Bitcoin dominated the cryptography market in 2024, but the change of policies under the Trump administration could arouse a rotation in alternative assets, according to Kaiko Research. Analysts Adam McCarthy and Dessislava Aubert highlight the growing force of decentralized finance (DEFI), the sector showing notable resilience.
The KAIKO DEFI index (KSDEFI) has outperformed Ethereum (ETH) since its launch in October 2023, offering an impressive yield of 75%. Although it is largely based on Ethereum, the index shows a correlation declining with ETH, signaling the expansion of the sector beyond its original ecosystem.
The index follows 11 DEFI tokens, with Uniswap (UNI), Aave (Aave) and Ondo Finance (Ondo) carrying the most weight. These assets could continue to thrive throughout 2025, fueled by regulatory developments and the increase in institutional adoption. If American regulations evolve favorably, UNISWAP and AAVE could implement costs switches, potentially distributing the protocol income to UNI and AAVE holders. Meanwhile, Ondo Finance is about to benefit as Wall Street deepens its involvement in tokenization.
Since 2020, Defi has faced obstacles such as high transaction costs, security risks and regulatory uncertainty. However, with the relaxation of regulatory pressure, the sector now has an important place for growth. Rear winds of the market and improved adoption could lead more upwards for DEFI tokens, by positioning them as attractive alternatives in exchange macro-waves.
