The rise in popularity of DeFi platforms creates some interesting correlations. If such a platform has a native token, its market cap usually hits 50% of the total value locked. There are some exceptions, making one wonder if these tokens are over- or undervalued.
Compound (COMP)
It has been a very interesting year for the Compound team. This remains one of the more popular decentralized finance offerings today, even though there is a lot more competition. Regaining some of the lost momentum may be necessary to remain relevant in the coming months.
One thing that is interesting is the value of COMP. Comparing this to the total value locked on the platform, there is a strong correlation. According to CoinGecko, there is just over $790 million value locked in Compound. The COMP market cap represents $539.84 million, or about 68%. This is well above the average, making one wonder what the “true” value of this token is supposed to be.
Synthetix (SNX)
A similar situation exists where Synthetix and its SNX token are concerned. Synthetix has become a very popular DeFi platform. The soon-to-be added synthetic futures contracts will only reinforce this particular aspect in the future. All new options will bring more value to the SNX token accordingly.
Currently, the correlation between TVL and SNX market cap sits at 90%. The total value locked is $716.5 million, whereas SNX has a market capitalization of $646.8 million. Should the market cap outpace the TVL, things could get very interesting for Synthetix. What the outcome will be of such a development, is difficult to predict.
REN (REN)
A key example of a dubious situation can be found when looking at REN. Through its RenVM platform, users can gain access to DeFi products and services. A very interesting option that seems to attract some funds from investors and speculators accordingly. That being said, there seem to be some worrisome statistics where this platform is concerned.
Deviating from the norm isn’t harmful by any means. However, the market cap of REN sits just below $400 million. Remarkable, considering how the TVL is well below $150 million. This means the TVL/market cap ratio has hit 270%, which may not necessarily be ideal. It is equally possible this will become the new norm for all DeFi platforms, one simply doesn’t know what the future holds.
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