DeFi tokens have rallied more than 30% since Donald Trump was elected as the 47th US President. This is because most crypto traders are of the opinion that the Trump administration will strengthen the “investment appeal” of holding “utility” tokens.
One of the biggest gainers amongst DeFi tokens was Uniswap (UNI) which increased by more than 35% to reach $9.58. Meanwhile, DeFi tokens like Maker (MKR), Aave (AAVE), Ethena (ENA) and Lido DAO (LDO) gained more than 20% from their lowest point in the last 24 hours.
Charlie Sherry, the crypto analysts head of BTC Markets underlined the significance of this as DeFi tokens were mostly labelled as “useless governance tokens” which have no other value than the “voting on protocol changes via governance voting rights”.
Sherry revealed how DeFi tokens holders were betting that one day “these protocols will be able to pass value back to the token through fees earned by the protocol.” However, such “value accrual mechanisms” didn't materialise as most DeFi protocols were fearing the enforcement action of the Securities and Exchange Commission (SEC). Sherry drew attention to SEC’s Uniswap to prove her point.
With Donald Trump becoming the 47th US President, the crypto world is expecting the resignation of the SEC Chair Gary Gensler by December or at best January next year which would trigger regulatory optimism.
“[The] markets are now pricing in the anticipated regulatory shift, expecting a friendlier environment for DeFi projects and their tokens,” said Sherry.
The benefits of value accrual mechanism can be seen in how AAVE holders would Hain significantly from the Aave protocol’s fee switch. In the same way, layer 2 blockchain Uniswap’s fees will be shared with UNI holders. This would convert these governance tokens into a utility asset, making it more attractive for crypto investors.
Other DeFi tokens ENA, LIDO, MKR, FXS could see similar “value accruing” changes in their protocols.
Speaking about DeFi tokens, Markus Thielen from 10X Research highlighted they gained as the crypto traders adopted a “buy the laggard” strategy. This means buying underperforming assets in anticipation of their surge in the next year.
Thielen pointed out that BlackRock is likely to aggressively promote its spot ETH exchange-traded fund in 2025, causing Ethereum to surge towards the $3,000 mark.
At present, Ethereum is trading at $2847, up 7% since 24 hours of Trump getting elected as the US President. The coin’s trading volume has declined 11.48% to reach $33.82 billion while its market capitalization stands at $343.31 billion.