Original Title: Crypto's Revenue Recipe
Original Author: Prathik Desai, Token Dispatch
Translated by: Chopper, Foresight News
I love the seasonal traditions in the crypto industry, such as "Uptober" and "Recktober." People in the community always bring out a bunch of data around these events, and isn't it true that humans naturally enjoy such interesting anecdotes?
Trend analysis and reports around these nodes are even more intriguing: "This time, ETF fund flows are different," "The crypto industry's fundraising is finally maturing this year," "Bitcoin is poised for a breakout in 2025," and so on. Recently, while reviewing the "2025 DeFi Industry Report," I was drawn to several charts illustrating how crypto protocols are generating "significant revenue."
These charts list the top crypto protocols with the highest annual revenues, confirming a fact that many in the industry have discussed over the past year: the crypto industry is finally becoming attractive in terms of revenue generation. But what exactly is driving this revenue growth?
Behind these charts lies another lesser-known issue worth exploring: where exactly do these transaction fees ultimately end up?
Last week, I delved into DefiLlama's fee and revenue data (note: revenue refers to the portion of fees retained after paying liquidity providers and suppliers), trying to find answers. In today's analysis, I will add more details to these data, explaining how capital flows and where it goes within the crypto industry.
Cryptocurrency protocols generated over $16 billion in revenue last year, more than double the $8 billion expected in 2024.
The value capture capability of the cryptocurrency industry has significantly improved. Over the past 12 months, the decentralized finance (DeFi) sector has given rise to many new categories, such as decentralized exchanges (DEX), token issuance platforms, and decentralized perpetual contract trading platforms (perp DEX).
However,The profit center generating the highest revenue remains focused on traditional sectors, with stablecoin issuers being the most prominent example.
The top two stablecoin issuers, Tether and Circle, contributed over 60% of the total revenue in the crypto industry. By 2025, their market share slightly declined from approximately 65% in 2024 to 60%.
However, the performance of decentralized perpetual contract trading platforms in 2025 should not be underestimated, as this sector was almost negligible in 2024.The four platforms Hyperliquid, EdgeX, Lighter, and Axiom collectively account for 7% to 8% of the industry's total revenue, significantly surpassing the combined protocol revenues of more mature DeFi sectors such as lending and borrowing, staking, cross-chain bridges, and decentralized trading aggregators.
So, what will be the revenue drivers in 2026? I found the answer from the three major factors that influenced the revenue landscape of the crypto industry last year:Yield from interest rate differentials, trade execution, and channel distribution.
Carry trade implies that whoever holds and transfers funds can benefit from this process.
The revenue model of stablecoin issuers combines structural characteristics with vulnerabilities. Structurally, their revenue scales in tandem with the supply and circulation of the stablecoin. Each digital dollar issued by the issuer is backed by U.S. Treasury securities and generates interest. However, the vulnerability lies in the fact that this model depends on macroeconomic variables largely beyond the issuer's control: Federal Reserve interest rates. Now, as the cycle of monetary easing has just begun, further rate cuts this year will gradually erode the dominant position of stablecoin issuers' revenue.
Next is the trading execution layer, which is also the most successful track in the DeFi field by 2025—the birthplace of decentralized perpetual contract trading platforms.
To understand why decentralized perpetual contract trading platforms have rapidly captured a significant market share, the simplest approach is to look at how they help users execute trading operations. These platforms create low-friction trading environments, enabling users to enter and exit risk positions as needed. Even with minimal market volatility, users can hedge, leverage, arbitrage, rebalance their portfolios, or build positions in advance for future opportunities.
Unlike decentralized spot trading platforms, decentralized perpetual contract trading platforms allow users to engage in continuous, high-frequency trading without the need to transfer underlying assets.
Although the logic of executing transactions may sound simple and the operations are extremely fast, the underlying technology is far more complex than it appears. These platforms must build stable trading interfaces that remain functional under heavy loads; develop reliable order-matching and settlement systems that maintain stability even during market chaos; and also provide sufficient liquidity depth to meet traders' needs. In decentralized perpetual contract trading platforms, liquidity is the key to success: whoever can consistently offer ample liquidity will attract the most trading activity.
In 2025, Hyperliquid dominates the decentralized perpetual contract trading space by offering ample liquidity from the largest number of market makers on its platform. This has also enabled the platform to be the decentralized perpetual contract exchange with the highest trading fee revenue for 10 out of the last 12 months.
Ironically, the success of these perpetual contract trading platforms in the DeFi space is precisely because they did not require traders to understand blockchain and smart contracts, but instead adopted the traditional trading platform operation model that people are familiar with.
Once all the aforementioned issues are resolved, the trading platform can automatically increase its revenue by charging small fees for high-frequency, large-volume trades by traders. Even if the spot price remains stagnant, the platform can still maintain continuous revenue, as it provides traders with a wide range of trading options.
This is exactly why I believe that although decentralized perpetual contract trading platforms accounted for only single-digit revenue percentages last year, they are the only segment with the potential to challenge the dominance of stablecoin issuers.
The third factor is distribution channels, which bring incremental revenue to crypto projects such as token issuance infrastructure, for example, pump.fun and the LetsBonk platform. This is not much different from the model we see in Web2 companies: Airbnb and Amazon do not own any inventory, but by leveraging extensive distribution channels, they have long since moved beyond the role of mere aggregation platforms and have also reduced the marginal cost of adding new supply.
The infrastructure for issuing encrypted tokens does not own the crypto assets created through its platform, such as Meme coins, various tokens, and micro-communities. However, by creating a seamless user experience, automating token listing processes, providing sufficient liquidity, and simplifying trading operations, these platforms have become the preferred choice for people issuing crypto assets.
In 2026, two questions may determine the development trajectory of these revenue drivers: Will stablecoin issuers' share of industry revenue fall below 60% as interest rate cuts disrupt spread trading? And can perpetual contract trading platforms break through an 8% market share as the transaction execution layer becomes more concentrated?
The three key factors—yield from interest rate differentials, trade execution, and channel distribution—reveal the sources of revenue in the crypto industry, but this is only half the story. Equally important is understanding what proportion of the total fees is allocated to token holders before net revenue is retained by the protocol.
Value transfer achieved through token buybacks, burning, and fee sharing implies that tokens are no longer merely governance credentials, but instead represent economic ownership of the protocol.
In 2025, the total transaction fees paid by users of decentralized finance and other protocols amounted to approximately $30.3 billion. After paying liquidity providers and suppliers, the protocols retained approximately $17.6 billion in revenue. Of the total revenue, about $3.36 billion was returned to token holders through staking rewards, fee-sharing, token buybacks, and token burns. This means that 58% of the transaction fees were converted into protocol revenue.
This represents a significant shift compared to the previous industry cycle. An increasing number of protocols are beginning to attempt making tokens represent ownership claims on operational performance, providing investors with real incentives to continue holding and being bullish about the projects they support.
The crypto industry is far from perfect, and most protocols have yet to generate any returns for token holders. However, from a macro perspective, the industry has already undergone significant changes, signaling that things are moving in a positive direction.
Over the past year, the proportion of protocol revenue allocated to token holders has continued to rise, breaking the previous historical high of 9.09% at the beginning of last year, and even exceeding 18% during its peak in August 2025.
This change is also reflected in token trading: if the tokens I hold have never generated any returns, my trading decisions will be influenced only by media narratives. However, if the tokens I hold can generate income through buybacks or fee-sharing, I will view them as income-generating assets. Although they may not necessarily be safe or reliable, this shift will still affect how the market prices tokens, making their valuations closer to fundamentals rather than being driven by media narratives.
When investors look back at 2025 and try to anticipate where the revenue in the crypto industry will flow in 2026, incentive mechanisms will become a key consideration. Last year, project teams that prioritized value transfer indeed stood out.
Hyperliquid has built a unique community ecosystem, returning approximately 90% of its revenue to users through the Hyperliquid Grant Program.
On the token issuance platform, pump.fun has reinforced the concept of "rewarding active platform users." Through daily buybacks, it has already burned 18.6% of the circulating supply of its native token, PUMP.
By 2026, "value transfer" is expected to no longer be a niche option but a necessary strategy for all protocols aiming to have their tokens trade based on fundamentals. Last year's market shifts taught investors how to distinguish between protocol revenue and token holder value. Once token holders realize that the tokens in their possession can represent claims to ownership, it would be irrational to revert to previous models.
I believe the "2025 DeFi Industry Report" did not reveal a completely new essence of how the crypto industry is exploring revenue models, as this trend has been widely discussed over the past few months. The value of this report lies in using data to uncover the truth. By digging deeper into these data, we can discover the most likely secrets to achieving revenue success in the crypto industry.
By analyzing the revenue-leading trends of various protocols, the report clearly states:Whoever controls the core channels—profit margins, trade execution, and channel distribution—will earn the highest profits.
In 2026, I expect more projects will convert transaction fees into long-term returns for token holders. This trend will become even more pronounced, especially in a declining interest rate environment where the appeal of arbitrage trading diminishes.
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