Compound ‘5x Overvalued’ as COMP Farming Accounts for 88% of Its Assets

Cointelegraph spoke with Pankaj Balani, the CEO of derivatives platform Delta Exchange, to learn more about his company’s research exercise in trying to give a fair value to the Compound protocol token. To estimate the remaining 80% of the value, researchers applied a classic evaluation method used for banks: He explained that bank stocks usually trade at modest multiples of their book sizes, or how much value they are lending out.

Researchers used a book value of $400 million, which was equal to the assets borrowed from the protocol in early July, according to DeBank data. Compound’s market capitalization is now about half the total value borrowed on the protocol — but there is a very important caveat to this as well.

Timeline of