One of the crucial things to be wary of are the circular dependencies underpinning the current DeFi token economy. These are indeed easy to observe. Ask yourself “what gives a governance token value?” and the answer is usually pretty simple: activity and usage within the protocol, and the ability for token holders to extract cashflows from that. Lately, we’ve seen hockey-stick-like charts for many protocols across the space, suggesting that we’ve only witnessed the cusp of an emerging industry.
Now ask yourself “what caused the increased activity and usage for DeFi protocols across the space?”