Like many cryptocurrencies, governance tokens of DeFi projects have been under the SEC's scrutiny for a long time. However, thanks to Trump's pro-crypto policy, the commission began to soften its rules, and this fresh air breathed new life into these governance tokens. Over the past week, these tokens have outperformed the rest of the market.
In brief
SEC proposes to implement rules tailored to DeFi.
DeFi governance tokens are strengthening their bullish trend.
SEC proposes to implement rules tailored to DeFi
From the very beginning of decentralized finance, governance tokens of DeFi projects have been controlled by the SEC. Indeed, the latter has long been wary of cryptocurrencies and the difficulties in determining their status. Moreover, these governance tokens may, even more than other cryptocurrencies, resemble certain characteristics of securities, as they may offer a redistribution of their revenue comparable to dividends.
However, since his election, Donald Trump has developed a pro-crypto voluntarism. Thanks to him, decentralized finance no longer lives under the constant fear of sanctions. Thus, the new SEC chairman, Paul Atkins, proposes to create a more flexible framework for DeFi companies, a kind of 'innovation exemption' supported by the SEC.
American values of economic freedom, private property rights, and innovation are embedded in the DNA of the DeFi or decentralized finance movement.
Paul Atkins
Among the projects that could benefit from this directional shift, the decentralized exchange Uniswap is likely the most symbolic. Indeed, the UNI token currently serves only to determine the direction of the protocol. Unfortunately, the SEC has already threatened it could be considered a security. For this reason, the Uniswap team has always postponed their project to redistribute revenue to UNI token holders. This blockade could be lifted thanks to the SEC's transition to a more collective approach. Now the commission is listening to industry players. The clarity law, which will provide a new framework for DeFi, will complete this new alliance between regulation and DeFi.
UNI, AAVE, and SKY accelerate their bullish trend
This new, more positive approach is very favorable for large decentralized finance projects. They have continued their technological development and convergence with TradFi institutions for years, not knowing exactly when legal barriers might be lifted.
Among DeFi projects, Uniswap, Aave, and Sky (formerly MakerDAO) are gaining significant benefits from this SEC easing. The UNI token has risen by 23% over the past seven days, the AAVE token by 11%, and the SKY token by 13%. Notably, these three projects come from the Ethereum ecosystem, although Uniswap and Aave have become multichain. Even more surprisingly, the dynamics between ETH projects and DeFi have changed.
UNIUSDT chart from TradingView
For a long time, it was the bullish trend of ETH that drove decentralized finance. In contrast, it can now be observed that it is these finances that support Ethereum and its token. In May, Uniswap generated a trading volume of $92 billion, marking its fourth best month since 2020. Moreover, an increasing amount of ETH is being staked on Aave and Sky to borrow stablecoins and thus obtain greater liquidity for trading. Thus, the use of these projects has become a significant element of demand for ETH.
Decentralized finance was simply waiting for the final signal to conquer TradFi. This was achieved thanks to recent changes in relation to the SEC, which has become much more favorable to DeFi. Since then, governance tokens have resumed their undeniable upward trend, despite a slight correction in the last 24 hours.
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