DeFi tokens have risen nearly 38% since August 17 as investors reassess how evolving US crypto policy could affect protocol revenue and token valuations.
SoSoValue said the rally is bringing decentralized finance closer to a market in which fees, token buybacks and on-chain activity play a larger role in determining value.
US Crypto Policy Shift Supports DeFi Rally
In a post on X, SoSoValue said its DeFi sector index, $DEFI.ssi, climbed from 0.3616 on August 17 to approximately 0.498 after reaching 0.511. The move represents a cumulative gain of about 37.7%.
The rally coincided with recoveries in Bitcoin and Ethereum, as well as broader short covering. However, the research firm said investors are also reconsidering whether mature DeFi protocols can return more of their revenue to tokenholders.
That question has constrained DeFi valuations for years. Protocols have generated substantial trading fees, lending income and other revenue, while tokenholders often had little direct claim on those economics.
Fee distributions and token buybacks have also raised potential securities-law concerns in the United States. As a result, many protocols have been reluctant to activate mechanisms that connect revenue directly to their tokens.
That situation could be changing. 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, a token may no longer remain part of an investment contract after a project completes or permanently stops the essential managerial work it had promised to perform.
US Legislation Could Expand DeFi Tokenholder Rewards
The Senate’s CLARITY Act draft goes further by proposing protections for noncontrolling developers, validators, node operators, oracle providers and self-custody wallet software.
The draft also leaves room for rewards tied to trading, staking, governance and liquidity provision. It still requires 60 votes in the Senate, while the SEC proposal remains subject to public comment.
Even so, SoSoValue said markets are already expressing greater confidence in the direction of US crypto policy, despite the lack of complete legal certainty.
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Protocol Revenue and Buybacks Strengthen DeFi Valuations
The valuation case for DeFi tokens becomes more compelling when protocol revenue is considered. Uniswap generated approximately $7.18 million over the past 30 days, followed by PancakeSwap with $5.16 million, Jupiter with $4.69 million, Aave with $4.12 million and Aerodrome with $4.11 million.
Several of these protocols now have mechanisms that connect their revenue to their tokens. Hyperliquid, for example, uses part of its trading fees to buy HYPE. Uniswap has linked revenue to UNI burns, while Jupiter allocates 50% of protocol fees to JUP purchases. PancakeSwap also directs part of its fees toward CAKE buybacks and burns.
Ethena has proposed an even larger allocation. Once USDe reaches its stated supply threshold, 95% of the net revenue paid to the foundation across its three core business lines would be used for ENA buybacks.
According to SoSoValue, the next phase of the DeFi token rally will depend on whether protocol revenue continues to grow and whether tokenholders receive a larger share of those economics.
