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
    ---><---

    References listed on IDEAS

    as
    1. Kakinaka, Shinji & Umeno, Ken, 2022. "Cryptocurrency market efficiency in short- and long-term horizons during COVID-19: An asymmetric multifractal analysis approach," Finance Research Letters, Elsevier, vol. 46(PA).
    2. Khurshid, Adnan & Khan, Khalid & Cifuentes-Faura, Javier & Chen, Yufeng, 2024. "Asymmetric multifractality: Comparative efficiency analysis of global technological and renewable energy prices using MFDFA and A-MFDFA approaches," Energy, Elsevier, vol. 289(C).
    3. Igor Makarov & Antoinette Schoar, 2022. "Cryptocurrencies and Decentralized Finance (DeFi)," NBER Working Papers 30006, National Bureau of Economic Research, Inc.
    4. Igor Makarov & Antoinette Schoar, 2022. "Cryptocurrencies and Decentralized Finance (DeFi)," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 53(1 (Spring), pages 141-215.
    5. Ramzi Nekhili & Mohammad Alomari & Walid Mensi & Jahangir Sultan, 2024. "Return spillovers between decentralized finance and centralized finance markets," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 14(2), pages 487-506, June.
    6. Cajueiro, Daniel O. & Gogas, Periklis & Tabak, Benjamin M., 2009. "Does financial market liberalization increase the degree of market efficiency? The case of the Athens stock exchange," International Review of Financial Analysis, Elsevier, vol. 18(1-2), pages 50-57, March.
    7. Keshab Shrestha, 2021. "Multifractal Detrended Fluctuation Analysis of Return on Bitcoin," International Review of Finance, International Review of Finance Ltd., vol. 21(1), pages 312-323, March.
    8. Ozili, Peterson K, 2022. "Decentralized finance research and developments around the World," MPRA Paper 114338, University Library of Munich, Germany.
    9. Khuntia, Sashikanta & Pattanayak, J.K., 2020. "Adaptive long memory in volatility of intra-day bitcoin returns and the impact of trading volume," Finance Research Letters, Elsevier, vol. 32(C).
    10. Meghna Jayasankar, 2025. "Efficient Market Hypothesis Versus Multifractality: Evidence from the Stablecoin Market," Computational Economics, Springer;Society for Computational Economics, vol. 66(6), pages 5033-5054, December.
    11. Makarov, Igor & Schoar, Antoinette, 2022. "Cryptocurrencies and decentralized finance (DeFi)," LSE Research Online Documents on Economics 117711, London School of Economics and Political Science, LSE Library.
    12. Karim, Sitara & Lucey, Brian M. & Naeem, Muhammad Abubakr & Uddin, Gazi Salah, 2022. "Examining the interrelatedness of NFTs, DeFi tokens and cryptocurrencies," Finance Research Letters, Elsevier, vol. 47(PB).
    13. Igor Makarov & Antoinette Schoar, 2022. "Cryptocurrencies and Decentralised Finance," BIS Working Papers 1061, Bank for International Settlements.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. José Zapata Sevilla, 2024. "Analysing decentralised autonomous organisations (DAOs): limits and perspective," Journal of Banking Regulation, Palgrave Macmillan, vol. 25(4), pages 425-436, December.
    2. Gök, Remzi, 2025. "Spillovers between cryptocurrency, DeFi, carbon, and energy markets: A frequency quantile-on-quantile perspective," The Quarterly Review of Economics and Finance, Elsevier, vol. 100(C).
    3. Umair, Syed Muhammad & Ali, Amjad & Audi, Marc, 2025. "Financial Technology and Financial Stability: Evidence from Emerging Market Economies," MPRA Paper 127487, University Library of Munich, Germany.
    4. Almeida, Lucas Mussoi & Perlin, Marcelo Scherer & Müller, Fernanda Maria, 2025. "Pricing efficiency in cryptocurrencies: The case of centralized and decentralized markets," Journal of Economics and Business, Elsevier, vol. 133(C).
    5. Castillo León, Jaime & Lehar, Alfred, 2026. "What data have told us about decentralized finance," Journal of Corporate Finance, Elsevier, vol. 96(C).
    6. Adi Wolfson & Gerard Khaladjan & Yotam Lurie & Shlomo Mark, 2025. "The Greater Sustainability of Stablecoins Relative to Other Cryptocurrencies," JRFM, MDPI, vol. 18(3), pages 1-14, March.
    7. Bogdan Adamyk & Vladlena Benson & Oksana Adamyk & Oksana Liashenko, 2025. "Risk Management in DeFi: Analyses of the Innovative Tools and Platforms for Tracking DeFi Transactions," JRFM, MDPI, vol. 18(1), pages 1-31, January.
    8. repec:osf:osfxxx:ube2z_v1 is not listed on IDEAS
    9. Dimitriadis, Konstantinos A. & Koursaros, Demetris & Savva, Christos S., 2024. "Evaluating the sophisticated digital assets and cryptocurrencies capacities of substituting international currencies in inflationary eras," International Review of Financial Analysis, Elsevier, vol. 96(PB).
    10. Junliang Luo & Xihan Xiong & Zonglun Li & Hong Kang & Xue Liu & William J Knottenbelt & Katrin Tinn, 2026. "SoK of RWA Tokenization: A Systematization of Concepts, Architectures, and Legal Interoperability," Papers 2604.06608, arXiv.org, revised Apr 2026.
    11. Cornelli, Giulio & Gambacorta, Leonardo & Garratt, Rodney & Reghezza, Alessio, 2025. "Why DeFi lending? Evidence from Aave V2," Journal of Financial Intermediation, Elsevier, vol. 63(C).
    12. Shahriari, Hesam & Stivers, Adam & Tsang, Ming, 2025. "Bias in cryptocurrency investing: The effect of financial and moral considerations," Journal of Behavioral and Experimental Finance, Elsevier, vol. 47(C).
    13. Mohamd Laimon & Rula Almadadha & Steven Goh, 2025. "Energy Consumption of Crypto Mining: Consequences and Sustainable Solutions Using Systems Thinking and System Dynamics Analysis," Sustainability, MDPI, vol. 17(8), pages 1-9, April.
    14. Oefele, Nico & Baur, Dirk G. & Smales, Lee A., 2025. "The effect of currency risk on crypto asset utilization in Türkiye," Emerging Markets Review, Elsevier, vol. 65(C).
    15. Katja Neugebauer & João Almeida & João Alves & Carlos Bettencourt & Maria Bettencourt & Madalena Borges & Filipa Castilho & Sónia Correia & Gisela Fonseca & Mariana Júdice & André Leal & Afonso Marque, 2024. "Occasional paper on Decentralised Finance," Working Papers o202402, Banco de Portugal, Economics and Research Department.
    16. Han, Jungsuk & Lee, Jongsub & Li, Tao, 2025. "A review of DAO governance: Recent literature and emerging trends," Journal of Corporate Finance, Elsevier, vol. 91(C).
    17. Di Casola, Paola & Habib, Maurizio Michael & Tercero-Lucas, David, 2025. "Global and local drivers of Bitcoin trading vis-à-vis fiat currencies," Journal of International Money and Finance, Elsevier, vol. 158(C).
    18. Allen, Franklin & Barbalau, Adelina, 2024. "Security design: A review," Journal of Financial Intermediation, Elsevier, vol. 60(C).
    19. Emmanuel Joel Aikins Abakah & Aviral Kumar Tiwari & Chi‐Chuan Lee & Matthew Ntow‐Gyamfi, 2023. "Quantile price convergence and spillover effects among Bitcoin, Fintech, and artificial intelligence stocks," International Review of Finance, International Review of Finance Ltd., vol. 23(1), pages 187-205, March.
    20. Meghna Jayasankar, 2025. "Efficient Market Hypothesis Versus Multifractality: Evidence from the Stablecoin Market," Computational Economics, Springer;Society for Computational Economics, vol. 66(6), pages 5033-5054, December.
    21. Kirimhan, Destan, 2023. "Importance of anti-money laundering regulations among prosumers for a cybersecure decentralized finance," Journal of Business Research, Elsevier, vol. 157(C).

    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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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.