Key Points:
- Bitwise CIO Matt Hougan sees DeFi as a likely driver of the next crypto bull market.
- Aave’s “Aave Will Win” proposal would divert 100% of product revenue to the DAO treasury.
- Aave Labs would receive funding and IP transfer in exchange for revenue allocation.
- Institutional investments in Uniswap and Morpho signal growing confidence in DeFi business models.
Bitwise Chief Investment Officer Matt Hougan said decentralized finance may play a central role in the next phase of crypto market recovery, citing structural changes in how major protocols generate revenue and align token incentives.
In a note to investors this week, Hougan argued that bear markets often force projects to strengthen their economic foundations. He said DeFi has begun shifting away from speculative activity toward business models built on protocol revenue, expanding user adoption, and clearer value capture for token holders
The transition, he added, reflects a broader change in how investors assess crypto projects, with greater focus on operational performance rather than narrative-driven growth.
A key example, Hougan said, is a recent governance proposal called “Aave Will Win Framework,” from Aave, one of the largest decentralized lending protocols. The initiative would direct revenue generated by Aave-branded products to the protocol’s decentralized autonomous organization (DAO), allowing token holders to determine how those funds are used.
Aave Proposal Highlights Shift Toward Revenue-Linked Tokens
Under the proposed structure, Aave Labs would receive funding through a combination of stablecoins, token allocations, and milestone-based grants tied to development goals, including work on Aave V4.
Hougan said such arrangements could reshape how investors view DeFi tokens, moving them closer to assets with economic exposure to protocol growth rather than governance-only instruments.
Earlier generations of DeFi tokens primarily granted voting rights without direct claims on protocol income. Hougan noted that newer tokenomics frameworks increasingly link token value to measurable revenue streams, aligning incentives between developers, users, and token holders.
Institutional Investment Reinforces Confidence in DeFi Models
Hougan also pointed to growing institutional participation as validation of DeFi’s evolving structure. Asset managers, including BlackRock and Apollo Global Management, have recently backed DeFi-related initiatives, signaling rising confidence in the sector’s long-term viability.
Meanwhile, total value locked across DeFi protocols has recovered to roughly $96 billion, reflecting renewed capital inflows after a prolonged downturn. Hougan said on-chain metrics such as fee generation, treasury growth, and governance outcomes will be critical indicators of whether these structural changes translate into sustained market momentum.
While he described the shift as a positive development, Hougan cautioned that outcomes will depend on execution, governance decisions, and broader market conditions. For DeFi to lead the next recovery phase, protocols must continue demonstrating consistent revenue generation and clear economic value for participants.
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