Some decentralized finance (DeFi) tokens rallied over 30% as traders expect the forthcoming Donald Trump administration to strengthen the “investment appeal” of holding “utility” tokens, according to an industry analyst.
Uniswap (UNI) was one of the biggest winners across Nov. 6-7, increasing over 35% to a local high of $9.58, while Lido DAO (LDO), Ethena (ENA), Aave (AAVE) and Maker (MKR) increased well over 20% from their local lows to highs, CoinGecko data shows.
“Until recently, DeFi tokens have been largely labeled as ‘useless governance tokens,’ tokens which serve no value other than voting on protocol changes via governance voting rights,” said Charlie Sherry, head of finance and cryptocurrency analyst at BTC Markets, in comments to Cointelegraph.
“However, investors and tokenholders have been buying on the bet that one day, these protocols will be able to pass value back to the token through fees earned by the protocol.”
Sherry noted that such “value accrual mechanisms” haven’t been implemented because many DeFi protocols have feared enforcement action from the United States Securities and Exchange Commission, pointing to the SEC’s probe into Uniswap Labs as a textbook example.
Trump secured the US presidency on Nov. 6, defeating Vice President Kamala Harris. This result could lead to the resignation of SEC Chair Gary Gensler as early as December or January, according to 10x Research.
Both of these together may have sparked a wave of “regulatory optimism,” Sherry said.
“[The] markets are now pricing in the anticipated regulatory shift, expecting a friendlier environment for DeFi projects and their tokens.”
Top performing tokens over the last 24 hours. Source: CoinGecko
Explaining the value accrual mechanism further, Sherry said lending and borrowing protocol Aave’s “fee switch” proposal would be a “significant step toward creating intrinsic value” for AAVE tokenholders.
Similarly, Sherry noted a portion of fees from Uniswap’s new layer 2 Unichain will also flow to UNI tokenholders — “transforming UNI from a governance token into a utility asset and expanding its investment appeal.”
The DeFi protocols behind LIDO, ENA, MKR and Frax (FXS) could see similar “value-accruing” changes, too, Sherry added.
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Meanwhile, 10x Research’s head of research, Markus Thielen, said DeFi tokens likely rose because some traders adopted a “buy the laggard” strategy — which involves purchasing underperforming assets over the previous year that may become leaders the following year.
There is also speculation that BlackRock may promote its spot Ether (ETH) exchange-traded fund “more aggressively” in 2025, Thielen told Cointelegraph.
Thielen said Ether may reach $3,000 if it exceeds the $2,700 level.
Ether is currently trading at $2,845, up 8.5% over the last 24 hours.
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