DeFi tokens such as LDO, UNI, RAY, ENA and AAVE are the leaders of the current market recovery after US citizens elected Donald Trump as the next US president, sparking hopes for a “DeFi Renaissance”.
The total value locked in DeFi protocols currently stands at almost $89 billion, according to DefiLlama.
(Shutterstock)
Published November 6, 2024 at 6:28 PM EST.
DeFi tokens are leading the current rally, with most surging 25% or more, after US citizens elected Republican candidate Donald Trump as the next president, sparking hopes of a “DeFi Renaissance.”
Liquid staking leader Lido’s governance token, LDO, rose 40.3% to $1.37 in the past 24 hours, giving the cryptocurrency a market cap of nearly $1.2 billion. dollars. The native tokens of Solana-based decentralized exchange Raydium and Ethereum-based exchange Uniswap both surged more than 30% to $4.30 and $9.49, respectively, during the same period.
Meanwhile, synthetic dollar provider Ethena’s ENA token rose 35.7% to 47 cents, while leading lending protocol by total value locked Aave saw its token jump 28%. The number of deposits into lending protocols also hit a two-year high of $52.4 billion on Monday, according to data from blockchain analytics firm Artemis.
With U.S. citizens electing Trump and more crypto-friendly representatives in the legislature, members of the DeFi ecosystem are optimistic about regulatory clarity.
“The biggest Trump-specific change will likely be a push toward greater regulatory clarity around the broader crypto ecosystem, so we believe altcoins could also see significant outperformance,” wrote Seth Ginns, managing partner and head liquid investments at CoinFund, in an email to Unchained.
According to Alexander Cutler, one of the main contributors to Aerdorome, a DEX on L2 Base incubated by Coinbase, the lack of legal and regulatory clarity has been one of the main limiting factors for the growth of DeFi. “The US election appears to be sending a signal that a more relaxed regulatory regime could be put in place,” Cutler added.
Under the Biden-Harris administration, the United States Securities and Exchange Commission, chaired by Gary Gensler, has been hostile to the crypto space, leading to a number of enforcement actions against several DeFi protocols. For example, the SEC not only gave a Wells Notice to Uniswap Labs, informing it of upcoming legal action, but the agency also implied in a lawsuit against software developer Consensys that the staking token liquid stETH du Lido was an unregistered security.
Crypto participants expect Trump to fire Gensler, which “could provide guidance on how DeFi protocols like Uniswap can turn on their fee switch so they can return protocol revenue to holders of UNI tokens,” wrote Keyu Liu, an investor at crypto prop Investment. Primitive Ventures company. Optimism towards DeFi has improved because, with clearer guidance, builders can focus on the biggest problem with DeFi tokens, namely their inability to redirect revenue to holders, according to Liu.
On Wednesday evening, crypto market maker and liquidity provider Wintermute created a governance proposal whose final objective is to allow a change in ENA fees. Ethena has generated $128.4 million in fees year-to-date, per Token terminal.
Others, like X users @degentradingLSD And @chainyodaI hope a new political atmosphere leads to a new ETH ETF with staking rewards. Wednesday evening, Viktor Bunin, Coinbase protocol specialist wrotethat in light of a new political regime, crypto will “fire Gary,” “enable staking in ETH ETFs,” and “shut down SEC legal investigations.”
As for why people are excited about DeFi’s growth trajectory and its ability to disrupt traditional finance, Aerodrome’s Cutler says DeFi has “undisputed true product-market fit, delivering products and services at an institutional level, without extraction of value by intermediaries. This creates surplus value that can be shared with users.
“DeFi is so back. Ethereum holders have become approximately 34 (billion dollars) richer today. This is important because they are not only buying DeFi tokens, but also using the protocols,” wrote Joseph Schiarizzi, founder of stablecoin provider Nerite, in a message to Unchained. “There is more ETH in protocols and that ETH is worth more. So, buying DeFi tokens could be considered a beta on this.
The total value locked in DeFi protocols currently stands at almost $89 billion, according to DefiLlama.
