In this cycle, the most active areas for degens are in airdrop mining and meme coins, as opposed to the seemingly extinct DeFi tokens. However, under the narrative of staking, Pendle remains well-insured, rising about 750% in the same period, and Uniswap’s fee switch may become a turning point for other DeFi protocols to emulate.
The OG tokens of the DeFi (Decentralized Finance) sector seem to have died. But the market is about to undergo a significant shift, with a new wave of FOMO poised to surge towards DeFi.
DeFi tokens have lagged far behind ETH. The DeFi Pulse Index (DPI) has slid relative to ETH for three consecutive years. In this cycle, ETH’s performance has also fallen behind BTC. DPI includes tokens such as UNI, MKR, LDO, AAVE, SNX, PENDLE, among others.
The sole exception is PENDLE, which has risen about 750% in the same period.
Airdrop mining and meme coins are the most active fields for degens in this cycle. Airdrop mining has reached a turning point: low circulation projects launching are sell-off airdrop events, and a high FDV means more tokens will continue to be dumped onto the market. But no one wants to buy these tokens! Moreover, behind every successful meme coin, there are 99 heading to zero.
DeFi OG tokens are the antithesis of airdrop mining and meme coins:
Firstly, a large number of DeFi OG tokens are already circulating in the market. For example, the Market Cap/Fully Diluted Valuation (MC/FDV) ratio:
• SNX – 1
• MKR – 0.95
• AAVE – 0.93
• LDO – 0.89
• UNI – 0.75
This puts less selling pressure on holders. The opposite continues in token issuance: in just six months, over 540,000 new tokens have been minted. Traders’ attention and capital are thinly spread. However, only a few DeFi OG tokens have solid business and revenue sources. If funds start flowing in.
Meme coins thrive in an environment of financial nihilism and oppressive regulation. However, regulatory clarity could bring the biggest bull market, driven by the following factors:
• Shift from narrative to Product-Market Fit (PMF)
• Clear indicators of success
• Easier access to funding
• A thriving M&A market
DeFi has the clearest Product-Market Fit (PMF) in the crypto space: trading on Decentralized Exchanges (DEX), borrowing in lending markets, using DeFi stablecoins or LST as collateral, etc. Additionally, established DeFi teams have substantial capital reserves—they can continue development for years without selling tokens.
The problem with DeFi tokens is their lack of practical use. However, this situation is beginning to change: Uniswap’s fee switch may become a turning point for other DeFi protocols to follow, with UNI surging after this news broke. Furthermore, regulatory clarity could accelerate the trend of profit sharing.
Another issue is that DeFi 1.0 is too boring. But as long as prices rise, new things are always interesting. However, DeFi tokens have stood the test of time. They have survived the COVID-19 crash of 2020 and the CeFi collapse of 2022. “The only real audit is the test of time.”
I believe DeFi tokens are now a good contrarian trade. Currently, few hold the original DeFi tokens, much like we accumulated ETH during the bear market, only to see SOL rise. So if the trend changes, only a few OG tokens could attract capital inflow.
Timing is crucial. We are at a turning point, tired of new L2s, celebrity coins, and waiting to see what comes next. Perhaps ‘what comes next’ will be the established DeFi tokens? I think they have great potential for an explosion. When the Ethereum spot ETF starts trading (possibly in early July), we will see some new funds flow into Ethereum, and crypto-native ETH holders may begin reinvesting their earnings into DeFi, and I truly believe DeFi has a chance for a major revival. Narratives in the crypto space change quickly, and the rotation of capital will leave many on the sidelines.
Currently, meme coins are in the spotlight, and you may laugh at my optimism for DeFi. However, the fundamentals are solid. It’s important that others start to believe in its significance, and this belief may recover faster than you think. As long as DeFi outperforms other tokens for a while, others will experience FOMO.
Later, I will bring analysis of leading projects in other tracks. Those interested can follow. I will also periodically compile some cutting-edge information and project reviews, and welcome like-minded crypto enthusiasts to explore together. Feel free to comment with questions or message privately.
