The regulatory environment for Decentralized Finance is easing, and the performance of leading protocols is diverging.

Recently, the shift in the regulatory attitude in the United States has brought new hope to the DeFi sector. The positive signals released by regulatory agencies indicate that DeFi platforms may welcome a more favorable development environment. However, against this backdrop of good news, the internal situation of the DeFi market presents a complex picture.

Some leading protocols like Aave have seen their total locked value (TVL) hit new highs, with strong fundamental data performance. However, many other top DeFi protocols have shown weak TVL growth, and their token prices remain below the levels at the beginning of the year, suggesting that market recognition of their value may still take time. Although there has been a rapid rebound in DeFi tokens recently, whether this is merely a short-term market sentiment fluctuation or reflects a deeper change in value logic remains to be further observed.

Regulatory environment becomes more lenient

The U.S. Securities and Exchange Commission ( SEC ) has recently shown a significant shift in its regulatory attitude towards Decentralized Finance (DeFi). At a recent crypto roundtable, the SEC chairman stated that the fundamental principles of DeFi align with America's core values and supports the self-custody of crypto assets. He emphasized that blockchain technology enables financial transactions without intermediaries, and the SEC should not hinder such innovation.

It is noteworthy that the SEC chairman has revealed for the first time that he has instructed the study of an "innovation exemption" policy framework targeting DeFi platforms. This framework aims to accelerate the market promotion of DeFi products and services. He also made it clear that it is inappropriate to hold developers liable solely for releasing code.

The head of the SEC's crypto task force also expressed support but simultaneously warned that centralized entities should not evade regulation under the guise of "decentralization." These statements were seen as a major positive by the market, driving up the prices of DeFi tokens. If the "innovation exemption" policy is implemented, it is expected to create a more lenient and clear regulatory environment for US DeFi projects.

Data shows weak growth in TVL, significant rebound in tokens.

After the announcement of favorable regulatory news, DeFi tokens generally saw a significant increase. Leading projects such as Aave, LDO, UNI, and COMP rose by 20% to 40%. However, looking at the data over the past six months, the overall growth of the DeFi industry is not significant.

Among the top 20 DeFi protocols, 7 had a decline in TVL in the first half of the year, and 5 grew by less than 5%. The fastest-growing is BUIDL, which is different from traditional DeFi. Aave performed outstandingly, with TVL surpassing $26 billion, setting a new historical high, and growing by over $6 billion in six months. The Spark from the Sky ecosystem grew by 72.97%.

In comparison, JustLend's TVL dropped by 39.82%, becoming the top protocol with the largest decline. Popular protocols such as Sky, Lido, EigenLayer, and Uniswap also experienced varying degrees of decline.

In terms of token prices, the average maximum drawdown of the top 20 DeFi protocol tokens in the first half of the year reached 57%. Despite a recent rebound, most have not returned to the levels at the beginning of the year. Only SKY's MKR has increased by 44.8% compared to the beginning of the year, while AAVE has barely returned to a similar price. Overall, these tokens have averaged a decline of 24% compared to the beginning of the year.

However, from the rebound off the low point, DeFi tokens have performed strongly, with an average increase of about 95.59%. Among them, ether.fi, Sky, Aave, EigenLayer, and Pendle have all increased by over 150%. It is worth noting that the price trends of the tokens do not show a significant correlation with the protocol's TVL performance.

The performance of top projects varies

As a leading project, Aave has shown impressive data in the first half of the year, repeatedly breaking historical highs. It has supported 18 public chains and launched the "Aavenomics" proposal to boost token prices. Although the borrowing rates are not high, it attracts large holders with its strong depth.

Uniswap officially launched version V4, introducing new technology that significantly reduces Gas fees. Unichain has launched, expanding ecological competitiveness. Although TVL has slightly declined, the amount of ETH staked has increased. Unichain quickly captured the market, becoming the second largest public chain for Uniswap.

After the upgrade of MakerDAO, the TVL has declined somewhat, but Spark within the ecosystem has shown potential in the RWA direction. The price of MKR has performed well, with an increase of over 170%. However, the complex upgrade plan poses challenges for market perception.

After EigenLayer introduced the concept of "re-staking", its TVL experienced explosive growth. Recently, it has entered another growth cycle, increasing by 77% to $12.4 billion in less than two months, which may reflect the market's re-recognition of its value.

As a leader in liquid staking, Lido's TVL once reached nearly $40 billion. However, its excessive reliance on the Ethereum mainnet has posed challenges, leading to a continuous decline in TVL. Adapting quickly to a broader market has become its top priority.

The improvement of the regulatory environment injects new momentum into Decentralized Finance, which may attract more traditional financial capital. At the same time, giants are launching distinctive DeFi products, signaling broader integration prospects and more intense market competition. This new situation, initiated by regulatory easing, may become the starting point for DeFi's maturation and deep integration with traditional finance.