DeFi’s latest rally reflects growing expectations that protocol economics could matter more in token valuations.
DeFi tokens have climbed nearly 38% since August 17 as investors reassess how US crypto policy could affect protocol revenue and token value.
SoSoValue says the rally is moving DeFi closer to a market where fees, buybacks and on-chain activity can play a larger role in how tokens are valued.
Policy Shift and Protocol Revenue Behind the Rally
In a post 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 about 37.7%.
The move came alongside Bitcoin and Ethereum’s recovery and broader short covering, but the research firm argues that investors are also reassessing whether mature DeFi protocols can return more of their revenue to tokenholders.
That issue has limited DeFi valuations for years. Protocols could generate substantial trading fees, lending income, and other revenue while tokenholders had little direct claim on those economics.
Fee distributions and buybacks could also create securities-law concerns in the US, leaving many protocols reluctant to activate mechanisms that tie revenue to their tokens. But that may be changing, considering that last week, the SEC proposed its “Regulation Crypto Assets” 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 managerial work it had promised, its token may no longer remain part of an investment contract.
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The Senate’s CLARITY Act draft goes further for DeFi, with protections for noncontrolling developers, validators, node operators, oracle providers and self-custody wallet software.
That draft also leaves room for rewards linked to trading, staking, governance, and liquidity provision. However, it still needs 60 votes in the Senate, while the SEC proposal is subject to public comment, but according to SoSoValue, markets are already assigning more confidence to the direction of US policy, even though legal certainty is still not there.
Revenue and Buybacks Give DeFi Tokens a Different Valuation Case
When you consider protocol revenue, the case becomes even more interesting, with Uniswap generating about $7.18 million during the past 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 connect those economics to their tokens. For example, Hyperliquid uses part of trading fees to buy HYPE, Uniswap has linked revenue to UNI burns, and Jupiter allocates 50% of protocol fees to JUP purchases. PancakeSwap also uses part of its fees for CAKE buybacks and burns.
Meanwhile, Ethena has proposed an even larger allocation. Once USDe reaches its stated supply threshold, 95% of net revenue paid to the foundation across its three core business lines would go towards ENA buybacks.
According to SoSoValue, the next phase depends on whether those protocol revenues keep rising and whether tokenholders can get a larger share of it.