This study examines the drivers of decentralized finance (DeFi) token returns, focusing on protocol metrics and broader market trends. While previous research has primarily analyzed a limited set of factors, this study incorporates additional indicators, including such groups of metrics as protocol activity indicators, income statement metrics, treasury balances, market efficiency metrics, and valuation multiples. Using weekly data from January 2021 to March 2025 for three major DeFi tokens (COMP, AAVE, CRV), we apply linear regression to test the relationship between token returns and internal protocol metrics. Our findings show that COMP and AAVE exhibit strong associations, mainly with Ether price movements, whereas CRV is also linked to financial metrics such as net treasury and Total Value Locked (TVL). These results suggest that DeFi token returns are shaped both by market-wide conditions and by protocol-specific characteristics, with the relative importance of these factors varying across different token types. This study contributes to the decentralized finance literature in three key ways: (1) we conduct the first comprehensive analysis linking governance token performance to five distinct categories of protocol-specific metrics, (2) we demonstrate significant variation in valuation drivers between different protocol types (lending versus DEX), and (3) we challenge the assumption that DeFi tokens simply track Ether’s price movements. Our results establish that protocol-specific factors must be accounted for in any comprehensive valuation model of DeFi assets.
Larionova et al. (Wed,) studied this question.