Title: “The Rainmakers of the Crypto Market”
Introduction:
In this article, we will analyze the most significant fee-generating protocols in the crypto market, including blockchain and decentralized applications. will focus on why users are inclined to pay fees for certain protocols, the types of these protocols provide, their business models, the total amount of fees paid by users, and which specific market are more popular than others. By analyzing a detailed chart, we will delve into industry in the cryptocurrency market.
Let’s begin our detailed exploration!
1. Focus on Top-Generating Blockchain Protocols
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The highlighted protocols include Ethereum, Tron,, Solana, BNB Chain and Base.
Major fee sources come from general blockchainsAmong the top protocols listed, 5 belong to Layer 1 (L1) blockchains while only belongs to Layer 2 (L2).
In the past 30 days, Ethereum has generated the highest fees at around $180 million. Although Base has relatively low average transaction at approximately $0.03 (compared to Ethereum L1’s $4.5 it has successfully entered the top 20 due to increased user activity on its L2 layer.
Apart from L1 and L2 blockchains, other protocols in the top 20 fall under Decentralized Finance (DeFi) category.
. Top Fee-Generating Protocols: Focus on Lido Finance and Jito
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Highlighted Protocols: Lido Finance and Jito.
Lido Finance generates highest fees among all crypto applications.
Jito operates two distinct businesses liquidity staking (JitoSOL) and maximizing extractable value (MEV) market; former profits through management fees based on AUM while latter profits through MEV tips charged validators (the chart includes only MEV tips).
Compared with Jito,Fee generation by Lido is approximately twice as high but Jito’s growth rate is faster.
Lido manages $3.35 billion in staked assets while Jito stands at160 million.Lido achieves a fully diluted valuation of $190 million whereas Jito is valued at $250 million.
3.Top Fee-Generatingocols: Focus on Decentralized Exchanges(Dex)
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Highlighted Protocols: Uniswap,PancakeSwap,Aerod,
Uniswap Labs,and GMX
Uniswap DAO dominates in Dex category with monthly fee generation close to100 million.
It’s worth noting that Uniswap Labs, as an independent entity, is included in consideration as it profits by charging users of the official Uniswap Labs frontend application that integrates with theiswap protocolUniswap DAO’s fee generation is approximately twice as high as other DEX protocols in the top 20.
Aerodrome, a Base-based Dex, generates fees are double those of its underlying L2 blockchain.
4. Top Fee-Generating Protocols: Focus on MakerDAO and Ethena
[imageHighlighted Protocols: MakerDAO and Ethena.
Ethena has the potential to surpass Maker in terms of fee generation.
MakerDAO and Ethena dominate in the field of stablecoin issuers. The largest stablecoin issuers on the market like TetherUSDT) and Circle (USDC) are not included because their fees and revenue are primarily generated off-chainEthena is expected to launch in November 2024 while MakerDAO has been operational since November 2017.
5. Top-Generating Protocols: Focus on Loan Protocols
The highlighted protocols include Aave, Morpho Compound, and Venus.
Aave ranks as the fourth-largest fee generator in the cryptocurrency field.
the lending category, Aave stands out with a fee gap of $30 million compared to second-ranked Morpho. Although both Aave and Compound were launched in 2020,Aave has successfully surpassed Compound when it comes to active loans and fee generation.
While Aave leads across all lending platforms,Venus holds a significant advantage in BNB Chain’s lending market currently accounting for approximately 90% of fees generated.
6.Top Fee-Generating Protocols: Chain Segmentation
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This section mainly introduces blockchains where applications are deployed.
Most top-feeenerating applications choose to deploy on multiple blockchains.In crypto space among top 20 fee-generating applications,the majority are deployed on Ethereum (including L1and L2).
It’s mentioning that asset issuers(stablecoin issuers liquidity providers) mostly adopt single-chain while their core products(stablecoins or LSTs) act as bridge assets across chains.Among these top 20,Aerodrome is unique app launched fromL blockchain(Base).
FAQs:
What are fees?
Fees refer to the total amount paid end-users for protocol services. Different market sectors have different fee structures because each sector’s protocols have unique business modelsBlockchain L1 & L2 = Charging transaction fees by selling block spaceLiquidity staking = Earning rewards by investing users’ staked assets
Exchanges (DEX, derivatives) = Exchanging assets for transaction fees
L = Offering interest-bearing loan services
Stablecoin issuers = Generating revenue by providing-bearing dollars or investing user deposits
Asset management = Earning income by investing user depositsWhat is the difference between fees and revenue?
Revenue is calculated based on the fee collection rate (%) of a protocol This rate can vary between 0% and 100%. Currently, Uniswap DAO and Bitcoin have adoption of 0%, while Ethereum usually has around an 80% adoption rate.
How revenue different from earnings?
Earnings are the result of deducting token incentives and operational expenses from revenue. Token incentives refer to the’s expenditure on user acquisition, calculated based on the dollar value of the protocol’s native. Operational expenses include investments in manpower and infrastructure for development, maintenance, and optimization processes.
Please note that many protocols do not publicly their operational expenses on-chain, which is why many protocols have not introduced this metric yetWhen should we consider fees, revenue, or earnings?
Based on experience, investors should focus on fees in early stages when a protocol has paying customers. In later stages whenization begins, focus shifts to revenue and/or earnings:
Early stage: Focus on fees to show that there are paying customers the protocol.
Later stage: Focus on revenue to demonstrate that the protocol can monetize its paying customers.
M stage: Focus on earnings to reflect that the protocol can create value for its token holders.
It is important to consider ratios such as:
Revenue/Fees = Ideally shows that a protocol has leverage over suppliers (LPs) and can charge higher fees.
Earnings/Revenue = Ideally indicates that a protocol has lower associated with user acquisition and operating expenses, allowing it to retain a higher proportion of revenue as earnings.
