Why Crypto’s Revenue Story Has Changed

US President Donald Trump displays the GENIUS Act (Guiding and Establishing National Innovation for US Stablecoins Act), which codifies the use of stablecoins — cryptocurrencies pegged to stable assets like the US dollar or US bonds — after signing it in the East Room of the White House in Washington, DC, on July 18, 2025. (Photo by Brendan SMIALOWSKI / AFP) (Photo by BRENDAN SMIALOWSKI/AFP via Getty Images)

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The cryptocurrency industry will generate roughly $20 billion in onchain fees this year, nearly matching its 2021 peak. But beneath these similar headline numbers lies a fundamental transformation that crypto skeptics have missed.

In 2021, Ethereum alone accounted for over 40% of all onchain fees. Users were simply overpaying for blockchain transactions during speculative frenzies, rushing to mint the latest NFT project or trade newly launched tokens. Today, that speculative premium has evaporated. Blockchain transaction costs have plummeted by roughly 90%, thanks to scaling innovations like EIP-1559 and layer-2 networks.

What replaced it tells a more interesting story about where the industry is headed.

Crypto Applications Take Over From Infrastructure

According to 1kx’s onchain revenue report, which analyzed 1,244 protocols across six sectors, decentralized finance applications now generate 63% of all onchain fees. These are trading platforms, lending protocols, and derivatives exchanges that users pay to access repeatedly because they find them useful, not because they have no alternative during a speculative mania.

The shift represents crypto’s maturation from expensive infrastructure to functional applications. When Ethereum transactions cost $50 during peak congestion, sustainable business models were impossible. At current costs, measured in cents rather than dollars, applications can actually monetize user activity at scale.

DeFi applications grew 126% year-over-year while blockchain fees declined. The number of fee-generating protocols jumped from roughly 120 in 2021 to 969 in the first half of 2025. Of these, 389 are entirely new, contributing 17% of third-quarter fees.

Perhaps most remarkably, 71 protocols have achieved $100 million in annual recurring revenue, with 32 reaching that milestone within a single year. This speed dwarfs traditional software companies.

Crypto Trading Infrastructure Drives Growth

The largest fee generators have shifted dramatically. Solana-based trading infrastructure now dominates the top ranks, serving long-tail retail traders swapping low-value tokens. Meteora, Jupiter, and Raydium have captured enormous volume that simply didn’t exist on Ethereum at these price points.

Uniswap continues growing on Ethereum and EVM chains, but missed the explosive retail trading wave that moved to faster, cheaper blockchains. The market leader lost share not through failure but by winning more slowly than new entrants.

This volatility extends across the sector. The top 20 protocols generate 69% of all fees, down from 94% in late 2021. But leadership rotates constantly, with roughly 25% of the top 20 turning over each quarter. Dominance is temporary, earned through continuous improvement rather than network effects that lock in users.

Value Actually Flows to Token Holders

The industry has solved a problem that plagued earlier cycles: how to return value to token holders without triggering regulatory action.

Value distributed to token holders hit an all-time high of $1.9 billion in the third quarter of 2025, up 50% from late 2021 despite lower total fees. This stems from dramatically reduced token incentives. Top applications distributed $2.8 billion in token rewards during late 2021 to attract users. That figure fell below $100 million in the first half of 2025.

The regulatory environment shifted decisively. For years, lawyers advised protocol founders against any mechanism that might be construed as profit-sharing. The combination of the Genius Act in the United States and MiCA framework in Europe provided clarity (and a frendlier regulatory environment) that enabled nearly 1,100 protocols to implement buybacks, burns, and other value distribution mechanisms.

This matters because it transforms tokens from purely speculative instruments into something closer to investable assets with cash flows. Price-to-fee ratios in DeFi applications now median at 17x, with decentralized exchanges at 14x and lending protocols at 8x. These multiples resemble growth software companies rather than lottery tickets.

Blockchains themselves still trade at a median 3,902x price-to-fee ratio, reflecting their role as foundational infrastructure with network effects and security guarantees that applications cannot replicate. But 1kx argues that applications increasingly trade on fundamentals.

The Composition Of Fees Tells the Real Story

Breaking down where fees come from reveals the industry’s evolution. DeFi and finance applications generated $6.1 billion in the first half of 2025, up 113% year-over-year. This category includes everything from spot trading to perpetual futures to lending markets.

Blockchains brought in $2.1 billion, down 40% as transaction costs compressed. Tron, Ethereum, and Solana lead this category, but their dominance reflects legacy positioning rather than growth trajectory.

Wallets emerged as a surprisingly robust category at $800 million, up 158%. These applications solved a monetization puzzle that stumped founders for years. It turns out users will pay small convenience fees to trade directly within their wallet interface rather than navigate to separate websites. Phantom leads with 30% market share, followed by Coinbase Wallet and Metamask.

Consumer applications, mostly token launchpads like Pump.fun, generated $600 million, up 173%. This category swings wildly with memecoin trading mania, making it the least predictable revenue source.

The smallest categories show the highest growth rates. DePIN, which encompasses decentralized physical infrastructure like GPU compute networks, grew 416% to $100 million. Middleware services like Chainlink grew 43% to $100 million.

Infrastructure Efficiency Enabled Application Growth

The numbers only make sense in context of how dramatically blockchain infrastructure improved. Daily transactions across layer-1 and layer-2 networks increased 2.7x to 169 million. Monthly active wallets grew 5.3x to 273 million. Yet blockchain fees declined because each transaction costs a fraction of what it did in 2021.

Ethereum’s fee revenue dropped 95% year-over-year even as activity migrated to layer-2 networks processing 18 times Ethereum’s transaction volume. This is progress, not failure. The base layer secured dramatically more economic activity while charging less for the privilege.

Solana’s fees grew 97% year-over-year from doubling non-vote transactions and a 20% increase in SOL’s price. The network found product-market fit with retail traders who prioritize speed and cost over the security guarantees that institutional users demand.

PancakeSwap, a decentralized exchange originally built on BNB Chain, saw fees jump 150% despite declining take rates. Trading volume surged over 200%, more than offsetting the shift toward cheaper liquidity pools.

The Industry Split Into Two Markets

Cryptocurrency now comprises two distinct markets that often get conflated. One consists of memecoins, speculative tokens, and assets trading purely on momentum and narrative. This market is enormous, volatile, and generates headlines.

The other consists of fee-generating protocols with sustainable business models, transparent financials, and value distribution to token holders. This market is quieter but growing faster.

The second market now represents over 30% of digital asset market capitalization, excluding Bitcoin. It generated $9.7 billion in the first half of 2025, projecting to $19.8 billion for the year. Including offchain fees and other income, total digital asset industry revenue reached $56.4 billion in the first half, up 15% year-over-year.

These protocols benefit from advantages unavailable to traditional companies. Transactions settle in milliseconds rather than 24 hours. Users face zero counterparty risk rather than trusting multiple intermediaries. All financial data is transparent and auditable in real-time rather than disclosed quarterly with creative accounting.

When Larry Fink wrote in BlackRock’s shareholder letter that stablecoins would upend payments and blockchains would become the software backend of global finance, he was describing trends already underway. Stripe’s acquisition of Bridge for stablecoin payment infrastructure and BlackRock’s BUIDL tokenized fund represent institutional validation of what the revenue data already showed.

Crypto Protocol Fee Projections

The report projects onchain fees will reach $32 billion in 2026, representing 63% growth. All growth comes from applications, with blockchain fees expected to remain flat.

DeFi should grow roughly 50% as it continues taking market share from centralized exchanges and traditional finance infrastructure. Emerging categories like tokenization, real-world assets, and DePIN could grow 70% as regulatory clarity enables more institutional participation.

The real unlock isn’t attracting new users but converting existing ones. Roughly 700 million people own cryptocurrency, but only 10% actively use onchain applications according to recent estimates from Andreessen Horowitz. These are not skeptics who need convincing about crypto’s value. They have already put money at risk. They simply haven’t discovered the applications worth paying for yet.

That gap between ownership and usage represents the industry’s near-term growth opportunity. As more holders become users, as more users discover sustainable applications worth paying for, and as more protocols distribute value to token holders, the industry transitions from speculation to investment.

The $20 billion in onchain fees tells a story of maturation. The composition of those fees tells a story of transformation. And the trajectory suggests the industry is finally building what it always promised: useful financial infrastructure that users pay for because it works better than the alternative.