The evolution of DeFi and its unique token distribution mechanics

DeFi offers a unique solution: synthetic products that allow conservative investors to receive interest on their stablecoins and enable traders and crypto optimists to leverage their current positions.

The true brilliance of DeFi is the issuance of governance tokens.

The COMP token increased in value from around $66 in early June to almost $220 in mid-August.

The governance token model has already proved to be beneficial for decentralization, as COMP holders have already had an impact on the protocol policies.

Then there is Balancer where, even though BAL tokens have not yet been minted and distributed, and after some volatility due to price discovery early on, the BAL token increased from around $8 in mid-July to over $34 by the end of August.

What is interesting here is that a governance token was not in the original design of Balancer but rather introduced later, following this trend in digital assets.

Finance is a case where, even though the developers have stated that the underlying governance token is mostly valueless, its value increased from around $700 to $15,000 in less than a month.

While the token merely provides its owners with voting rights, the developers behind it have decided to distribute all YFI to the community, keeping none for themselves, and thereby earning the approval of their users who value decentralization.

Equilibrium has an innovative value proposition, aiming to be the first true cross-platform DeFi solution, and thereby accessing much larger liquidity than any other DeFi solution out there.

The protocol follows industry best practices by offering its own governance token for liquidity farming and a full set of DeFi functionalities like stablecoins, derivative products, lending and liquidity pools.