DeFi tokens are cryptocurrencies used within decentralized finance (DeFi) protocols for functions such as governance, payments, collateral, rewards and access to financial services.
Unlike traditional financial assets, DeFi tokens operate on blockchain networks and can interact with smart contracts without relying on a central intermediary. Some tokens are tied to specific DeFi platforms, while others serve broader functions across decentralized applications.
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DeFi tokens can serve different purposes depending on the protocol they’re associated with. Some give holders voting rights, while others are used for rewards, collateral, payments or access to specific features.
| Feature | DeFi tokens |
|---|---|
| What you hold | A blockchain-based crypto token |
| Primary purpose | Governance, utility, rewards, collateral or other protocol functions |
| Underlying protocol | A decentralized application or financial protocol |
| Governance rights | Some tokens allow holders to vote on protocol decisions |
| Rewards | Some tokens can be earned through staking, liquidity provision or other activities |
| Collateral | Some DeFi tokens can be deposited as collateral for borrowing |
| Trading | Often traded on centralized or decentralized exchanges |
| Self-custody | Usually possible with a compatible crypto wallet |
| Availability | Varies by token, blockchain, exchange and country |
Not every DeFi token offers all of these functions — its features depend on the token and the protocol behind it.
DeFi tokens are cryptocurrencies associated with decentralized finance (DeFi) protocols. DeFi protocols are blockchain-based applications that provide financial services such as lending, borrowing, trading and rewards without relying on a traditional financial intermediary.
DeFi tokens can serve different purposes within these protocols, including:
These functions are usually enabled by smart contracts — programs on a blockchain that automatically execute transactions when certain conditions are met.
For example, AAVE is associated with the Aave lending protocol, while UNI is associated with the Uniswap decentralized exchange. Their specific functions and rights differ from one another.
DeFi tokens are cryptocurrencies, but not all cryptocurrencies are DeFi tokens.
| Type | Examples | Role |
|---|---|---|
| Native blockchain coins | BTC, ETH, SOL | Power and help secure their respective blockchains; may also be used for transaction fees |
| DeFi tokens | AAVE, UNI | Provide functions within specific DeFi protocols, such as governance or utility |
The distinction isn’t always absolute. Some cryptoassets can serve multiple purposes or be used across different parts of the broader crypto and DeFi ecosystem.
DeFi tokens can have several different functions within decentralized finance protocols. Not every token serves every purpose, and some tokens have a single primary use while others have multiple functions.
| Use | What it does | Example |
|---|---|---|
| Governance | Lets holders vote on certain protocol decisions | AAVE, UNI |
| Utility and fees | Provides access to protocol features or, in some cases, fee-related benefits | Protocol-specific |
| Rewards | Incentivizes users to participate in a protocol, such as by providing liquidity | Protocol-specific |
| Collateral | Can be deposited as collateral to borrow other cryptoassets | Protocol-specific |
| Liquidity | Can help facilitate trading in decentralized liquidity pools | Protocol-specific |
Governance is one of the most common uses. For example, eligible AAVE and UNI holders can participate in governance decisions for their respective protocols.
Other DeFi tokens may be designed primarily to incentivize participation, support lending and borrowing, or provide utility within a particular application. The token’s role depends on the protocol’s design, so it’s important to understand what a token actually does before buying it.
There are thousands of tokens connected to decentralized finance, from lending and trading platforms to staking and blockchain infrastructure. The examples below represent some of the more prominent DeFi and DeFi-related tokens.
| Token | Protocol/ecosystem | What it does | What the token is used for |
|---|---|---|---|
| HYPE | Hyperliquid | Decentralized trading and derivatives | Governance, staking and ecosystem incentives |
| LINK | Chainlink | Provides blockchain oracles and data infrastructure used by DeFi applications | Paying for services and helping secure the Chainlink network |
| AAVE | Aave | Decentralized lending and borrowing | Governance and ecosystem participation |
| UNI | Uniswap | Decentralized trading and liquidity | Governance |
| JUP | Jupiter | Trading and liquidity aggregation on Solana | Governance and ecosystem participation |
| LDO | Lido | Liquid staking for Ethereum | Governance |
| CRV | Curve | Decentralized trading and liquidity, particularly for stablecoins | Governance and liquidity incentives |
| MKR | Maker/Sky | Decentralized lending and stablecoins | Governance and protocol participation |
DeFi token classifications can vary. For example, LINK is primarily an oracle and blockchain infrastructure token rather than a token for a specific DeFi application. HYPE is the native token of Hyperliquid, while other tokens in the table are associated with specific DeFi protocols.
Token functions can also change as protocols evolve. Before buying a token, check its current purpose, token supply and availability on the exchange or platform you plan to use.
DeFi tokens operate within blockchain-based applications called DeFi protocols. These protocols use smart contracts to automate financial transactions and other functions without relying on a central intermediary.
The basic relationship looks like this:
Blockchain → smart contract → DeFi protocol → token
For example, a lending protocol can use smart contracts to manage deposits and loans, while its associated token can give holders governance rights or other protocol-specific utility.
The exact role of a DeFi token depends on how its protocol is designed. Some tokens are essential to a protocol’s operation, while others primarily provide governance or incentives.
You can buy DeFi tokens through a centralized crypto exchange (CEX) or a decentralized exchange (DEX), depending on the token and your location. Before buying, check that the platform supports the specific token and network you need.
Hot tip: Compare crypto exchanges to see which platforms support the DeFi tokens you’re interested in, along with their fees, features and availability in the US.
DeFi tokens can offer access to new financial applications, but they also carry risks that don’t apply to many traditional investments. The risks vary by token and protocol, so research the specific project before buying.
Before buying a DeFi token, look beyond its price and market capitalization. Consider:
A DeFi protocol is the underlying application or set of smart contracts that provides a financial service, while a DeFi token is a crypto asset associated with that ecosystem. The two are related, but they aren’t the same thing.
For example:
A protocol can operate without its token serving as the actual mechanism for every transaction. The token’s specific role depends on how the protocol is designed.
DeFi tokens are crypto assets connected to decentralized finance protocols and can serve different purposes, including governance, rewards, utility and collateral. Their features, risks and potential uses vary significantly by token, so understand the underlying protocol, token economics and risks before buying.
If you’re ready to buy, compare centralized crypto exchanges to find a platform that supports the DeFi tokens you want and is available in the US.
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