IDEAS home Printed from https://ideas.repec.org/a/ebl/ecbull/eb-25-00286.html

Decoding multifractality in DeFi through governance tokens

Author

Listed:
  • Meghna Jayasankar

    (Gulati Institute of Finance and Taxation (Affiliated to Cochin University of Science and Technology))

  • Anoop S Kumar

    (Gulati Institute of Finance and Taxation (Affiliated to Cochin University of Science and Technology))

Abstract

This study investigates the multifractal characteristics of the decentralised finance (DeFi) market through the lens of governance tokens. We classify governance tokens into two categories: blockchain governance tokens and governance tokens for decentralised autonomous organisations (DAOs). Using daily returns of seven tokens Uniswap, Compound, Maker, Curve DAO, Aave, Dash, and Decred spanning May 2020 to June 2024, we apply Multifractal Detrended Fluctuation Analysis (MFDFA) to examine scaling behaviour and long-memory properties. Our findings confirm multifractality across all tokens, with blockchain governance tokens exhibiting greater multifractality and thus higher market inefficiency than DeFi tokens. We further introduce the Generalised Magnitude of Long Memory (GMLM), a novel measure of relative efficiency across return moments, which shows that DeFi tokens are more efficient at higher moments, while blockchain tokens are more efficient at lower moments. This suggests that risk assessment strategies in DeFi should account for moment-specific efficiency, with higher-order risk models being more appropriate for DeFi tokens and lower-order models being better suited for blockchain governance tokens. These findings offer actionable insights for investors, portfolio managers, and policymakers navigating the DeFi landscape.

Suggested Citation

  • Meghna Jayasankar & Anoop S Kumar, 2026. "Decoding multifractality in DeFi through governance tokens," Economics Bulletin, AccessEcon, vol. 46(1), pages 93-110.
    • Handle: RePEc:ebl:ecbull:eb-25-00286
    as

    Download full text from publisher

    File URL: http://www.accessecon.com/Pubs/EB/2026/Volume46/EB-26-V46-I1-P10.pdf
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G3 - Financial Economics - - Corporate Finance and Governance

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ebl:ecbull:eb-25-00286. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: John P. Conley (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.