The New DeFi Narrative: World Liberty Financial, the Trump Administration, and the Rise of AAVE and Hyperliquid

World Liberty Financial, jointly launched by the Trump family and top figures in the crypto industry, is gradually influencing the direction of the industry

World Liberty Financial, jointly launched by the Trump family and top figures in the crypto industry, is gradually influencing the direction of the industry, and its recent purchase of selected coins has also driven the growth of the secondary market.

After Trump's victory, potential short-term crypto-friendly policies include: the establishment of a strategic Bitcoin reserve in the United States, the normalization and legalization of cryptocurrencies, and the issuance of debt plans in conjunction with ETFs.

The new interest rate cut cycle will attract more capital injection to DeFi, similar to the macro environment during the DeFi Summer from 2020 to 2021.

Many lending protocols such as AAVE and Hyperliquiqui have attracted widespread attention from the market, showing strong potential for recovery and explosion.

The recent listing trends of Binance and Coinbase are more inclined towards DeFi-related tokens.

1. Impact of off-chain situations on the overall trend:

1.1 World Libertyfi and the Trump Administration

World Liberty Financial is positioned as a decentralized financial platform that provides fair, transparent and compliant financial tools, attracting a large number of users and symbolizing the beginning of a banking revolution. It was jointly initiated by the Trump family and top figures in the crypto industry. , aims to challenge the traditional banking system by providing innovative financial solutions. Expresses Trump's ambition to make the United States a global cryptocurrency leader, aiming to challenge the traditional banking system by providing innovative financial solutions.

At the same time, affected by World Liberty Financial's purchase in December, the prices of related DeFi tokens have also rebounded, including ETH, cbBTC, LINK, AAVE, ENA, and ONDO.

1.2 Crypto-friendly policies to be finalized

The 47th President of the United States, Donald Trump, will be inaugurated on January 20, 2025. There are three main favorable policies for cryptocurrencies to be implemented:

Trump reiterates plan to establish US strategic Bitcoin reserve

Strategic reserves are reserves of key resources that are released in times of crisis or supply disruptions. The most famous example is the U.S. Strategic Petroleum Reserve. Trump recently said that the U.S. plans to make a major move in the crypto space and may establish a cryptocurrency reserve similar to the oil reserve. According to data from Coingecko in July this year, governments hold a total of 2.2% of the global bitcoin supply, of which the United States owns 200,000 bitcoins, worth more than $20 billion.

The normalization of encryption

The Trump administration is likely to legalize cryptocurrencies once again, and may adopt a more open policy in this area in the future. Trump made a speech at the Blockchain Association’s annual party: affirming that the Blockchain Association is the United States. Efforts to legislate cryptocurrency; said real use cases like DePIN legitimize cryptocurrency and are on the priority list for legislation; pledged to ensure Bitcoin and cryptocurrency thrive in the United States.

Crypto Combo: Stabilizing the U.S. dollar hegemony + Bitcoin strategic reserve + Crypto legalization + ETF = Bonds

Trump's public and strong support for crypto assets has brought him many benefits: 1. Better consolidation of the dollar's position and the dollar's pricing power in the crypto industry during his term; 2. Early layout of the crypto market to allow more funds to enter; 3. Force The Federal Reserve moves closer to itself; 4. Forces once hostile capital to move closer to itself.

As shown in the following figure, in 2014, the US dollar index was around 80 and the US debt was only about 20 trillion. Now the US debt has increased to about 36 trillion US dollars, an increase of 80% month-on-month, but the US dollar has continued to appreciate contrary to its norm. If it strengthens, combined with the U.S. Securities and Exchange Commission's approval of the spot Bitcoin ETF, the new incremental portion is entirely likely to cover future bond issuance costs.

1.3 The new interest rate cut cycle makes DeFi more attractive

Data released by the U.S. Bureau of Labor Statistics showed that core inflation rose 0.3% in November for the fourth consecutive quarter and rose 3.3% year-on-year. Housing costs fell, but commodity prices excluding food and energy rose 0.3%, the highest since May 2023. Biggest increase.

The market reacted quickly, raising the probability of the Fed cutting interest rates next week from 80% to 90%. Investment manager James Assi believes that a rate cut in December is almost a foregone conclusion. Short-term U.S. Treasury bonds rose first and then fell due to mixed employment data. Market expectations for the Fed to cut interest rates this year have increased. At the same time, JPMorgan Chase expects the Fed to cut interest rates quarterly after