DeFi Projects Set to Surge? Kaiko Research Highlights Key Trends

DeFi Sector Poised for Growth as Bitcoin’s Dominance Wanes, Kaiko Reports

After a year of Bitcoin (BTC) dominance in 2024, market conditions may be setting the stage for decentralized finance (DeFi) projects to shine, according to a new report from Kaiko Research. Analysts suggest that increasing regulatory clarity and sector-specific tailwinds could drive DeFi’s continued outperformance.

Kaiko’s DeFi index (KSDEFI), which tracks 11 major DeFi tokens, has surged approximately 75% since its launch in October 2023, outperforming Ethereum (ETH) despite most of its components being built on the Ethereum blockchain.

“The DeFi index has shown a growing divergence from ETH, signaling that the sector is evolving beyond its reliance on the Ethereum network,” wrote analysts Adam McCarthy and Dessislava Aubert. “This trend could persist well into 2025 as regulatory shifts create new opportunities.”

Among the key tokens in the index are Uniswap (UNI), Aave (AAVE), and Ondo Finance (ONDO), all of which have catalysts that could fuel further gains. Uniswap and Aave, for example, may soon be able to activate fee-switch mechanisms, allowing token holders to earn a share of protocol fees—a move that could significantly boost demand.

Meanwhile, Ondo Finance is set to benefit from the rising adoption of tokenized assets by institutional investors, as Wall Street deepens its involvement in crypto markets.

“DeFi has faced significant hurdles, from regulatory uncertainty to high transaction fees and security concerns,” the report noted. “But with a more favorable regulatory environment taking shape, the sector is well-positioned for a new phase of growth.”

About The Author

ctleditor

See author's posts