DeFi tokens have soared nearly 38% since August 17, as investors reassess how U.S. crypto policy could affect protocol revenue and token values.
SoSoValue says the rally moves DeFi closer to a market where fees, redemptions, and on-chain activity can play a larger role in how tokens are valued.
Policy change and protocol revenue behind the rally
In an article on X, SoSoValue said its DeFi sector index, $DEFI.ssi, rose from 0.3616 on August 17 to around 0.498 after reaching 0.511, for a cumulative gain of around 37.7%.
The move was accompanied by the recovery of Bitcoin and Ethereum and broader short-selling coverage, but the research firm says investors are also re-evaluating whether mature DeFi protocols can return more of their revenue to token holders.
This problem has limited DeFi valuations for years. The protocols could generate substantial trading fees, lending revenue, and other revenues, while token holders had few direct rights to these economics.
Fee distributions and redemptions could also create securities law issues in the United States, leaving many protocols reluctant to activate mechanisms tying revenue to their tokens. But that could change, given that last week the SEC proposed its “crypto asset regulation” framework, which includes exemptions and a conditional safe harbor for certain crypto asset offerings.
Under the proposal, once a project has completed or permanently stopped the essential management work it had promised, its token can no longer be part of an investment contract.
The Senate CLARITY bill goes further for DeFi, with protections for non-controlling developers, validators, node operators, oracle providers, and self-custodial wallet software.
This project also leaves room for rewards related to trading, staking, governance and liquidity provision. However, it still needs 60 votes in the Senate, while the SEC’s proposal is subject to public comment. But according to SoSoValue, markets are already placing more confidence in the direction of American policy, even if legal certainty is still not there.
Revenues and redemptions give DeFi tokens a different valuation case
When considering the protocol’s revenue, the case becomes even more interesting, with Uniswap having generated around $7.18 million in the last 30 days, followed by PancakeSwap at $5.16 million, Jupiter at $4.69 million, Aave at $4.12 million, and Aerodrome at $4.11 million.
Several of these protocols now have mechanisms that tie these economics into their tokens. For example, Hyperliquid uses a portion of trading fees to purchase HYPE, Uniswap has tied its revenue to UNI burns, and Jupiter allocates 50% of protocol fees to JUP purchases. PancakeSwap also uses a portion of its fees for CAKE buybacks and burns.
Meanwhile, Ethena proposed an even larger allocation. Once USDe reaches its stated funding threshold, 95% of net revenues paid to the foundation across its three main business lines will be dedicated to ENA redemptions.
According to SoSoValue, the next phase depends on whether revenue from these protocols continues to grow and whether token holders can get a larger share of it.
The post DeFi Sector Jumps 38% as US Policy Shift Unlocks Token Value Capture appeared first on CryptoPotato.
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