Authors: Lasse Clausen, Christopher Heymann, Robert Koschig, Clare He, Johannes Säuberlich
Translator: Shan Ouba, Jinse Finance
On-chain revenue has become a pillar of the $20 billion economy
Decentralized finance will dominate on-chain revenue by 2025
Blockchain technology is maturing, transaction fees are decreasing, and applications are experiencing explosive growth, with a year-on-year increase of 126%
1. Establishing Protocol Tokens as an Investable Asset Class
Currently, digital tokens are still often misunderstood as speculative tools for retail investors. This report argues that if networks can achieve product-market fit and establish sustainable business models, tokens have the potential to evolve into an investable asset class accessible to a wider range of more mature market participants.
We consider user-paid fees as the best indicator, as they reflect users' and businesses' willingness to pay for reusable and useful features.
As protocols mature and regulations become more sophisticated, the ability to generate and distribute stable fee revenue will become a key criterion distinguishing "networks with long-term viability" from "early-stage experimental projects." Currently, over 80% of on-chain fees come from tokenized protocols, which offer global, permissionless investment channels. In contrast, off-chain revenue channels are mostly limited to established public companies or private investment vehicles. 2. The Increasing Importance of On-Chain Activity and Efficiency Although on-chain fees still represent a relatively small percentage of total industry revenue, they clearly reflect application adoption and long-term value creation: since the beginning of 2025, nearly 400 protocols have achieved annualized revenue exceeding $1 million, and 20 protocols have distributed over $10 million in value to token holders. This achievement benefits from the global reach and ever-improving efficiency of blockchain, enabling applications to quickly achieve scalable profitability (see later chapters of the report for details). This advantage has driven on-chain players to seize market share from off-chain competitors; for example, decentralized exchanges now account for 25% of total cryptocurrency trading volume. Many high-growth business models, such as DePIN, also rely heavily on on-chain infrastructure. 3. The Transparency Advantage of On-Chain Fees Transparency is a core principle of blockchain – “trustless, just verifiable.” Unlike the delayed disclosure of information in traditional finance, on-chain financial data is real-time and verifiable. This transparency is crucial for protocols issuing tokens to attract global investors: investors expect verifiable business metrics. Today, more and more protocols disclose revenue or reflect performance through on-chain mechanisms, even if some revenue comes from off-chain sources. Digital asset revenue is not limited to on-chain fees, but driven by the maturity of blockchain technology, on-chain fees have seen the most rapid growth: On-chain fees ($9.7 billion): The 41% year-on-year growth includes two opposing trends: Blockchain has moved beyond the "high cost, low transaction volume" stage and become a standardized infrastructure, with efficiency improvements driving a steady decline in fees²; Applications benefited from this shift, scaling rapidly on lower-cost, more efficient infrastructure, with a year-over-year growth of 126%. Off-chain fees ($23.5 billion): Centralized exchanges (CEXs) accounted for the largest share of revenue, estimated at $19 billion; the remainder primarily came from other financial infrastructure (market makers, fund asset management fees, etc.) and cryptocurrency casinos³. Other revenue ($23.1 billion): mainly divided into two parts: Block rewards earned by blockchain miners and stakers: Bitcoin contributed $8 billion, Solana contributed $2 billion, and Ethereum contributed $1 billion, accounting for the largest share; Stablecoin issuance revenue: Circle and Tether earned $4.5 billion through the assets behind their stablecoins (such as US Treasury bonds).
In 2021, users paid $13.4 billion in fees for blockchain transactions, accounting for 56% of total fees;
When on-chain fees rebound overall in 2024, the dominance of blockchain-related fees has been replaced by DeFi/financial applications; in 2025, DeFi/financial application fees are expected to reach $13.1 billion, accounting for 66% of total fees;
New use case expansion and stablecoin growth drive on-chain fees in the first half of 2025 to surpass the peak of the second half of 2021:
Mature categories: Fee growth of approximately 4%;
DEXs, perpetual contracts, and derivatives platforms in the DeFi sector are seizing market share from CEXs.
DEXs, perpetual contracts, and derivatives platforms in the DeFi space are taking market share from CEXs.
¹;
Perpetual contract platforms, led by Hyperliquid, saw fees increase by 2 times and trading volume increase by 5 times year-on-year;
Lending fees remained stable at approximately $700 million, with new players like Morpho gaining market share by improving efficiency.
Stablecoins: Although not a new category, stablecoin-related on-chain fees have also broken records as market capitalization² reached new highs and the monetization of off-chain collateral yields improved.
Other emerging use cases: contributed $1.1 billion in fees, including automated/decentralized artificial intelligence (DeFAI, such as bots and AI agents), risk management and vaults, real-world assets (RWAs), and liquidity staking—all of which generate fees by taking a share of user deposit yields.
CEX revenue transparency through token buybacks is low: Buybacks should reflect revenue/profit, but verification is difficult. Binance and Bitget no longer link buybacks to revenue, and OKX's actual buyback scale may not reach the announced level, therefore this report does not include such data; 2) As of the end of Q3 2025, the market capitalization of stablecoins was close to $300 billion.
In the first half of 2025, DeFi/financial fees increased to $6.1 billion (a year-on-year increase of 113%), of which core categories (DEX, perpetual contracts and derivatives platforms, lending) contributed $4.4 billion.
In the first half of 2025, DeFi/financial fees increased to $6.1 billion (a year-on-year increase of 113%), of which core categories (DEX, perpetual contracts and derivatives platforms, lending) contributed $4.4 billion.
Growth primarily came from new players with previously meager revenues: DEX: Growth was led by Raydium and Meteora, both benefiting from the Solana ecosystem boom; while Uniswap, formerly third, lagged behind, with its market share dropping from 44% to 16%; Perpetual Contracts/Derivatives: Jupiter's fee share rose from 5% to 45%; Hyperliquid, launched less than a year ago, now contributes 35% of fees in this segment; Lending: Aave remains dominant, but Morpho, a lending aggregator built on Aave, saw its fee share increase from nearly 0% in the first half of 2024 to 10%.
Efficiency Improvement: Especially for Ethereum, overall fee revenue has been reduced by lowering transaction costs (see Chapter (04) for classification details);
MEV: The Flashbots protocol has begun coordinating so-called MEV transactions on Ethereum, and Jito has also launched a similar service on Solana.
MEV: The Flashbots protocol has begun coordinating so-called MEV transactions on Ethereum, and Jito has also launched a similar service on Solana.
These fees are related to arbitrage opportunities, so revenue surges during periods of high speculation (such as the meme coin craze from the second half of 2024 to the first quarter of 2025); Concentration: In the first half of 2025, the top 5 protocols (Tron, Ethereum, Solana, Jito, Flashbots) accounted for approximately 80% of blockchain-related fees. Although the concentration remains high, it has improved compared to 2021—in 2021, Ethereum alone accounted for 86% of blockchain-related fees; Rollups (L2/L3): Emerging in 2022, their fees are much lower than L1, but current transaction volume is still insufficient to support a substantial fee share¹.
Head-up L2 is Base: On-chain fees were approximately $39 million in the first half of 2025.
Head-up L2 is Base: On-chain fees were approximately $39 million in the first half of 2025.
User fees in the first half of 2025 were 34% lower than the historical peak in the second half of 2021, but improved blockchain efficiency spurred more activity:
In 2021, Ethereum alone contributed over 40% of on-chain fees; from the beginning of 2025 to date, its share has dropped to 3%—Ethereum's scaling efforts are the main reason for the 86% decrease in average blockchain transaction fees;
Daily transaction volume for blockchain L1 and L2 increased by approximately 2.7%.
The number of monetization protocols has increased dramatically, reaching 169 million. The number of protocols generating fees is unprecedented: In 2021, only 125 protocols generated fees, and almost all of those fees came from 20 protocols¹; in contrast, in the first half of 2025, 969 protocols generated fees, an eightfold increase in four years. The value distributed to token holders has increased: Despite lower fees than in 2021, the value distributed to token holders by protocols has increased by 50%, reaching an all-time high. This development coincides with the digital asset and value distribution-friendly regulatory environment that began at the end of 2024.
In the second half of 2021, the top 20 protocols accounted for 94% of fees; in the first half of 2025, this proportion dropped to 69%.
Average transaction fees decreased by 86%, mainly driven by Ethereum (accounting for more than 90% of the total decrease), due to factors including the implementation of Ethereum's new fee mechanism (EIP-1550) and increased L2 adoption.
Lower costs drive increased engagement: Daily transaction volume increased 2.7 times compared to the second half of 2021, with a rise in the proportion of Level 2 transactions; Similarly, the number of monthly transaction wallets increased 5.3 times in the first half of 2025, reaching 273 million. In 2025, our dataset contained 1124 protocols generating on-chain fees¹: Of these, 389 protocols generated fees for the first time in 2025², and as of the beginning of 2025 to date, these protocols have contributed 13% of total fees, accounting for 17% of fees in the third quarter; Typical representatives of this batch of protocols include: Meteora (ranked first in total fees in the first half of 2025) Axiom Bullx
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2025 was the first year that "non-DeFi/financial new protocols" accounted for a considerable share of monetization: among the 150 new "other areas" protocols added in 2025, DePIN and consumer protocols accounted for the highest proportion.
Data as of Q3 2025; in Q3 2025 alone, 1053 protocols generated fees; 2) Specifically, the fee data for these protocols became available for the first time.
The value allocated to token holders, after deducting buybacks, burns, and other accruals, and then subtracting the "net value" after token issuance, has reached all-time highs in the past three quarters: The value allocated in the third quarter of 2025 reached $1.9 billion, roughly the same as the total allocation in the second half of 2021 (peak fee period); However, many protocols still have zero allocations – the scale of token incentives for new networks still exceeds the value returned to holders, which is significant in the blockchain space. More common in L1; Applications are the main contributors to value distribution, thanks to reduced incentives: token incentives for leading applications¹ decreased from $2.8 billion in the second half of 2021 (representing 90% of their fees) to less than $100 million in the first half of 2025, significantly increasing net returns to holders. It's important to note that profit-based metrics such as "value distribution" have limitations, especially regarding "which holders benefit (active holders vs. passive holders)." For details on industry-adopted methodologies and metrics, please refer to page 51 and subsequent sections of the downloadable report. More efficient infrastructure is becoming a new driving force. What are the fee drivers?
Asset prices are the input variable for fees denominated in USD in most sectors, so there is an expected correlation between the two, but the driving factors are not limited to this:
Seasonality: Changes in market risk appetite can cause cyclical fluctuations in token prices, which in turn affect fee levels;
Causality¹: This relationship varies over time and across sectors.
Causality¹: This relationship varies over time and across sectors.
In the second half of 2021, Ethereum fees reached a record $6.3 billion, driven by high ETH prices and speculative demand, with users having a high tolerance for extremely high fees at the time.
In the second half of 2021, Ethereum fees reached a record $6.3 billion, driven by high ETH prices and speculative demand, with users having a high tolerance for extremely high fees at the time.
Such as shifting to Proof-of-Stake, Rollup, Dynamic Fees, Capacity Boosting, Transaction Packaging
Uniswap, as the first mainstream decentralized exchange, has long been a leader in trading volume and fee capture, but in the first half of 2025, its fees in USD terms decreased by 18% year-on-year, mainly due to a decrease in average fees:
The average price of traded assets increased during the period¹, which should have had a positive impact on fees;
Swap fee range is 5-100 While trading volume gradually shifted to lower-fee liquidity pools, the average fee rate decreased by over 30%. In the second quarter of 2025, trading volume increased by 20% year-on-year, reaching approximately $230 billion. However, this growth was primarily price-driven (crypto asset prices rose more significantly), so the actual asset trading volume after price standardization slightly decreased. Other DEXs also faced similar fee compression issues. However, PancakeSwap offset the impact of fee declines by increasing trading volume, achieving approximately 150% year-on-year fee growth. Although the top 20 protocols contributed 70% of the revenue, the leading positions are constantly changing. Who is leading the pack? Top Fee Generating Protocols
Consistent with industry share, top protocols are mainly concentrated in DeFi/finance and blockchain:
Exceptions include consumer-grade Pump and wallet-grade Phantom, but some protocols' fees come from multiple areas (e.g., Meteora also operates a token launchpad, which falls under the consumer category);
The top 20 protocols (accounting for 2% of the total) contributed 69% of the fees, a concentration typical of digital asset market metrics;
Recent growth was mainly driven by DEXs in the Solana ecosystem, such as Meteora and Raydium:
A year ago, the fee volume of these DEXs was negligible; now, Solana ecosystem DEXs are not only expanding their market share but also driving the growth of the overall on-chain fee pool;
Other protocols such as Pump.fun are also launching new As a former leading DEX, Uniswap maintained a stable absolute fee scale, but its market share declined due to the lack of a Solana ecosystem presence. Conversely, PancakeSwap on the BNB Chain achieved fee growth by increasing trading volume, and jumped to the top of the fee revenue rankings in the third quarter of 2025.
Among the more than 1,000 protocols we analyzed, 71 protocols have exceeded $100 million in on-chain annualized revenue. Among them, 32 protocols achieved this goal within one year of their launch, and their growth rate is comparable only to leading AI breakthrough projects such as Cursor.
Among the more than 1,000 protocols we analyzed, 71 protocols have exceeded $100 million in on-chain annualized revenue. Among them, 32 protocols achieved this goal within one year of their launch. Their growth rate is comparable only to leading AI breakthrough projects such as Cursor.
Typical examples include: Blockchain: Base, Filecoin, Linea; DePIN: Aethir; DeFi/Finance: Ethena, GMX, Virtuals, Sushiswap; Wallets/APIs: Axiom, Moonshot, Photon; Consumer: Friend.tech, LooksRare, Pump.fun. Many protocols relied on incentives for early fee growth; for example, LooksRare generated $500 million in fees in its first three months, but also distributed an equal amount in rewards. It is worth noting that 16 of the 71 protocols were launched on platforms after June 2023, and all of them, except for Base, are application protocols. This phenomenon highlights both the concentration of fee generation and indicates that mature infrastructure is accelerating the disruption of existing players by innovators. Ethereum was the first publicly investable asset to surpass a market capitalization of $500 billion within six years (during the 2021 bull market): Similar to Bitcoin, Ethereum has global accessibility from its inception; Before reaching this valuation, Ethereum's annualized fees exceeded $1 billion, and it achieved a $100 million ARR in just 2.5 years; Although Ethereum's fee revenue has since declined, it has remained a significant contributor to global asset value. The peak annualized fees in the fourth quarter of 2021 approached $15 billion; Only energy companies can rival the speed at which Bitcoin and Ethereum achieved a $500 billion valuation—Meta, as the fastest-growing technology company, took 13.5 years to reach this goal. Application-layer revenue is more strongly correlated with valuation, but public chains still dominate the total market capitalization. Is the market overlooking something? The Relationship Between On-Chain Fees and Valuation
Among protocols that generate fees, blockchain protocols dominate valuations—in our statistics of a $1.2 trillion market capitalization (excluding Bitcoin), blockchain protocols account for 91%:
Ethereum, XRP, Solana, and BSC alone account for approximately 80% of the blockchain market capitalization;
DeFi/finance protocols account for 6%: Hyperliquid, a perpetual contract DEX launched less than a year ago, has quickly taken the lead in terms of valuation and fees;
Although the fee share of blockchain protocols decreased from over 60% in 2023 to 12% in the third quarter of 2025, their valuation still accounted for over 90% of the total market capitalization of fee-generating protocols; conversely, DeFi/financial protocols contributed 73% of the fees, but their market capitalization share was still far below 10%.
The price-fee ratio is defined as "fully diluted market capitalization divided by annualized fees".
1. Real-World Asset Tokenization (RWAs)
RWAs are the smallest segment in the DeFi space in terms of fees, but have significant growth potential:
On-chain RWA asset value has doubled year-on-year, with a compound annual growth rate (CAGR) of 235% over the past four years;
On-chain fee growth even exceeds the asset value growth rate: fees increased 50 times year-on-year in the third quarter of 2025, despite a low base (only 1500 These fees mainly come from asset management scale (AUM) revenue sharing, transaction fees, or management fees; Benefiting from favorable regulations (more asset classes are open for tokenization), RWA AUM growth², and more off-chain value being "on-chain," fees are expected to continue to grow; Note: Some large RWA protocols, such as the BlackRock BUIDL Fund, are not included in the on-chain fee statistics.
2. Decentralized Physical Infrastructure Network (DePIN)
Aside from early projects like Helium, Akash, and Arweave, DePIN is still a relatively new field.
Over the past year, monetization in this sector has increased significantly: Fees increased approximately fourfold year-over-year, primarily driven by Aethir and IO.Net; Aethir, which provides GPU computing services, holds a large share of the market, but its fees are based on token buybacks; Although growth for Aethir and IO.Net slowed in Q3 2025, the overall growth trend in the sector remains clear¹, and more revenue is expected to be on-chain in the coming quarters; The World Economic Forum predicts that the DePIN sector will be valued at $3.5 trillion by 2028 (approximately 90 times higher than in 2025), indicating that the recent rapid growth is likely to continue.
3. Wallet and Transaction Interface / Application
Wallets and transaction interfaces / applications directly connect with users, mainly realizing on-chain monetization through the additional fees of swap transactions:
Since the fourth quarter of 2024, with the surge in activity in the Solana ecosystem, Phantom's fee contribution has increased significantly;
Coinbase wallet's monthly fee revenue has remained stable at 500-1500 since December 2024.
With the entry of Phantom and Coinbase wallets into the fee generation field, Metamask's market share has declined; in 2024, interfaces focusing on trader-friendly user experience (UX) such as Photon emerged; in the second quarter of 2025, the market declined, and wallet fees also decreased by about 60% (quarter-on-quarter).
4. Consumer Category: Launchpad
In the second half of 2024, launchpad fees surged, with Pump.fun reaching approximately $250 million in on-chain fees in the first quarter of 2025;
In the second quarter of 2025, other platforms such as Meteora (based on the Believe ecosystem) also began monetizing and seizing market share;
The launchpad sector shows the potential for rapid scaling of fees, but historical experience warrants caution: In early 2021-2022, fees for gaming (Axie, Sandbox) and creator economy (Opensea, LooksRare) protocols also experienced a sharp increase, followed by a significant decline.
The launchpad sector demonstrates the potential for rapid scaling of fees, but historical experience warrants caution: In early 2021-2022, fees for gaming (Axie, Sandbox) and creator economy (Opensea, LooksRare) protocols also increased dramatically, followed by a significant decline.
almost all the value distributed by protocols to token holders comes from the application side (light blue line), and favorable regulations will further strengthen this trend.
Regulatory agencies adjust their strategies, sending signals that are friendly to digital assets:
The clarity of DeFi application regulation has improved: Policies such as the Crypto Asset Markets Regulation (MiCA) and the Genius Act have been introduced;
The framework continues to improve: The Clarity Act has been implemented, and the U.S. Securities and Exchange Commission (SEC) has shifted to a "rule-making priority" instead of the previous "enforcement priority";
As regulators and elected officials gain a deeper understanding of blockchain technology, relevant laws and regulations will be more aligned with the actual needs of the industry. The new chairman of the U.S. SEC has listed cryptocurrencies and tokenization as a top priority.
As regulators and elected officials gain a deeper understanding of blockchain technology, relevant laws and regulations will be more aligned with the actual needs of the industry. The new chairman of the U.S. SEC has listed cryptocurrencies and tokenization as top priorities.
The current regulatory environment in the United States shows signs of mainstream adoption: Tokenized funds: BlackRock's BUIDL fund (tokenized through Securitize); Tokenized stocks: For example, Galaxy's $GLXY stock (tokenized through Superstate); Robinhood announced it will launch its own L2 for RWAs; The Depository Trust and Clearing Corporation of the United States (DTCC) announced plans to tokenize its clearing business; Digital Asset Treasury Companies (DATs) are experiencing a surge in popularity; However, tax law remains an obstacle to on-chain fund flows: On-chain value flows and fee generation are still affected by ambiguities in US tax law, such as the following unresolved issues: Should token “wrap/unwrap” be taxed? Are there differences in tax treatment between compound interest liquidity staking tokens (LSTs, such as stETH) and cumulative LSTs (such as wstETH)? Should staking rewards be recognized “at the time of receipt” or “at the time of withdrawal”? Conclusion and Outlook In the first half of 2025, users paid $9.7 billion in on-chain fees, the second highest since the second half of 2021. 2021 fee growth relied on billions of dollars in user incentives, related speculative activities, and a few high-cost PoW blockchains; Currently, fees are primarily generated by the application side—financial use cases dominate, but DePIN, wallets, and consumer applications are expanding rapidly (all achieving over 200% year-over-year growth); Despite increased throughput, blockchain fees have remained stable due to efficiency improvements reducing unit costs—a trend that extends to DEXs and other mature protocols, creating conditions for rapid scaling and monetization on the application side; Consequently, the value distributed to token holders by protocols (e.g., through buybacks and token burns) has reached record highs over the past three quarters; The regulatory environment has also shifted, with recent legislation such as the Genius Act enabling institutional participation in DeFi and potentially further recognizing the legitimacy of "distributing value to token holders"; Looking ahead: Data from 2025 and the forecast of on-chain fees exceeding $32 billion in 2026, representing a 63% year-over-year increase, confirm that on-chain monetization continues to rise. The speed and scale of application scaling are unprecedented, leading to increasing value distribution; simultaneously, clear regulatory support encourages broader investor participation. As the relationship between application fees and valuations demonstrates, the on-chain economy has entered a more mature stage, and fundamental fee metrics deserve close attention from investors.Generative AI can enhance efficiency in real estate by automating tasks like property listing creation and providing personalized customer experiences. It also enables data-driven decisions, helps eliminate bias, and creates interactive virtual tours for better property visualisation.
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