (over $1B total) and traditional lending institutions. This is the way DeFi moves forward.