Since Feb. 2021, we’ve seen capital flows into DeFi tokens virtually grind to a halt. The actual products still had users and usage, but there were no marginal buyers left for the vast majority of these tokens. Most of that boiled down to the absurd, frothy valuations most liquid tokens had.

Fast forward to 2023, DeFi is one of the most unloved and beaten down sectors in the primary (private) market and secondary (liquid) markets. But we just may be on the precipice of a pivot in DeFi sentiment.

Since the beginning of 2023, DeFi tokens have been ripping. I know what you’re thinking — “but everything in crypto has been ripping”. True, but even as we saw relief rallies unfold over 2022, DeFi tokens were still weak and ranked amongst the worst performers over specific time frames. That’s changed.

Moreover, 2022 was a period of reinvention for many large DeFi names. Synthetix worked on perpetuals (and finally released it) and a new product strategy, Aave was working on the ins and outs of cross-chain functionality, amongst countless other examples.

While the shroud of macro uncertainty still exists, endogenous catalysts within crypto are ramping up for teams that took the time to rethink their strategies and focused on reinvention over 2021 and 2022.

Short-term price action starting to kick off could be a sign that we’re in the midst of a sentiment reversal for DeFi. This time around, it’s not just vaporwave and inflated expectations. There are genuine improvements to many of these products, so there are real fundamentals at play.

Of course, it’s impossible to predict where things go from here over the next few weeks. But I’ll be keeping my eyes peeled on DeFi protocol flows and token flows.