The most active areas for degens in this cycle are airdrop mining and meme coins, while the seemingly dying DeFi tokens. But under the staking narrative, Pendle remains strong, with an increase of about 750% during the same period, and the fee switch on Uniswap could be a turning point for other DeFi protocols to imitate.
The OG tokens in the DeFi (decentralized finance) sector seem to be dead. But the market is about to undergo a major transformation, with a wave of new FOMO heading towards DeFi.
The performance of DeFi tokens lags far behind ETH. The DeFi Pulse Index (DPI) has fallen relative to ETH for three consecutive years. And in this cycle, the performance of ETH itself lags behind BTC. DPI includes tokens such as UNI, MKR, LDO, AAVE, SNX, and PENDLE.
The only exception is PENDLE, which has risen by about 750% during the same period.
Airdrop mining and meme coins are the most active areas for degens in this cycle.
Airdrop mining has reached a turning point: low circulating supply projects launch sell-off airdrop events, while high FDV means more tokens will continue to be sold to the market. But no one wants to buy these tokens! And behind every successful meme coin, there are 99 that go to zero.
DeFi OG tokens are the opposite of airdrop mining and meme coins:
First, a large number of DeFi OG tokens are already in circulation on the market. For example, using the market value/fully diluted valuation (MC/FDV) ratio:
• SNX – 1
• MKR – 0.95
• AAVE – 0.93
• LDO – 0.89
• UNI – 0.75
This means less selling pressure for holders. The opposite continues in token issuance: over 540,000 new tokens have been minted in just 6 months. Traders’ attention and capital are thinly spread. However, only a few DeFi OG tokens have a solid business and revenue source. If funds start to flow in, meme coins thrive in a financially nihilistic and oppressive regulatory environment. However, regulatory clarity could bring the biggest bull market driven by factors such as:
• Shifting from narrative to product-market fit (PMF)
• Successful clear indicators
• Easier access to funds
• Thriving M&A market
DeFi has the clearest product-market fit (PMF) in the crypto field: trading on decentralized exchanges (DEX), lending in the lending market, using DeFi stablecoins or LST as collateral, etc. In addition, the old DeFi teams have a large amount of capital reserves – they can continue development for many years without selling tokens.
The problem with DeFi tokens is that they lack practical use. However, this is beginning to change: Uniswap’s fee switch could be a turning point for other DeFi protocols to imitate, and UNI soared after this news. In addition, regulatory clarity could accelerate the trend of profit sharing.
Another problem is that DeFi 1.0 is too boring. But as long as the price rises, new things are always interesting. However, DeFi tokens have stood the test of time. They have experienced the collapse of the COVID-19 pandemic in 2020 and the collapse of centralized finance (CeFi) in 2022. “The only true audit is the test of time.”
I believe that DeFi tokens are now a good choice for contrarian trading. Currently, very few people hold the original DeFi tokens, similar to accumulating ETH during a bear market and seeing SOL rise. So if the trend changes, only a few OG tokens will attract capital inflows.
The timing is crucial. We are at a turning point, tired of new L2s, celebrity coins, and waiting for the next step. Maybe the “next step” will be the old DeFi tokens? I think they have great potential for a big revival. When Ethereum spot ETFs start trading (possibly early July), we will see some new capital flowing into Ethereum, and native ETH holders may start reinvesting their profits into DeFi. I truly believe that DeFi has the opportunity for a major revival. The narrative in the crypto field changes quickly, and the rotation of capital will leave many people on the sidelines.
Currently, meme coins are in the spotlight, and you may laugh at my optimism about DeFi. However, the fundamentals are solid. What’s important is that others are starting to believe in its importance, and this belief may recover faster than you think. As long as DeFi outperforms other tokens for a period of time, others will have FOMO.
Later, I will bring you an analysis of the leading projects in other tracks. If you are interested, you can follow us. I will also periodically summarize some cutting-edge information and project reviews. Welcome to explore together with like-minded people in the coin circle. If you have any questions, feel free to leave a comment or ask privately.