TL;DR — Token Identity Crisis in DeFi

Token identity is the answer to the question: what exactly do you hold when you hold a token.

In 2020-2021, tokens were sold as participation in the success of protocols (like if you bought in, huh);

by 2024–2025, most only retained formal governance.

The token identity crisis is a situation when a token:

governs the protocol but does not own the business, does not control the brand and interface, and does not receive cash flows.

The real value in DeFi has shifted:

• from protocols → to interfaces,

• from DAOs → to private companies,

• from tokens → to off-chain and product layers.

Governance tokens increasingly mean the right to vote without the right to value capture.

This leads to:

• dilution of the economic meaning of tokens,

• inflation of governance tokens,

• rising skepticism from the market.

Aave is a case in point: v4 enhances the role of UX as a point of control over cash flows, making the question "who owns Aave?" central.

The market's response to the crisis:

• increased interest in RWA,

• tokenization of stocks and income instruments,

• search for legally formalized rights instead of abstract governance.

As a result: a token without ownership rights is not an asset but an interface for voting.