Where does the money in DeFi flow to? Decoding the revenue model of decentralized finance

When it comes to revenue in the cryptocurrency industry, most people think of DeFi protocols as new projects. But in reality, in 2025, DeFi protocols and other crypto projects generated over $16 billion in net revenue, doubling the $8 billion of 2024. This figure is shocking because it shows that the crypto industry has shifted from the “token-only, no income” phase to the “real income, clear revenue” era. But the question is: where does this money come from? where does it flow? And what will determine the future of DeFi revenue?

To answer these questions, we need to understand the three main factors creating cash flow in the current DeFi ecosystem: yield from interest rates, transaction execution technology, and new asset issuance channels. Each factor has its own mechanism, attracts different user types, and creates unique earning opportunities.

The Yield Empire: Tether and Circle Still Hold 60% of DeFi Revenue

Tether and Circle, the two largest stablecoin issuers in the world, control over 60% of the total revenue of the entire crypto industry in 2025. This figure is even higher than in 2024 (65%), indicating their advantages remain strong despite emerging new challenges.

Their revenue generation mechanism is simple yet powerful: each stablecoin issued is backed by real assets—mainly U.S. Treasury bonds. When Treasury yields are high, these issuers automatically earn interest from these assets, creating sustainable and predictable revenue. Most of this profit is redistributed to stablecoin holders through staking programs or fee sharing, making holding stablecoins a form of “passive selling” to earn interest.

However, this model has a critical weakness: it depends entirely on the base interest rate set by the Federal Reserve (Fed). In 2025, the Fed begins a new rate-cutting cycle, and if this trend continues, profits from Treasury bonds will decline, leading to a decrease in stablecoin issuers’ revenue. For this reason, many experts forecast stablecoin market share could fall below 60% in the coming years.

Transaction Technology Layer: The Birthplace of New DeFi Unicorns

While profits from stablecoins gradually weaken, a completely new market is emerging—decentralized perpetual contract exchanges (perp DEX). In 2024, these projects had almost no significant revenue. But in 2025, the top four platforms—Hyperliquid, EdgeX, Lighter, and Axiom—together account for 7-8% of the industry’s total revenue, surpassing the combined revenue of traditional DeFi segments like lending, staking, bridges, and aggregators.

Why are these platforms growing so rapidly? The secret lies in how they completely simplify the trading experience. Unlike spot DEXs, where users must transfer assets and perform complex steps, perp DEXs allow continuous, high-frequency trading—margin trading, arbitrage, risk management, building long-term positions—all without the effort of transferring funds.

Behind this simplicity is an extremely complex technological system. These platforms must build ultra-stable trading servers that do not crash under pressure; automated order matching systems; safe liquidation mechanisms; and most importantly, they must provide sufficient liquidity depth to serve all user orders.

Hyperliquid’s dominance is not due to marketing but to abundant liquidity. This platform attracts the largest number of market makers—those who provide continuous liquidity—making Hyperliquid the highest fee-earning perpetual contract exchange in 10 months of 2025.

Ironically, because these platforms do not require users to have deep blockchain or smart contract knowledge, and operate like familiar traditional exchanges, they are highly attractive. Once the technology is stable, revenue will automatically grow from small fees on millions of daily trades.

The Issuance Channel: Where Meme Coins Are Born and Create Value

The third revenue factor in DeFi comes from platforms issuing new tokens, such as pump.fun and LetsBonk. These platforms do not own any meme coins themselves but create infrastructure that makes it easy for anyone to launch their own new tokens.

This model is exactly like Airbnb or Amazon in Web2: these companies do not own assets (homes, products), but by building platforms with excellent user experience, they become the preferred place for sellers. Similarly, pump.fun does not own any meme coins but has become the place where nearly all new meme coins are issued. By automating listing processes, providing initial liquidity, and simplifying operations, this platform earns fees from each token issued, creating sustainable earning opportunities from the meme coin phenomenon.

How DeFi Distributes Value: Tokens Are No Longer Just Voting Certificates

An equally important aspect to mention is: what percentage of total fees is shared with token holders before the protocol retains its share?

In 2025, the total fees paid by DeFi users amount to about $30.3 billion. Of this, the revenue retained by protocols after paying liquidity providers is $17.6 billion. But the notable figure is: approximately $3.36 billion has been directly transferred to token holders via staking, fee sharing, buybacks, and token burns. That is 58% of total fees converted into protocol revenue, and 20% paid to token holders.

This shift is profound: tokens are no longer just governance certificates but have become a claim to the protocol’s cash flow. This creates strong incentives for investors—they are not only betting on token prices but also owning a share of the project’s real revenue. As a result, this model encourages token holders to hold long-term and even buy more.

Looking to 2026: Two Questions That Will Decide

Where will the cash flow in DeFi go next year? Two questions need answers:

First, as the Fed continues to cut interest rates, profits from bonds will decline, and stablecoin issuers’ market share could fall below 60%. If that happens, where will the fee money flow?

Second, as the structure of the perp DEX layer becomes more concentrated (with only a few exchanges dominating the market), can these platforms’ 7-8% market share surpass 10% or higher?

The answers will clearly define DeFi’s future: will the industry continue to depend on macro interest rates, or will it develop independent, more sustainable revenue sources? Whatever the outcome, one thing is certain: DeFi is no longer just a token industry without real money—it is becoming a genuine financial system, where every USD of revenue has a clear source and every token holder has the right to share in the value.