Originally published on: November 07, 2024
The decentralized finance (DeFi) sector is witnessing a significant surge, with DeFi tokens spiking over 30% as traders anticipate a more favorable environment under the upcoming Donald Trump administration. According to industry experts, this shift is expected to enhance the investment appeal of holding utility tokens.
Leading the charge is Uniswap (UNI), which saw a remarkable increase of over 35% to reach a local high of $9.58. Other tokens such as Lido DAO (LDO), Ethena (ENA), Aave (AAVE), and Maker (MKR) also recorded substantial gains, climbing well over 20% from their recent lows.
Charlie Sherry, a finance and cryptocurrency analyst at BTC Markets, highlighted the traditional perception of DeFi tokens as “useless governance tokens” and the lack of value accrual mechanisms in the sector. However, Sherry noted that recent developments, including Aave’s fee switch proposal and Uniswap’s new layer 2 Unichain, are signaling a transformation in the DeFi landscape.
The potential regulatory shift with the incoming Trump administration and the anticipated resignation of SEC Chair Gary Gensler are seen as catalysts for this wave of regulatory optimism in the DeFi space. Analysts believe that these changes could pave the way for the implementation of value-accruing mechanisms in DeFi protocols, adding intrinsic value to tokens like AAVE and UNI.
Markus Thielen, head of research at 10x Research, pointed out that the recent surge in DeFi tokens could be due to traders adopting a “buy the laggard” strategy, where underperforming assets from the previous year are purchased in anticipation of future growth. Additionally, speculation that BlackRock may ramp up promotion of its spot Ether exchange-traded fund in 2025 could further boost tokens like Ether (ETH).
With the DeFi sector experiencing a newfound optimism and potential value-accruing changes on the horizon, the future looks promising for investors in the DeFi space.
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