Which Protocols Drained the Crypto Market in 2025?

Original Article Title: Crypto’s Revenue Recipe

Original Article Author: Prathik Desai, Token Dispatch

Original Article Translation: Chopper, Foresight News

I adore the seasonal traditions of the crypto industry, such as Uptober and Recktober. People in the community always bring out a ton of data around these milestones, and humans do love such anecdotes, don't they?

However, the trend analysis and reports around these milestones are even more interesting: "This time, ETF fund flows are different," "Cryptocurrency industry funding has finally matured this year," "Bitcoin is gearing up for a rise this year," and so on. Recently, while reviewing the "2025 DeFi Industry Report," several sets of charts on how crypto protocols generate "significant revenue" caught my attention.

These charts list the top-earning crypto protocols of the year, confirming a fact that many have discussed in the industry over the past year: the crypto industry has finally started to make revenue attractive. But what exactly is driving this revenue growth?

Behind these charts lies another little-known question worth exploring: where does this revenue ultimately flow to?

Last week, I delved into DefiLlama's fee and revenue data (Note: Revenue refers to fees retained after paying to liquidity providers and suppliers) in an attempt to find an answer. In today's analysis, I will add more detail to this data, dissecting the flow and destination of funds in the crypto industry.

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

The crypto industry's value-capture ability has greatly improved. In the past 12 months, the decentralized finance (DeFi) sector has seen many new entrants, such as decentralized exchanges (DEXes), token issuance platforms, and decentralized perpetual contract trading platforms (perp DEXes).

However, the profit centers that generated the highest revenue 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 slightly dropped from around 65% in 2024 to 60%.

However, decentralized perpetual contract trading platforms showed a remarkable performance in 2025, a track that was almost insignificant in 2024. The four platforms, Hyperliquid, EdgeX, Lighter, and Axiom, together accounted for 7% to 8% of the industry's total revenue, far surpassing the combined protocol revenue of mature DeFi tracks such as lending, staking, cross-chain bridges, and decentralized trading aggregators.

So, what will be the revenue drivers in 2026? I have found the answer in the 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 holding and transferring funds can earn income from this process.

The revenue model of stablecoin issuers combines structural aspects with vulnerability. Its structural aspect lies in the fact that revenue scales up in sync with the supply and circulation of stablecoins. Each digital dollar issued by the issuer is backed by U.S. Treasury bonds and accrues interest. However, its vulnerability lies in the fact that this model relies on macroeconomic variables that the issuer has little control over, such as the Federal Reserve's interest rates. With the current monetary easing cycle just beginning, as interest rates are further reduced this year, the dominant position of stablecoin issuers in revenue will also weaken.

Next is the trade execution layer, which was also the birthplace of the most successful track in the DeFi sector in 2025, decentralized perpetual contract trading platforms.

To understand why decentralized perpetual contract trading platforms have rapidly gained a significant market share, the simplest way is to see how they help users complete transaction operations. These platforms have created low-friction trading venues, allowing users to enter and exit risk positions as needed. Even when the market is relatively stable, users can still hedge, leverage, arbitrage, rebalance, or pre-position for the future.

Unlike spot decentralized trading platforms, decentralized perpetual contract trading platforms allow users to engage in continuous, high-frequency trading without the hassle of transferring underlying assets.

Although the logic of trade execution may sound simple and the operation speed is extremely fast, the technical support behind it is far more complex than it seems. These platforms must build a stable trading interface to ensure it does not crash under high loads; establish reliable order matching and clearing systems to maintain stability in market chaos; and provide sufficient liquidity depth to meet traders' needs. In decentralized perpetual contract trading platforms, liquidity is the key to victory: those who can consistently provide ample liquidity will attract the most trading activity.

By 2025, Hyperliquid had dominated the decentralized perpetual contract trading track with the most liquidity providers on the platform, enabling it to hold the title for the highest fee income decentralized perpetual contract trading platform for 10 out of the past 12 months.

Ironically, the success of these DeFi track perpetual contract trading platforms was precisely because they did not require traders to understand blockchain and smart contracts but instead adopted the familiar operational model of traditional trading platforms.

Once all the above issues were addressed, the trading platform could achieve automated revenue growth by charging traders small fees on high-frequency, large-volume trades, ensuring continuous revenue even during sideways price action as the platform offered traders abundant operational choices.

This is why I believe that although the revenue share of decentralized perpetual contract trading platforms was only in single digits last year, they are the only ones capable of challenging stablecoin issuers' dominant position.

The third factor is channel distribution, which brings incremental revenue to crypto projects such as token issuance infrastructure, e.g., pump.fun and LetsBonk platforms. This pattern is not significantly different from what we see in Web2 enterprises: Airbnb and Amazon do not hold inventory, yet through extensive distribution channels, they have surpassed the aggregator positioning, reducing the marginal cost of new supply.

Crypto token issuance infrastructure similarly 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 listing process, providing ample liquidity, and simplifying trading operations, these platforms have become the preferred venue for people to issue crypto assets.

By 2026, two questions may determine the development trajectory of these revenue drivers: Will the stablecoin issuers' industry revenue share fall below 60% as interest rate cuts impact carry trades? Can decentralized perpetual contract trading platforms break through an 8% market share as the trading execution layer landscape tends to consolidate?

Carry yield, trade execution, and channel distribution reveal the sources of revenue in the crypto industry, but this is only half of the story. Equally important is understanding how much of the total transaction fees will be allocated to token holders before net protocol retention revenue.

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

By 2025, the total fees paid by users of decentralized finance and other protocol amounted to approximately $30.3 billion. Of this, the protocol retained revenue of around $17.6 billion after paying liquidity providers and suppliers. Out of the total revenue, about $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.

Compared to the previous industry cycle, this represents a significant shift. More and more protocols are now attempting to make the token a claim on operational performance, providing investors with tangible incentives to continue holding and bullish on their favored projects.

The crypto industry is far from perfect, with most protocols still not distributing any earnings to token holders. However, from a macro perspective, the industry has undergone considerable changes, signaling that everything is moving in the right direction.

Over the past year, the proportion of protocol revenue allocated to token holders has continued to rise, surpassing the historical high of 9.09% from early last year and peaking at over 18% in August 2025.

This shift is also reflected in token trading: if the tokens I hold never brought any returns, my trading decisions would only be influenced by media narratives; but if the tokens I hold can generate returns for me through buybacks or fee sharing, I would consider them income-generating assets. Although they may not be entirely secure, this shift will still impact how the market prices tokens, making their valuation more closely tied to fundamentals rather than media narratives.

As investors look back on 2025 and try to anticipate the revenue flow of the crypto industry in 2026, incentive mechanisms will be a critical consideration. Last year, project teams that prioritized value transfer indeed stood out.

Hyperliquid has built a unique community ecosystem, returning about 90% of the revenue to users through the Hyperliquid Relief Fund.

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

In 2026, it is expected that "value transfer" will no longer be a niche choice but a necessary strategy for all protocols wishing to have their tokens traded based on fundamentals. The market shifts from last year have taught investors to differentiate between protocol revenue and token holder value. Once token holders realize that their tokens can represent ownership claims, reverting to the previous model would seem unwise.

I believe that the 2025 DeFi Industry Report did not uncover the new essence of exploring revenue models in the crypto industry, a trend that has been widely discussed over the past few months. The value of this report lies in revealing the truth through data, and by delving deeper into this data, we can find the key to which crypto projects are most likely to achieve revenue success.

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

In 2026, I expect to see more projects converting fees into long-term rewards for token holders, especially as the interest rate reduction cycle leads to a decrease in spread trade attractiveness, making this trend more pronounced.

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