Original Author: Prathik Desai

Original Translation: Chopper, Foresight News

I love the seasonal traditions in the crypto industry, such as the October bull run (Uptober) and the October horror period (Recktober). People in the community always bring out a lot of data around these nodes, and humans naturally enjoy such anecdotes, don’t they?

The trend analysis and reports surrounding these nodes are even more interesting: "This time, ETF fund flows are different," "Crypto industry financing has finally matured this year," "Bitcoin is poised for a rise this year," and so on. Recently, while browsing the "2025 DeFi Industry Report", I was attracted by several charts showing how crypto protocols create "substantial revenue."

These charts listed the top crypto protocols by annual revenue, confirming a fact that many in the industry have discussed over the past year: the crypto industry has finally begun to make revenue attractive. But what exactly is driving this revenue growth?

Behind these charts lies another lesser-known question worth exploring: where do these fees ultimately go?

Last week, I delved into the fee and revenue data from DefiLlama (Note: revenue refers to the fees retained after paying liquidity providers and suppliers) in an attempt to find answers. In today’s analysis, I will add more details to this data and analyze how funds flow in and out of the crypto industry.

Crypto protocols generated over $16 billion in revenue last year, more than double the approximately $8 billion expected in 2024.

The value capture capability of the crypto industry has significantly improved, with many new tracks emerging in the decentralized finance (DeFi) space over the past 12 months, such as decentralized exchanges (DEX), token issuance platforms, and decentralized perpetual contract exchanges (perp DEX).

However, the highest revenue-generating profit centers are still concentrated in traditional tracks, with stablecoin issuers being the most prominent.

The top two stablecoin issuers, Tether and Circle, contributed over 60% of the total revenue in the crypto industry. By 2025, their market share is expected to slightly decline from about 65% in 2024 to 60%.

But the performance of decentralized perpetual contract exchanges in 2025 should not be underestimated, as this track was almost insignificant in 2024. The four platforms, Hyperliquid, EdgeX, Lighter, and Axiom, collectively accounted for 7% to 8% of the industry’s total revenue, far exceeding the combined revenue of mature DeFi tracks such as lending, staking, cross-chain bridges, and decentralized trading aggregators.

So, what will drive revenue in 2026? I found the answer from three major factors that influenced the revenue landscape of the crypto industry last year: spread income, trade execution, and channel distribution.

Spread trading means that anyone who holds and transfers funds can earn from this process.

The revenue model of stablecoin issuers is both structural and fragile. Its structural aspect is reflected in the fact that revenue scales expand in sync with the supply and circulation of stablecoins; every digital dollar issued by the issuer is backed by U.S. Treasury bonds and generates interest. The fragility lies in the fact that this model relies on macroeconomic variables that issuers can hardly control: the Federal Reserve's interest rates. Now, the monetary easing cycle has just begun, and as interest rates are further lowered this year, the revenue dominance of stablecoin issuers will also weaken.

Next is the trade execution layer, which is also the birthplace of the most successful track in the DeFi space in 2025: decentralized perpetual contract exchanges.

To understand why decentralized perpetual contract exchanges can quickly capture a significant market share, the simplest way is to look at how they help users complete trading operations. These platforms create low-friction trading venues that allow users to enter and exit risk positions as needed. Even when market volatility is low, users can still hedge, leverage, arbitrage, adjust positions, or build positions in advance for future layouts.

Unlike spot decentralized exchanges, decentralized perpetual contract exchanges allow users to engage in continuous, high-frequency trading without expending effort to transfer underlying assets.

Although the logic of trade execution sounds simple and operates at high speed, the technical support behind it is far more complex than it appears. These platforms must build stable trading interfaces to ensure they do not crash under high loads; create reliable order matching and clearing systems to maintain stability amid market chaos; and provide sufficient liquidity depth to meet traders' needs. In decentralized perpetual contract exchanges, liquidity is the key to victory: whoever can continuously provide ample liquidity can attract the most trading activity.

In 2025, Hyperliquid dominated the decentralized perpetual contract trading track with the ample liquidity provided by the largest number of market makers on its platform. This also allowed the platform to be the highest revenue-generating decentralized perpetual contract exchange for 10 out of the last 12 months.

Ironically, the success of these DeFi track perpetual contract exchanges is precisely because they do not require traders to understand blockchain and smart contracts, but instead adopt a traditional exchange operating model that people are familiar with.

Once all the above issues are resolved, exchanges can achieve automated revenue growth by charging small fees on high-frequency, large-volume trades from traders. Even if spot prices fluctuate sideways, revenue can continue because the platform provides traders with a rich array of operational choices.

This is why I believe that although decentralized perpetual contract exchanges accounted for only a single-digit percentage of revenue last year, they are the only track that could potentially challenge the dominance of stablecoin issuers.

The third factor is channel distribution, which brings incremental revenue to crypto projects such as token issuance infrastructure, like pump.fun and LetsBonk platforms. This is not much different from the model we see in Web2 companies: Airbnb and Amazon do not own any inventory, but with their vast distribution channels, they have long surpassed the positioning of aggregation platforms and reduced the marginal cost of new supply.

Crypto token issuance infrastructure also does not own the crypto assets created through its platform, such as meme coins, various tokens, and micro-communities. However, by creating a frictionless user experience, automating the token listing process, providing ample liquidity, and simplifying trading operations, these platforms have become the preferred place for people to issue crypto assets.

In 2026, two questions may determine the trajectory of these revenue drivers: will the industry revenue share of stablecoin issuers fall below 60% as interest rate cuts impact spread trading? Can perpetual contract trading platforms break through the 8% market share as the trade execution landscape becomes more concentrated?

Spread income, trade execution, and channel distribution reveal the sources of revenue in the crypto industry, but that is only half the story. Equally important is to understand how much of the total fees will be allocated to token holders before the protocol retains net revenue.

The value transfer achieved through token buybacks, burns, and fee sharing means that tokens are no longer just governance certificates, but represent economic ownership of the protocol.

In 2025, the total fees paid by users of decentralized finance and other protocols amounted to approximately $30.3 billion. Of this, the revenue retained by the protocol after paying liquidity providers and suppliers was about $17.6 billion. Of the total revenue, approximately $3.36 billion was returned to token holders through staking rewards, fee sharing, token buybacks, and burns. This means that 58% of the fees were converted into protocol revenue.

This is a significant shift compared to the last industry cycle. More and more protocols are beginning to experiment with making tokens a claim to ownership of operational performance, providing tangible incentives for investors to continue holding and going long on projects they believe in.

The crypto industry is far from perfect, and most protocols still do not allocate any revenue to token holders. But from a macro perspective, the industry has undergone considerable changes, signaling that everything is moving in a positive direction.

Over the past year, the proportion of token holder earnings relative to total protocol revenue has continued to rise, breaking through the historical high of 9.09% at the beginning of last year, and even exceeding 18% at the peak in August 2025.

This change is also reflected in token trading: if the tokens I hold have never brought any returns, my trading decisions will only be influenced by media narratives; but if the tokens I hold can bring me returns through buybacks or fee sharing, I will view them as income-generating assets. Although they may not be safe and reliable, this shift will still affect the market's pricing of tokens, making their valuations closer to fundamentals rather than swayed by media narratives.

When investors look back at 2025, trying to predict the revenue direction of the crypto industry in 2026, incentive mechanisms will become an important consideration. Last year, project teams that prioritized value transfer indeed stood out.

Hyperliquid has created a unique community ecosystem, returning about 90% of its revenue to users through the Hyperliquid Assistance Fund.

In the token issuance platform, pump.fun has reinforced the idea of "rewarding active users of the platform," having already burned 18.6% of the circulating supply of its native token PUMP through daily buybacks.

In 2026, "value transfer" is expected to no longer be a niche choice but a necessary strategy for all protocols that wish for their tokens to trade based on fundamentals. The market changes of last year have taught investors to distinguish between protocol revenue and token holder value. Once token holders realize that their tokens can represent ownership claims, it would be irrational to revert to previous models.

I believe the "2025 DeFi Industry Report" does not reveal the new essence of the crypto industry's exploration of revenue models; this trend has already been widely discussed in recent months. The value of this report lies in revealing the truth with data, and by digging deeper into this data, we can find the secrets to the crypto industry's most likely revenue success.

By analyzing the dominant revenue trends of various protocols, the report clearly states: whoever controls the core channels, spread income, trade execution, and channel distribution can earn the most profit.

In 2026, I expect more projects to convert fees into long-term returns for token holders, especially against the backdrop of declining interest rates making spread trading less attractive; this trend will become even more pronounced.

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