Derivatives market and crypto exchange FTX is shifting into the storm created by Compound’s new governance token, COMP.
Traders will soon be in a position to place their bets on which way decentralized finance (DeFi) will go, CoinDesk has learned.
Later Thursday, FTX and FTX US will each list COMP as nicely as cUSDT, the Compound model of the tether. On the global site, FTX will also open its suite of crypto derivatives, allowing customers to take leveraged bets on the token’s expenses looking down the road.
“For basically all of DeFi, MakerDAO has been the king of DeFi, and it has had the canonical tokens,” FTX CEO Sam Bankman-Fried advised CoinDesk in a cellphone call. “One element the markets are implying right now is that Compound is making a serious run for that crown.”
Since users of Compound began earning COMP tokens for borrowing and lending on June 15, the complete cost locked has shot up over $300 million, from less than $100 million on Sunday.
Compound presently has $318 million staked on the platform, following Defi Pulse, and the COMP token is buying and selling at $170, according to CoinGecko.
Incorporating COMP derivatives on FTX, even though not in the United States, opens up a range of positions traders can take on.
“These will be the first futures on Compound through a longshot,” Bankman-Fried said.
He expects the most popular product will be the perpetual futures markets. These are futures that let merchants take a lengthy or brief role on a product except needing to worrying about renewing their contracts.
“It’s a futures contract that by no means expires,” Bankman-Fried explained, saying it’s one of these merchandises that is especially unheard of outside of crypto.
Bringing a market for brief positions may want to be wholesome for Compound’s users.
The arrival of COMP has created a bizarre state of affairs where users can doubtlessly borrow cash and profit, SesameOpen’s Henry He particular on Medium beforehand this month. At some point, the number of human beings earning COMP and the fee of COMP will attain an equilibrium where some users will determine it no longer makes experience to keep going deeper into debt. A market for short positions ought to assist deliver some clarity.
Bankman-Fried said he’s been curious about the endpoint of COMP’s runaway growth, too. “I don’t be aware of at what point it stops,” he said.
Besides including COMP, incorporating cUSDT approves FTX customers to use a token for collateral on FTX that earns interest.
When customers savings cash in Compound, they get a new ERC-20 that represents that deposit. For USDT, that’s cUSDT. This makes their deposits tradable and it also capability users can earn hobby on their deposits wherever they hold the token.
So for FTX customers that switch from USDT to cUSDT as their collateral token, it creates a small built-in hedge for these users. FTX hasn’t yet determined how COMP earned for any dealer keeping cUSDT will be managed, however, either way, holders of cUSDT are incomes 0.50% annual share yield as of this writing. Further, this is the first time users can without problems collect cUSDT except going directly to the Compound.
FTX US does no longer provide the derivatives product however it does provide a massive amount of liquidity and margin trading for positive customers, Bankman-Fried said. FTX US only went live in May.
“We’re excited to give our users get right of entry to Compound’s products. It’s a massive step forward for DeFi and additionally an active challenge proper now,” Bankman-Fried said.