The old crypto startup formula built on venture capital, token launches and subsidized user growth is losing ground. In a long-form piece translated by TechFlowPost from The Token Dispatch, author Prathik Desai argues that the sector is being rebuilt around real revenue, measurable cash flow and distribution power rather than token issuance.
The article highlights three examples. Hyperliquid generated nearly $1 billion in real trading fees over the past 12 months. Telegram-owned Fragment produced more than $350 million in high-margin revenue from auctions for anonymous phone numbers and usernames over the same period. Stripe, meanwhile, acquired stablecoin platform Bridge for $1.1 billion in cash and stock. Taken together, the piece says, those cases reflect a new operating reality in crypto: businesses are being judged on whether they make money, not whether they can issue a token.
Revenue is replacing the old token-first startup script
For much of the past decade, the standard crypto startup path looked familiar. Founders raised money from top-tier venture firms, built a sweeping narrative, launched low-float, high-FDV governance tokens, used token inflation to subsidize users, and hoped eventual secondary-market demand would validate the model.
According to the article, that loop is now breaking down as the liquidity illusion fades and large numbers of no-revenue, dilution-heavy altcoins continue to sink. In its place, stronger teams are choosing a more direct route: build the product, generate revenue, and only then decide whether a token is necessary.
Hyperliquid and Fragment are presented as leading examples. Hyperliquid reached nearly $1 billion in fee revenue over the process without raising a single dollar from venture capital funds. Fragment, which runs Telegram’s marketplace for rare usernames and anonymous numbers, generated more than $350 million in net revenue without issuing a token and without selling equity to VC firms.
The article says these are not isolated cases. As crypto and traditional fintech move closer together, more startups are stepping back from token speculation and dependence on venture funding and are shifting toward cash-flow businesses. Even among projects that do have tokens, investors are paying less attention to distant narratives and more attention to free cash flow.
1kx says crypto is entering an “earnings era”
The piece leans heavily on 1kx’s 2026 blockchain revenue report, which tracked financial data from more than 2,600 crypto protocols and 100 public companies. That report says the industry is moving quickly into what it calls an “Earnings Era.”
What makes the shift notable, the article says, is that it is happening while total crypto industry fee revenue across the network is down about 30% year over year. Desai frames the transition around three developments:
- protocol-generated revenue is replacing token issuance as the preferred way to fund operations;
- secondary markets are repricing tokens based on whether platforms pass real cash flow back to holders;
- value capture is moving toward distribution, with user access becoming more important than the token itself.
Why top teams are no longer rushing to issue tokens
Under the old model, issuing a token was almost a default setting for crypto startups. Tokens could fund development and double as a low-cost marketing engine. A token launch created attention, and that attention often turned into early users.
The article argues that strong business revenue is making those functions less important.
Among all crypto protocols generating real fee income, 157 had issued tokens in 2025. By the end of September this year, that number had fallen to 24. 1kx attributes part of the drop to a weaker market, but the article stresses that the protocols choosing not to issue tokens are not fringe survivors.
Data cited in the piece shows that tokenless protocols now account for 31% of total fee revenue across crypto applications, up from 20% last year. Even as fee revenue among tokenized protocols fell by more than one-third, tokenless protocols still posted real growth in absolute revenue this year.
One reason, the article says, is speed. In 2026, 22 crypto protocols reached more than $100 million in annualized fee revenue within just six months of turning on monetization. Seven of them only began charging fees after 2025.
Public blockchain infrastructure is what makes that kind of launch velocity possible, according to the article. A traditional fintech startup may spend years building infrastructure, securing licenses, lining up bank partners and assembling capital before earning its first dollar. A crypto-native team can go live on day one with access to existing blockchain networks, shared liquidity pools and users who already have wallets set up.
The article also points to a sharp gap in capital efficiency. The top 20 revenue-generating protocols produce $6.30 in real fee revenue for every $1 of outside venture capital raised. Axiom, a trading application that has not issued a token, generated real business revenue equal to 607 times its historical funding total.
The contrast is much weaker in the long tail. Projects outside the top 20 generate only about $0.08 in annual protocol revenue for every $1 of venture funding raised. The article’s conclusion is blunt: the leaders are funding themselves through business activity, while the long tail still depends on venture support. Years of repeated fundraising rounds and token airdrops masked that difference.
In Desai’s telling, the token-promotion game only worked when the market cared mainly about symbols and speculation. As long as a token could list on an exchange and be sold, few people asked whether the underlying business was healthy. That is changing as the industry matures and investors become more selective.
Even when a profitable protocol such as Hyperliquid eventually launched its native token, HYPE, the article describes that move as a financial outcome rather than a prerequisite for survival. Real revenue comes first. Only then does a token have a durable basis.
Cash flow is becoming the basis for token valuation
Once token issuance stops being the default financing tool, the article asks a more direct question: what exactly does a token pay its holders for?
For most of crypto’s history, token prices were driven by macro narratives, unlock schedules and exchange listings. In a weaker market, the article says, what matters is whether a platform returns captured economic value to holders, including through buybacks and burns funded by fee income.
That cash-flow logic dominated in 2026, according to the piece. A “cash-flow distribution token index” compiled by 1kx returned 82% from January through September this year. Over the same period, spot Bitcoin fell 5%, while the top 100 major tokens excluding BTC and ETH posted an average return of negative 7%.
The article says those distribution-focused crypto assets also outperformed listed crypto companies. Coinbase’s market value was down 18% year to date, Robinhood was flat, and Circle was up 4%. The reason, in the article’s framing, is simple: these native tokens did what traditional equity investors understand immediately, which is distribute real profits to investors.
The historical comparison in the piece is also telling. The same distribution token index rose 63% in 2024 while Bitcoin doubled. In 2025, the index fell 14% while Bitcoin declined 6%. By 2026, the article argues, market preferences and valuation benchmarks had shifted in a more durable way.
Valuation multiples are also moving closer to traditional finance. A decentralized exchange willing to distribute profits to token holders now trades at a median valuation of about 6x annualized fees, according to the article. That places it inside the single-digit valuation range common among listed brokers and exchanges. Coinbase, it notes, is currently valued at about 8x sales.
Protocols are also increasing direct distributions. In the third quarter of 2026 alone, on-chain protocols transferred $1.5 billion in real value to token holders, equal to roughly 40% of total on-chain fee spending. For comparison, Apple’s dividends and share buybacks in the second quarter of this year amounted to about 27% of its quarterly revenue.
For secondary-market investors, the article says, a new rule is taking shape: tokens that do not pass real returns to holders now rank below yield-bearing assets with stable cash flow.
Distribution is becoming the new center of value capture
The article says tokens once served a third major purpose beyond fundraising and speculation: they helped projects acquire users through airdrops, liquidity mining and points programs. In practice, those systems paid users with project-created tokens in exchange for participation.
That user-acquisition role is now being absorbed by distribution channels. Real users, the article argues, are increasingly obtained either by paying heavily for access or by renting access from key gatekeepers.
Circle is used as a clear example. As the issuer of USDC, Circle earns interest income from the U.S. Treasuries backing its reserves. But it then has to hand over 60% of that interest income to distribution partners. In the first half of this year alone, Coinbase received $655 million in interest-related subsidies from Circle.
The implication is that the company issuing the digital dollar may end up with a smaller share of profits than the platform controlling the user relationship.
Uniswap faces a similar dependence, according to the article. Without traffic from Robinhood Chain, Uniswap’s protocol fee revenue would be down 54% from a year earlier. Two-thirds of the platform’s trading fee revenue now depends on that single core distribution channel.
Hyperliquid has taken a more explicit route by building revenue sharing with distributors into the system itself. The article says its HIP-3 standard lets third-party developers build custom front ends and create markets on top of Hyperliquid’s order book infrastructure. In return, the protocol shares fee revenue with those builders. So far, external front-end developers and market-making ecosystem participants have received 16% of Hyperliquid’s total platform fee revenue.
Desai places that shift in a broader fintech context. As financial infrastructure matures, the mystique around the technology fades and the focus moves to how cash flow is allocated. In that structure, lasting value settles at the distribution layer that controls user access, not in the isolated asset category itself. Crypto tokens, the article says, are now being judged by the same rule.
What this means for Web3 founders and investors
The article argues that the shift could leave the Web3 sector on healthier footing. Tokens with stable distribution capacity can be valued more like traditional equities on fundamentals. Protocols that can fund themselves through operating cash flow no longer need to sell their future too early to venture capital firms before a product is fully built.
The piece closes on an irony it does not miss: one of the clearest reports arguing for a revenue-first crypto industry with less dependence on VC money and token speculation came from a well-known venture firm, 1kx.
The original article was written by Prathik Desai of The Token Dispatch and published in Chinese translation by TechFlowPost.
