Who is paying for crypto? Who is actually benefiting?

Written by: Prathik Desai

Compiled by: Chopper, Foresight News

I love the crypto industry's seasonal traditions, like the October Uptober and the October Recktober. People in the community always bring up a ton of data around these periods, and humans just love these kinds of interesting stories, don't they?

The trend analyses and reports surrounding these milestones are even more interesting: "This time, ETF fund flows are different," "Crypto funding is finally maturing this year," "Bitcoin is poised for a surge this year," and so on. Recently, while reviewing the "2025 DeFi Industry Report," several charts about how crypto protocols generate "substantial revenue" caught my attention.

These charts list the top-grossing crypto protocols of the year, confirming a fact many in the industry have been discussing over the past year: the crypto industry is finally starting to make revenue attractive. But what exactly is driving this revenue growth?

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

Last week, I delved into DefiLlama's fee and revenue data (note: revenue refers to the fees retained after payments to liquidity providers and suppliers) in an attempt to find answers. In today's analysis, I'll add more detail to this data, dissecting how and where funds flow in the crypto industry.

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

The crypto industry's ability to capture value has been comprehensively enhanced. In the past 12 months, many new tracks have emerged in the decentralized finance (DeFi) field, such as decentralized exchanges (DEX), token issuance platforms, and decentralized perpetual contract exchanges (perp DEX).

However, the profit centers that generate the highest revenue are still concentrated in traditional sectors, with stablecoin issuers being the most prominent.

The two leading stablecoin issuers, Tether and Circle, contributed over 60% of the crypto industry's total revenue. In 2025, their market share slightly decreased to 60% from approximately 65% in 2024.

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

So what will be the revenue drivers in 2026? I found the answer in the three major factors that influenced the revenue landscape of the crypto industry last year: interest rate spreads, trade execution, and channel distribution.

Carry trades mean that whoever holds and transfers the funds can profit from the process.

The revenue model of stablecoin issuers is both structurally sound and vulnerable. Structurally, revenue expands in tandem with the supply and circulation of stablecoins; every digital dollar issued is backed by US Treasury bonds and generates interest. Vulnerably, this model relies on a macroeconomic variable that issuers have virtually no control over: the Federal Reserve's interest rates. Now, with the monetary easing cycle just beginning, and further interest rate cuts expected this year, the revenue dominance of stablecoin issuers will weaken.

Next is the transaction execution layer, which is also the birthplace of decentralized perpetual contract exchanges, the most successful sector in DeFi in 2025.

To understand why decentralized perpetual contract exchanges have rapidly gained a significant market share, the simplest way is to look at how they facilitate user trading. These platforms create low-friction trading venues, allowing users to enter and exit risky positions as needed. Even in calmer markets, users can still hedge, leverage, arbitrage, rebalance positions, or build positions in advance for future positioning.

Unlike spot decentralized exchanges, decentralized perpetual contract exchanges allow users to conduct continuous, high-frequency trading without having to spend time and effort transferring underlying assets.

While the logic behind trade execution sounds simple and the operation is extremely fast, the underlying technology is far more complex than it appears. These platforms must build stable trading interfaces to ensure they don't crash under high loads; create reliable order matching and clearing systems to remain stable amidst market turmoil; and provide ample liquidity depth to meet traders' needs. In decentralized perpetual contract exchanges, liquidity is the key to success: whoever can consistently provide abundant liquidity will attract the most trading activity.

In 2025, Hyperliquid dominated the decentralized perpetual contract trading market thanks to the ample liquidity provided by the largest number of market makers on its platform. This also made the platform the highest-grossing decentralized perpetual contract exchange in terms of transaction fees for 10 out of the 12 months of that year.

Ironically, the reason these perpetual contract exchanges in the DeFi space have succeeded is precisely because they do not require traders to understand blockchain and smart contracts, but instead adopt the familiar operating model of traditional exchanges.

Once all the above issues are resolved, the exchange can achieve automated revenue growth by charging small fees on high-frequency, large-volume trades. Even if spot prices fluctuate sideways, revenue can continue because the platform provides traders with a wide range of trading options.

This is precisely why I believe that, despite decentralized perpetual contract exchanges accounting for only a single-digit percentage of revenue last year, they are the only sector with the potential to challenge the dominance of stablecoin issuers.

The third factor is distribution channels, which generate incremental revenue for crypto projects such as token issuance infrastructure, like pump.fun and LetsBonk platforms. This isn't too different from the model we see in Web2 companies: Airbnb and Amazon don't own any inventory, but with their massive distribution channels, they've long since transcended the role of aggregation platforms and reduced the marginal cost of adding new supply.

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

In 2026, two questions may determine the trajectory of these revenue drivers: Will stablecoin issuers' industry revenue share fall below 60% as interest rate cuts impact carry trades? And can perpetual contract trading platforms break through the 8% market share as the trading execution layer becomes more concentrated?

Interest rate spreads, trade execution, and channel distribution—these three factors reveal the sources of revenue in the crypto industry, but that's only half the story. Equally important is understanding what percentage of total fees is distributed to token holders before protocols retain net revenue.

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

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

This represents a significant shift compared to the previous industry cycle. More and more protocols are beginning to allow tokens to represent ownership of operational performance, providing tangible incentives for investors to continue holding and investing in projects they believe in.

The crypto industry is far from perfect, with most protocols still not distributing any rewards to token holders. However, from a macro perspective, the industry has undergone significant changes, a sign that things are moving in a positive direction.

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

This shift is also reflected in token trading: if the tokens I hold never generate any returns, my trading decisions will only be influenced by media narratives; but if the tokens I hold can generate returns for me through buybacks or fee sharing, I will treat them as interest-bearing assets. Although they may not be safe and reliable, this shift will still affect how the market prices tokens, making their valuations closer to fundamentals rather than being swayed by media narratives.

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

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

Among token issuance platforms, pump.fun reinforces the concept of "rewarding active users of the platform" and has burned 18.6% of the circulating supply of the native token PUMP through daily buybacks.

In 2026, "value transfer" is expected to cease to be a niche option and become an essential strategy for all protocols that want their tokens to trade based on fundamentals. Last year's market changes taught investors to distinguish between protocol revenue and token holder value. Once token holders realize that their tokens can represent ownership claims, returning to the previous model would be unwise.

I believe the "2025 DeFi Industry Report" doesn't reveal the entirely new nature of the crypto industry's exploration of revenue models, a trend that has been widely discussed in the past few months. The report's value lies in its data-driven approach, revealing the truth, and by delving deeper into this data, we can uncover the secrets to the crypto industry's most likely revenue success.

By analyzing the revenue-driving trends of each agreement, the report clearly points out that whoever controls the core channels, interest rate spreads, transaction execution, and channel distribution will earn the most profits.

In 2026, I expect more projects to convert transaction fees into long-term returns for token holders, especially as interest rate cuts reduce the attractiveness of carry trades.