A report translated by TechFlowPost from insights4vc argues that the strongest on-chain business models usually control scarce liquidity, distribution channels, or access to dollar financing. For investors, the harder task is not identifying which protocol generates fees, but figuring out where the residual value actually ends up.
The report’s starting point is simple: in one on-chain interaction, a trader may be paying the application layer, the execution venue, and the network underneath at the same time. Headline revenue can look large. The amount actually retained by a protocol, its operating entity, or tokenholders may be much smaller.
Three headline findings
The report opens with three core observations.
- Customer reach, or distribution power, is itself a valuable economic asset. A trading frontend can capture meaningful fees even if it does not provide the underlying liquidity.
- Token buybacks need to be rebuilt as a separate accounting line rather than accepted at face value from dashboard labels. Blockworks put PUMP buyback spending for the first nine months of the year at $240.5 million. The official dashboard showed $242.8 million. A fair-value proxy produced a very different result.
- Real operating costs can alter the investment case. In Aave’s own financial disclosure, third-quarter revenue was $17.8 million, yet net profit under an accounting framework was only $2.4 million after incentives, market-making and service-provider costs.
The broader claim is that the most powerful on-chain entities tend to own scarce liquidity, distribution networks, or dollar funding access. Investors need to look through tokenomics and determine which claims on value are actually capturing the protocol’s residual economics.
Where retained revenue goes
The ranking uses natural-quarter data through Sept. 30. “Retained revenue” is defined as the economic value left with the protocol treasury, operating entity, or tokenholders after identifiable supply-side subsidies and revenue shares are deducted. It is measured before any undisclosed employee compensation, R&D support, infrastructure spending, or bad-debt losses. If funds from that pool are later used for token buybacks, that is treated as capital allocation rather than additional revenue.
The scope covers financial applications with on-chain activity or fee mechanisms. It excludes base-layer blockchains, centralized exchanges, interest income from centralized stablecoin reserves, off-chain fund managers and ETPs, as well as physical collectibles. Polymarket only includes its international on-chain venue. The report says mixed-model protocols may also earn from off-chain assets, so the dataset should be read as a sector estimate under a specific methodology, not an audit-level census of the full industry.
One of the clearest shifts this year was GMGN’s breakout. Its third-quarter retained revenue was more than four times the second quarter, according to the report. Sky and Polymarket were roughly stable. The list of leaders over the first nine months includes both fast-expanding transaction-service businesses and steadier financial intermediaries.
Hyperliquid: liquidity as a paid privilege
The report places Hyperliquid at the top of the on-chain earnings table. On its reconstructed numbers, total fees and gross revenue reached $638.9 million, and $488 million of that remained as economic retention for the protocol and holders. Third-quarter retained revenue came in at $174 million, up 17.0% from the prior quarter. The report says this validates scale, but not a fully loaded operating margin.
Customers are paying for immediate liquidity, execution quality, and increasingly differentiated market access. The moat, in the report’s telling, comes from the interaction between a deep order book, trader trust, and market microstructure. Software can be copied. Convincing both sides of an active market to move together is much harder.
Hyperliquid’s design adds another layer to that model. The report says the HIP-3 growth framework cut protocol-level parameters by 90% and lets deployers keep their own share split. That means a surge in volume does not automatically translate into a proportional rise in retained revenue at the protocol level, because ecosystem developers also hold claims along the transaction path.
Blockworks research identified a second monetization engine. Since launching in April, the read/write priority auction system has generated $5.07 million in revenue. Over the last 30 days, it contributed $2.75 million, or 6.7% of estimated revenue. The report interprets this as evidence that high-frequency traders are willing to pay for earlier information access and better execution order.
For historical comparison, the report points to the Chicago Mercantile Exchange. In 2002, CME posted $453.2 million in net revenue, with $48.7 million coming from quote data fees. Average revenue per trade fell from $0.71 to $0.64, yet trading volume rose 35%. The takeaway is that deep liquidity and strong distribution can allow lower unit pricing and broader commercial expansion to coexist. Hyperliquid is facing a similar question: how to monetize privileged access faster than core fee rates decline over time.
Pump: distribution takes a toll
Pump generated $888.8 million in gross fees over the first nine months and retained $351.4 million. The $537.4 million gap largely went to creator payouts, liquidity-provider incentives, and related support channels. By the third quarter, gross fees were up 80.1% quarter over quarter, while retained revenue rose 50.4%. The capture rate slipped from 43.2% to 36.0%. In other words, the more active the trading, the larger the slice taken by ecosystem revenue sharing.
The report describes Pump as more than a token-issuance factory. It calls it a tightly engineered traffic-distribution pipe. New assets keep creating speculative setups. Creator rebates and an embedded trading terminal keep users inside the system. The business is tied to turnover fees rather than the survival of any single token, which also means its life cycle is tightly linked to swings in speculative appetite.
The report adds that cash outlays and the number of tokens bought back and burned can diverge sharply. In Hyperliquid’s case, third-quarter buyback spending rose 5.7%, but the number of HYPE acquired fell 26.4%, to 2.04 million from 2.77 million. When the asset price rises, a larger cash budget can still retire a smaller share of circulation.
GMGN: the frontend itself becomes the business
GMGN is presented as one of the clearest examples of distribution being monetized on its own. It charges a 1% processing fee, separate from on-chain gas costs and venue slippage. Users pay for trend discovery, smart whitelist address monitoring, and faster trading convenience. The application layer does not need to own the underlying liquidity pool to turn user traffic into revenue.
The numbers are striking. GMGN posted $170.6 million in gross fees over the first nine months and retained $138.2 million after rebates. The third quarter alone accounted for $86.3 million, a 355.8% jump from the prior quarter. The report reads this as proof of strong monetization power, but also as a sign of heavy reliance on bursty trading waves. A high capture rate does not mean durable user loyalty has already been secured.
One of the report’s more pointed conclusions is that most of GMGN’s profits are held directly by the operating team. Based on currently public information, there is no native token with a direct claim on that profit pool. The report says successful distribution frontends should first be valued as businesses, rather than treated as an automatic positive read-through for a public token.
Sky: spread income supports the ecosystem
Sky’s model is built on the spread between funding costs and asset yield. The report says it generated $286.5 million in gross revenue over the first nine months. After paying $149.9 million in supply-side funding costs, retained revenue was $136.7 million. Third-quarter retained revenue was $41.8 million, down 1.8% from the previous quarter, which the report presents as a sign of resilience.
Its historical comparison is Charles Schwab. In 2019, Schwab cut online stock commissions to zero, yet net interest revenue still reached $6.516 billion and accounted for 61% of total revenue. The report uses that example to argue that earning spreads on client balances and yield-bearing assets remains one of the most durable profit engines in financial intermediation.
Polymarket: attention is not the same as monetization
Polymarket’s international version generated $233 million in total fees over the first nine months and retained $122.4 million. In the third quarter, total fees increased 10.4%, but retained revenue fell 1.7%. The capture rate dropped from 55.9% to 49.8%.
The report points to a structural reason. Under Polymarket’s official rules, trades tied to geopolitical and major macro international events are exempt from fees. That means the markets with the broadest reach and the strongest attention pull are not necessarily the ones driving platform profits. At the same time, the platform has to pay significant incentives to market makers and referrers to keep spreads competitive. The report also notes that collateral asset pUSD does not confer any equity-like rights, so platform popularity should not be confused with tokenholder returns.
Buybacks: what do tokenholders really receive?
The report says any serious analysis of token buybacks has to track four separate variables: actual dollars spent, the number of tokens acquired, the share permanently burned, and the floating supply that later returns through unlocks. Showing only the notional dollar value of burned tokens can be highly misleading.
Pump is used as a case study. Cash spent on buybacks in the first nine months was about $240 million, equal to nearly 68% of its retained revenue. But Blockworks estimated that team and investor unlocks in the third quarter reached 96.25 billion tokens, well above the 22.98 billion tokens repurchased and retired over the same period. Large burns and a real expansion in circulating supply can happen at the same time.
Aave’s financials show the weight of real costs
The report treats Aave as a benchmark for financial transparency in the sector. Aave recorded $17.8 million in revenue in the third quarter. After $15.4 million in operating costs, including infrastructure providers, safety module incentives, market-making subsidies, and insurance reserves, net profit was only $2.4 million.
That does not weaken Aave’s standing as a leading decentralized lending protocol, the report says. It does, however, show that a high-fee ranking and the actual net free cash flow available to investors are separated by a layer of real commercial costs that cannot be ignored.
