The cryptocurrency sector is set to produce approximately $20 billion this year, coming close to its 2021 peak. However, underneath these comparable headline figures, there exists a fundamental shift that has eluded the attention of crypto skeptics. In 2021, Ethereum represented more than 40% of the total onchain fees. During speculative frenzies, users found themselves overpaying for blockchain transactions as they rushed to mint the latest NFT project or trade newly launched tokens. Today, that speculative premium has disappeared. Transaction costs on the blockchain have seen a dramatic decrease of about 90%, driven by scaling advancements such as EIP-1559 and layer-2 networks. Revenue report reveals that an analysis of 1,244 protocols spanning six sectors shows decentralized finance applications are responsible for generating 63% of all onchain fees. These platforms for trading, lending protocols, and derivatives exchanges are ones that users consistently pay to access due to their utility, rather than a lack of alternatives during a speculative frenzy.
The transition signifies the evolution of cryptocurrency from costly infrastructure to practical applications. During peak congestion, when Ethereum transactions soared to $50, the viability of sustainable business models became unattainable. At present costs, expressed in cents instead of dollars, applications have the potential to effectively monetize user activity on a large scale. DeFi applications experienced a remarkable 126% growth year-over-year, even as blockchain fees saw a decline. The count of fee-generating protocols surged from approximately 120 in 2021 to 969 in the initial half of 2025. Among these, 389 are completely new, accounting for 17% of the fees in the third quarter. In a striking development, 71 protocols have crossed the $100 million mark in annual recurring revenue, with 32 of them hitting that impressive milestone in just one year. This speed eclipses that of traditional software companies. The largest fee generators have undergone a significant transformation. Solana-based trading infrastructure has taken the lead, catering to long-tail retail traders engaged in swapping low-value tokens. Meteora, Jupiter, and Raydium have amassed significant volume that was absent on Ethereum at these price levels. Uniswap is experiencing growth on Ethereum and EVM chains; however, it has missed out on the explosive retail trading wave that has shifted to faster, cheaper blockchains. The market leader experienced a decline in share not due to missteps, but rather by progressing at a slower pace compared to emerging competitors. The volatility is pervasive throughout the sector. The leading 20 protocols account for 69% of total fees, a decline from 94% observed in late 2021. However, leadership experiences constant rotation, with approximately 25% of the top 20 changing hands each quarter. Dominance is a fleeting achievement, attained through relentless enhancement instead of network effects that secure user loyalty.
The industry has addressed a challenge that has affected previous cycles: finding a way to provide value to token holders while avoiding regulatory repercussions. In the third quarter of 2025, value distributed to token holders reached an unprecedented $1.9 billion, marking a 50% increase from late 2021, even with a decline in total fees. This arises from significantly diminished token incentives. In late 2021, leading applications distributed a staggering $2.8 billion in token rewards to draw in users. The figure dipped under $100 million during the first half of 2025. The regulatory landscape has undergone a significant transformation. For years, legal experts cautioned protocol founders against implementing any mechanism that could be interpreted as profit-sharing. The synergy between the Genius Act in the United States and the MiCA framework in Europe has brought about clarity and a more favorable regulatory landscape, allowing approximately 1,100 protocols to adopt buybacks, burns, and various value distribution strategies. This is significant as it shifts tokens from being merely speculative instruments to entities that resemble investable assets with cash flows. The median price-to-fee ratios in DeFi applications currently stand at 17x, with decentralized exchanges averaging 14x and lending protocols at 8x. These multiples reflect characteristics of growth software companies instead of resembling lottery tickets. Blockchains continue to exhibit a median price-to-fee ratio of 3,902x, underscoring their status as essential infrastructure. This figure highlights the unique network effects and security assurances that applications are unable to duplicate. However, 1kx contends that applications are progressively trading based on fundamentals. Analyzing the origins of fees sheds light on the evolution of the industry. In the first half of 2025, DeFi and finance applications raked in an impressive $6.1 billion, marking a significant 113% increase compared to the previous year. This category encompasses a wide range of activities, including spot trading, perpetual futures, and lending markets.
Blockchains generated $2.1 billion, reflecting a 40% decline as transaction costs tightened. Tron, Ethereum, and Solana are at the forefront of this category, yet their dominance signifies a legacy positioning rather than an upward growth trajectory. Wallets have emerged as a surprisingly robust category, reaching $800 million, which marks a significant increase of 158%. These applications cracked a monetization conundrum that had perplexed founders for years. Users are willing to incur minor convenience fees to execute trades directly from their wallet interface instead of having to visit separate websites. Phantom dominates the market with a 30% share, trailed by Coinbase Wallet and Metamask. Consumer applications, primarily token launchpads such as Pump.fun, raked in $600 million, marking a significant increase of 173%. This category experiences extreme fluctuations due to the memecoin trading frenzy, rendering it the most unpredictable source of revenue. The smallest categories are demonstrating the most significant growth rates. DePIN, representing decentralized physical infrastructure such as GPU compute networks, surged by 416% to reach $100 million. Middleware services such as Chainlink experienced a remarkable growth of 43%, reaching a valuation of $100 million. The figures only gain significance when viewed through the lens of the remarkable advancements in blockchain infrastructure. Daily transactions across layer-1 and layer-2 networks surged 2.7 times, reaching a total of 169 million. Monthly active wallets surged 5.3 times, reaching a total of 273 million. Blockchain fees have seen a decline, as each transaction now costs only a fraction of what it did back in 2021. Ethereum’s fee revenue has plummeted by 95% year-over-year, despite a significant shift in activity towards layer-2 networks, which are now handling 18 times the transaction volume of Ethereum. This represents advancement, not defeat.
The base layer significantly enhanced economic activity while imposing lower fees for the service. Solana’s fees surged by 97% year-over-year, driven by a doubling of non-vote transactions and a 20% rise in SOL’s price. The network has successfully identified its product-market fit among retail traders, who place a higher value on speed and cost rather than the security assurances sought by institutional users. PancakeSwap, a decentralized exchange initially developed, experienced a staggering 150% increase in fees, even as take rates continued to decline. Trading volume skyrocketed by over 200%, effectively counterbalancing the movement towards more affordable liquidity pools. The cryptocurrency landscape currently consists of two separate markets that frequently become intertwined. One encompasses memecoins, speculative tokens, and assets that trade solely based on momentum and narrative. The market is vast, unpredictable, and consistently makes news. The other includes fee-generating protocols that boast sustainable business models, transparent financials, and a value distribution mechanism for token holders. The market may be quieter, yet it is experiencing rapid growth. The second market currently accounts for more than 30% of the digital asset market capitalization, not including Bitcoin. The first half of 2025 saw a generation of $9.7 billion, with projections indicating a total of $19.8 billion for the entire year. Total revenue for the digital asset industry, including offchain fees and other income, hit $56.4 billion in the first half of the year, marking a 15% increase compared to the previous year. These protocols leverage benefits that traditional companies simply cannot access. Transactions settle in mere milliseconds instead of taking a full 24 hours. Users encounter no counterparty risk, eliminating the need to place trust in various intermediaries. All financial data is transparent and auditable in real-time, as opposed to being disclosed quarterly with creative accounting practices.
Larry Fink stated that stablecoins would disrupt payments and that blockchains would evolve into the software backbone of global finance, highlighting trends that were already in motion. Stripe’s acquisition of Bridge for stablecoin payment infrastructure, alongside BlackRock’s BUIDL tokenized fund, signifies a strong institutional endorsement of the revenue data that has already been revealed. The report forecasts that onchain fees are set to hit $32 billion by 2026, indicating a robust growth of 63%. All growth is driven by applications, as blockchain fees are anticipated to stay stable. DeFi is projected to expand by approximately 50% as it steadily captures market share from centralized exchanges and traditional financial systems. Emerging categories such as tokenization, real-world assets, and DePIN are poised for a significant growth of 70%, driven by regulatory clarity that facilitates increased institutional participation. The true breakthrough lies not in drawing in new users, but in transforming the ones we already have. Approximately 700 million individuals hold cryptocurrency, yet merely 10% engage with onchain applications, as per recent estimates from Andreessen Horowitz. These individuals are not skeptics requiring persuasion regarding the value of crypto. They have already exposed their capital to risk. They have yet to uncover the applications that hold true value for investment. The disparity between ownership and usage highlights a significant growth opportunity for the industry in the near term. With an increasing number of holders turning into users, a growing awareness of sustainable applications that justify expenditure, and a rise in protocols that allocate value to token holders, the industry is shifting from mere speculation to genuine investment. The $20 billion in onchain fees illustrates a narrative of growth and development. The breakdown of those fees reveals a narrative of change. The trajectory indicates that the industry is on the verge of delivering on its long-standing promise: creating valuable financial infrastructure that users are willing to pay for due to its superior performance compared to alternatives.