Share this article
Why DeFi Projects Could Be Ready to Outperform: Kaiko Research
Regulatory clarity may provide a boost for DeFi projects.
Updated Feb 28, 2025, 7:32 p.m. Published Feb 28, 2025, 6:31 p.m.
Make us preferred on Google
What to know:
- DeFi protocols may outperform in the second half of 2025, according to Kaiko Research.
- The Trump administration may bring long-needed regulatory clarity to these projects.
- Kaiko emphasized the potential of individual tokens like UNI, ONDO and AAVE.
Bitcoin took the spotlight from the rest of the crypto market in 2024, but the Trump administration is quickly changing the rules of the game and a rotation into other assets could end up happening, according to crypto data firm Kaiko Research
In fact, the decentralized finance (DeFi) sector isn’t looking too bad, Kaiko research analysts Adam McCarthy and Dessislava Aubert wrote in a new report.
STORY CONTINUES BELOW
Don't miss another story.Subscribe to the Crypto Daybook Americas Newsletter today. See all newsletters
The company’s DeFi index (KSDEFI) has outpaced ether since the instrument’s inception in October 2023, bringing in roughly 75% returns in that span of time. That’s remarkable considering that most of the protocols included in the index are built on Ethereum.
“This outperformance may persist into the latter half of 2025, as several assets within the index benefit from strong tailwinds,” the report said. “This trend highlights the decreasing correlation between the DeFi index and ETH over time, as the decentralized finance sector continues to expand beyond the Ethereum ecosystem.”
The index is composed of 11 DeFi tokens, the most heavily weighted being UNI, AAVE and ONDO. At least four of these tokens have powerful tailwinds for the rest of the year, the report said.
For example, regulatory developments in the U.S. may open up possibilities for decentralized exchange Uniswap and decentralized lender Aave to implement fee switches for each of their respective tokens, meaning that protocol fees may end up getting distributed to UNI and AAVE holders.
Tokenization protocol Ondo Finance, for its part, will likely benefit from an acceleration of the tokenization trend as Wall Street keeps wading deeper into crypto, the report said.
“Regulatory constraints in key markets have been a significant hurdle [since 2020], but they are only part of the challenge. DeFi has also faced structural issues, including high user friction due to fees and security concerns. However, with regulatory scrutiny easing, the sector now has abundant opportunities for growth,” the report said.
More For You
Pudgy Penguins is building a multi-vertical consumer IP platform — combining phygital products, games, NFTs and PENGU to monetize culture at scale.
What to know:
Pudgy Penguins is emerging as one of the strongest NFT-native brands of this cycle, shifting from speculative “digital luxury goods” into a multi-vertical consumer IP platform. Its strategy is to acquire users through mainstream channels first; toys, retail partnerships and viral media, then onboard them into Web3 through games, NFTs and the PENGU token.
The ecosystem now spans phygital products (> $13M retail sales and >1M units sold), games and experiences (Pudgy Party surpassed 500k downloads in two weeks), and a widely distributed token (airdropped to 6M+ wallets). While the market is currently pricing Pudgy at a premium relative to traditional IP peers, sustained success depends on execution across retail expansion, gaming adoption and deeper token utility.
More For You
Bitcoin climbs above $89,000 as U.S. dollar tumbles on President Trump's remarks
The president said he isn't concerned about the dollar's recent declines, sending the greenback plunging even lower.
What to know:
- Bitcoin rallied above $89,000 as remarks by President Trump sent the dollar to its lowest level in nearly four years.
- Gold rose to a new record above $5,200 per ounce following the president's comments.
- One analyst is seeing a bullish technical divergence which could send bitcoin back to $95,000 in short order.
Top Stories
