Over the past year, we have spent a lot of time at Token Dispatch writing about perpetual futures (perps) venues. Their rise to fame made it impossible to ignore them. Perps allow participants to price events close to their occurrence, with high leverage and deep liquidity available around the clock. Existing exchanges never offered that because of their constrained trading time and days. An 11-member team rode on this 24/7 trading pitch and made Hyperliquid the fastest-growing crypto exchange, with almost a billion dollars in annualised revenue.

Throughout 2025, perp trading volume averaged seven times that of spot trading. It seemed like a guaranteed way to build a sustainable business. So the inevitable happened: others jumped on the bandwagon.

Last week, the two largest prediction markets, Polymarket and Kalshi, announced perpetual futures and crypto trading within hours of each other. This comes just months after Hyperliquid said it’d launch event contracts. The convergence of perps and prediction market venues is a no-brainer. Everyone wants to be the everything exchange, and offer a one-stop shop that brings together attention, capital and leverage.

Three weeks ago, Saurabh wrote in a note on X about why Hyperliquid’s expansion into prediction markets will help the exchange take over finance. But is that true the other way round too? Can Polymarket and Kalshi’s moves be similarly rewarding?

Today, I will tell you all about it.

Why Perps Matter for PMs

Prediction markets have a stickiness problem. They are often cyclical and see record-level trading volumes when there are events to bet on. Just like we saw it during a U.S. Presidential election, a Super Bowl season, or an FOMC meeting.

Polymarket’s monthly active users peaked at 321,500 in November 2024 during the U.S. Presidential Elections. Three weeks later, the number had dropped by 25% to 245,000.

However, with seasonal events, the monthly user count kept swinging in both directions.

In January 2025, it peaked at 500,000 users, then dropped below 200,000 in September. This tells us about Polymarket’s user-retention rate.

Dune’s cohort data shows that across every monthly cohort since 2024, only 8-11% of users are still trading a year after joining. About 75% of them vanish within 90 days. Users return for events and don’t necessarily find the platform sticky.

But that’s just part of the problem.

PMs also block capital until the issue is resolved. Perps are different. They price the event every second. It captures attention for extended periods and builds sustained engagement. It also makes economic sense for the PMs, since perps record far more trading volume and proportionally higher fee income.

In 2025, perps recorded over $60 trillion in notional trading volume, compared with $28 billion for PMs.

So, this adjacency expansion for PMs becomes a natural evolution. Platforms that capture one form of speculative intent often extend their reach to the next. They either build the capability or buy another player with that capability. We’ve seen this happen multiple times: Robinhood went from stocks to options to crypto to prediction markets (PMs). Coinbase acquired Deribit for a record $ 2.9 billion to venture into derivatives trading. Binance expanded from offering spot to futures to creating its native blockchain.

We see this often in the traditional world. A company expands the breadth of its services and hopes to cross-sell the new offerings to the same customers. It does two things: increases the average revenue per user (ARPU) and insulates the business from market cycles by diversifying reliance across multiple revenue streams.

In the early 1970s, the Chicago Board of Trade’s (CBOT) revenue from its commodity futures was dwindling. So they launched the Chicago Board Options Exchange (now known as Cboe) in what used to be a 4,000-square-foot smoking lounge of its parent company, CBOT. Both the products worked in sync because they needed a common infrastructure: risk management, clearing and a network of professionals who understood derivatives pricing.

But there’s a wide strait between wanting to run a perps venue and actually being able to execute one.

The Perps Stack

Running a perps exchange has too many moving parts. Let’s start with liquidity.

Hyperliquid processes over 200,000 orders per second through a fully on-chain order book. The perps venue clears over $6-7 billion in daily volume with two-sided market making. Lack of liquidity would lead to extreme volatility, wide bid-ask spreads, and high slippage. This makes it easy for whales to manipulate prices.

Second is the risk engine - the heart of any derivatives platform. It tracks every position and checks margin requirements on every order. When $19 billion were wiped out of the crypto market in October 2025, Hyperliquid processed billions in liquidations without downtime.

Then there’s the funding rate mechanism that keeps perps tethered to the spot price of the underlying asset. It runs continuously by settling small payments between long and short positions every few hours.

Building this entire stack isn’t the main problem. That I’m sure the prediction markets will manage to put together. The bigger problem is stress-testing that stack.

Hyperliquid built all this and stress-tested it in real-world scenarios, like the 10/10 crypto liquidation event and the U.S.-Israel-Iran war. It then launched event contracts via HIP-4 once the entire stack was in place to support that. Kalshi and Polymarket are trying to go the other way round. They have been running successful prediction markets that required none of the above stack in the first place. They are now going to fight for a share of the pie by not only competing alongside a highly successful Hyperliquid but also with an infrastructure that has not been stress-tested for the high-frequency activity seen in perpetual trading.

There’s a lot more stacked against PMs that makes the expansion to perps more difficult than the other way around.

The Hedging Synergy

On Hyperliquid, the risk engine sees all your positions across perps, spot and, soon, event contracts. Saurabh explained this in his note on HIP-4.

This common risk engine solves a core money problem by optimising the same capital across multiple trades a trader makes on the venue.

Consider a trader on Hyperliquid who is long ETH at 5x leverage. The trader is worried about the Fed decision next week, so she buys an outcome contract that says “Fed holds rates steady” at $0.65. With a common risk engine, both positions are held in the same margin account. If the Fed surprises with a cut, ETH rallies, her perp profits and the outcome contract loses only what she paid. If the Fed holds the rates, the PM contract pays out and partially offsets any drawdown on her perp.

This is why a PM platform or a perp venue cannot be a mere add-on feature. This hedging possibility is what makes HIP-4 valuable on Hyperliquid. An average trader on the platform sees PMs as insurance cover in case their existing perps position flips over.

Currently, the collateral on Polymarket and Kalshi is locked until the event resolves. So, unless they offer a common risk engine across their perps and prediction markets venues, it loses a crucial catalyst that keeps traders on the platform. Right now, neither platform has announced cross-margining between their PM and perps venues.

The category breakdown and average trader profile on PMs raise further concerns about their ability to replicate their success in perps trading.

Over 80% of Kalshi’s total monthly trading volume occurs in the sports category. For Polymarket, that share was over 40% in 2025. Now, how would you create a continuous pricing mechanism for a perps venue around these sporting events? That takes away a big chunk of its traders out of the perps equation.

Additionally, an average Kalshi trader is a retail user who has never touched crypto and funds their PM account via ACH transfers from their bank account. So, even if I assume the theoretical possibility of cross-margining on Kalshi, I doubt that these traders have the sophistication required to double down on their positions on the platform and use perps as a hedging strategy.

What Could Work for PMs

There’s one scenario where I expect the bets to work if Kalshi and Polymarket do announce cross-margining. Their institutional partnership with prime brokerages and clearing firms can encourage high-value, frequent trading activity across event contracts and perpetual futures.

It would let institutional desks treat PMs as part of a broader risk management toolkit.

Both Kalshi and Polymarket can boast about partnerships that will give them access to institutional clients.

Kalshi’s tie-up with FIS and Tradeweb data, and Polymarket’s deals with Intercontinental Exchange (ICE) could help retain institutional clients who value hedging their prediction market positions with perpetual contracts on the same platform.

That’s still a far-fetched wedge that rests on many things going right for both the prediction markets. They need to set up stress-tested infrastructure, ink partnerships and show their clients that their platforms can help optimise capital.

But this is what it takes for them to survive a cut-throat competition. With the distribution wedge already with Hyperliquid, they have no other choice but to maximise their chances elsewhere.

That’s it for today. I will be back with another deep dive.

Until next time, stay curious,
Prathik

Token Dispatch is a daily crypto newsletter handpicked and crafted with love by human bots. If you want to reach out to 170,000+ subscriber community of the Token Dispatch, you can explore the partnership opportunities with us 🙌

📩 Fill out this form to submit your details and book a meeting with us directly.

Disclaimer: This newsletter contains analysis and opinions of the author. Content is for informational purposes only, not financial advice. Trading crypto involves substantial risk - your capital is at risk. Do your own research.

Can a business generate more revenue on an unchanged or much lower trading volume base? Economics 101 suggests that when you raise the price, you lose customers. But Polymarket just raised the price, lost a customer, yet made more revenue.

Until earlier this year, the world’s largest prediction market by trading volume operated on a zero-revenue model. Users could trade, deposit, or withdraw without paying the prediction market a dime for most of its existence.

All that changed in less than a quarter.

Polymarket first announced fees on some of its market categories early this January. Three months later, on March 30, the prediction market went full throttle, announcing fees for all categories, barring geopolitical markets, and even increasing rates on categories that already attract fees.

The platform has now collected more fees in the 8 days since its announcement than it did in the entire month before it.

In today’s analysis, I will show you how Polymarket’s new fee structure reshapes how it builds liquidity on its platform amid market uncertainties.

The Volume-Fee Inversion

When Polymarket increased its fee rates across categories, the inevitable happened. The higher cost of making a prediction reduced trading volume. Did they expect that? Most likely. That’s Economics 101. But there was little cause for concern.

Although a higher fee reduced demand for Polymarket trades, the decline was not proportional to the price increase. Again, that’s Economics 101. As a result, Polymarket’s total fee collections increased.

Despite a

0 wasn’t the first time Polymarket moved away from the “more volume equals business growth” view. It first announced fees on some of its market categories in January this year.

This shift is evident in Polymarket’s daily take rate — fees as a percentage of total volume, which has been consistently rising.

From January through late March, this ratio crept upward, doubling from roughly 0.001 to 0.002. After March 30, that rate tripled and shot past 0.007. That’s about 70 cents of earnings on a sale of $100.

But how does a business generate more revenue on the same (or in fact lower) trading volume base? That’s what happens when a business targets users willing to pay a premium for access to better markets.

The fun part is in the formula it uses to calculate the fees.

Pricing Uncertainty

Polymarket doesn’t charge a flat fee, unlike conventional commission mechanisms. Instead, its fee varies depending on the likelihood of the outcome. The fee changes with probability: Fee = Shares × feeRate × Price × (1 − Price).

Every market on Polymarket is structured as a yes/no share. These shares trade between $0 and $1, reflecting traders’ estimates of the likelihood of the underlying event occurring. For example, a $0.90 price means traders collectively believe there is a 90% chance of the event occurring. Polymarket’s fee is designed to be the highest when the likelihood approaches 50% probability and to minimise toward zero as the outcome approaches certainty in either direction, 0 or 1.

This model ensures that Polymarket earns the most when traders trade in markets where the outcome is most contested. That’s because it makes economic sense (Economics 101, again). Think about it. A trade on an outcome with a 90% or 10% probability of occurring will yield a minimal payout. Why would such a trader trade anyway if the high cost of such a trade, via fees, further squeezes out their winnings? That would stifle trading activity at the margins.

Let’s understand this using a sample market: ‘Will Bitcoin hit $100K by June 30?’ Say the “Yes” share is trading at 90 cents. This means the traders are 90% certain that the BTC price will hit $100,000 by June 30. If you buy 100 shares at that price, you spend $90 and stand to win $100 if you’re right, giving you a profit of $10.

A flat fee of 1.5% on the $90 trade would cost you $1.35, reducing your maximum potential winnings of $10. Polymarket’s probability-scaled fee fixes this problem. When you buy the same trade of 100 shares on Polymarket, it charges you a fee depending on the likelihood of the occurrence of the event.

If the likelihood stands at $0.90 per share, then Polymarket’s fee comes up to $0.65. [100 shares x 0.072 (fee rate) x $0.90 (price) x $0.10 (1-Price)].

However, at 50-50 probability, the fee is maximum at $1.80 [100 shares x 0.072 (fee rate) x $0.50 (price) x $0.50 (1-Price)].

This ensures that fee collection is concentrated at that point on the probability curve where the stakes are the highest.

The Rebate Flywheel

There’s an interesting part about this bell-shaped fee model.

Polymarket doesn’t stop at charging takers a premium for offering tighter bid-ask spreads and good liquidity. Takers are those who want to make a trade by simply clicking on “Buy”/”Sell” at the market price. Polymarket allocates a share of the fee income to market makers as a rebate. Market makers help improve liquidity by placing deeper order books at limit prices.

These rebates attract more market makers, which in turn improve liquidity and attract more takers. The rebate share varies across categories 20% for crypto, 25% for politics and sports, and 25% for finance. Only geopolitical markets charge no taker fees and offer zero maker rebates.

Polymarket’s zero-rebate and zero-fee policy for markets related to geopolitics and world events reveals its approach to the category. It expects these markets to draw traffic by offering low friction, zero cost, and maximum visibility. Once it has captured the trader on its platform, Polymarket expects the trader to cross-trade across categories and pay fees across other categories.

The Liquidity Bet

Polymarket has been around for more than half a decade. Yet, it kept struggling to achieve its product-market fit for almost four years. Few knew about it or used it until the 2024 U.S. Presidential Elections gave it its aha moment.

After the election euphoria died down, people doubted whether the prediction markets would stay. Sports and crypto categories filled that gap.

Its fee announcement has boosted Polymarket’s revenue for now. But can it retain its users from leaving for its competitors?

History has some answers.

When Uber launched in 2012, it took 20% of every ride before giving the rest to the drivers. Over the years, the fee kept creeping up. By 2025, it even exceeded 40% in some instances. Drivers protested. Some quit. Yet, it didn’t matter. New drivers kept joining, and riders stuck to their favourite app.

The lesson was that if a platform raised fees gradually, users would absorb them as long as the alternatives were worse. Is it the most ethical thing for Uber to do? I may have my reservations about that.

But Polymarket is doing something more than just raising fees.

A flat fee hike extracts value from users who have nowhere better to go. But Polymarket’s bell curve charges the most where traders have the highest stakes and uses a share of that fee to reward the market makers who make the platform worth staying on.

Better rebates attract more market makers. More market makers create tighter bid-ask spreads and deeper order books. And that matters, because Polymarket runs a central limit order book where every trade pays a spread and large orders walk the book, incurring slippage. These costs don’t show up on a fee schedule, but they come out of the trader’s pocket.

A taker paying zero fee on a low-liquidity platform still loses to wider spreads and greater slippage on every trade. A taker paying a small fee on Polymarket gets tighter execution funded by the very rebate that fee pays for. If this flywheel is well-managed, the all-in cost of trading on Polymarket, with deep liquidity, will feel lower than on a platform with shallow liquidity. In this case, the fee becomes a small price to pay for better pricing.

That’s it for this week. I will be back with another one.

Until next time, stay curious,
Prathik

Token Dispatch is a daily crypto newsletter handpicked and crafted with love by human bots. If you want to reach out to 170,000+ subscriber community of the Token Dispatch, you can explore the partnership opportunities with us 🙌

📩 Fill out this form to submit your details and book a meeting with us directly.

Disclaimer: This newsletter contains analysis and opinions of the author. Content is for informational purposes only, not financial advice. Trading crypto involves substantial risk - your capital is at risk. Do your own research.

Money often becomes useful only when it reaches its destination. A salary earned abroad can’t pay for rent, school fees, utilities and groceries back home until it passes through banks, FX desks, payout partners, and local compliance checks. Until then, it is a mere value in motion and not a medium of exchange.

The same problem is now showing up on-chain. Stablecoins move money globally in code, but their usefulness is tied to where they can plug in, who is allowed to use them, and which rules govern their reserves and redemption.

This concept stood out to me when I was reviewing Dune’s ‘Beyond Dollarisation: The Rise of Local Currency Stablecoins’ report.👇🏾

Read the Report Here

In today’s quantitative analysis, I will explain the factors that influence the growth of non-dollar local-currency-pegged stablecoins.

Onto the story,
Prathik

The Regulatory Teeth

Nowhere is the role of regulations more evident than in what happened with Tether’s euro-pegged stablecoin. When Europe’s Markets in Crypto-Assets (MiCA) regulation became applicable in 2024, it almost immediately spelt a death knell for Euro Tether (EURT).

One of the earliest and once-largest non-dollar stablecoins, EURT saw its circulation fall from over $400 million to around $50 million. As a result, the total supply of local currency stablecoins in circulation fell from $1 billion to $350 million.

Crypto enthusiasts often assume that code alone is enough. They create a token, add liquidity, and expect the market to do the rest. But non-dollar stablecoins are not just abstract internet money. They are trying to become better digital versions of euro, yen, baht and other local currencies that can move on public rails without being at the mercy of banking hours. Yet they operate within a domestic financial system, with reserve requirements, licensing norms, payment networks, and redemption expectations.

The shutdown of EURT is a reminder that being early and the largest is not enough. A change in the domestic rulebook can wipe out the first-mover advantage.

But regulation is not all bad for stablecoins. If that were the case, non-USD stablecoins might have stalled after the discontinuation of EURT.

If we exclude EURT, the total non-USD stablecoin supply nearly tripled, from ~$350 million in January 2023 to $1.1 billion by February 2026.

Widening the Market

Along with circulation, the number of addresses holding such a stablecoin balance grew from approximately 42,000 to over 1.2 million during the same period.

Monthly transfer volume rose from $600 million to $10 billion, a 16-fold increase. Monthly sending addresses climbed 22 times, from around 6,000 to 135,000.

The fact that both holders and senders grew faster than the supply suggests that the market expanded through increased participation.

Therefore, regulation is not always detrimental to the market, like it was for Euro Tether. Here, it attracted more stablecoin issuers and users.

Where is Non-USD Money Flowing?

By early 2026, unidentified transfers accounted for 38% of the total transfer activity in local-currency stablecoins. This likely reflects payment and settlement activity, including peer-to-peer transfers and transfers from self-custodial wallets to payment providers.

This was followed by lending at 29%, DEX activity at 17%, and CEX-related flows at 14%.

This breakdown shows that non-USD stablecoins are being used for two main purposes on-chain. One is using them to make payments, while the other is using them as money in motion between peers or businesses. Another is using them across DeFi primitives, such as lending and trading.

But there’s a caveat in this data. When you exclude euro-pegged stablecoins from the picture, the market takes a different trajectory.

Euro stablecoins, which account for over 90% of total transfer volume, are being used like financial assets in their own right. Users are parking them in lending markets, using them in DEXs, and treating them more like on-chain cash that can earn, collateralise, and circulate across DeFi. This gives local-currency stablecoins a more mature appearance.

EURC, along with EURS, EURm, and EUROe, has found its way into DeFi yield-generating venues such as Aave, Morpho, and Fluid.

When you strip out euro stablecoins, the remaining non-USD digital money is mostly used for settlement infrastructure.

Almost 8 in 10 non-USD, non-euro stablecoins fall into the unidentified transfers bucket. It likely captures wallets moving money, businesses settling obligations, remittance-style transfers, and payment flows passing through service providers.

The dominance of euro-pegged currencies among non-USD stablecoins suggests that the next phase of growth is more likely to be concentrated in DeFi primitives. Outside of the euro, the non-USD stablecoins will first scale as infrastructure to move domestic money across digital rails before they can be used in DeFi primitives.

This growth remains crucial, as it will come from stablecoins used for payroll, treasury management, merchant settlement, remittances, and foreign exchange (FX).

All of these sectors are more regulated than DeFi primitives, since operational money cannot tolerate ambiguity as well as a speculative asset can. If a token is expected to operate within domestic payment systems, treasury workflows, and compliance-heavy environments, it will demand predictable reserves, clear redemption processes, and legal clarity. Thus, regulation will play a crucial role in the adoption of non-USD stablecoins.

This also explains why growth is showing up in areas with mature financial systems. The report pointed out that activity in Brazilian Real (BRL) and Japanese Yen (JPY) accelerated following improvements to local frameworks. At the same time, the report noted that markets without dedicated regimes, such as Indonesia, lagged.

I also find an economic case for non-USD stablecoins.

Cross-border payments still carry high conversion costs, and remittances lose a significant chunk to FX spreads and intermediaries. More local-currency stablecoins can reduce the value that needs to be detoured through dollars before it reaches its destinations. That can reduce FX costs, remove settlement friction, and let businesses and individuals hold value in the currency they earn, spend and save in.

The potential is much larger than DeFi alone. Euro stablecoins have set a strong precedent for integrating local digital money into financial systems. However, reducing the cost, speed, and dollar dependency in cross-border money movement will be a bigger win on a global scale.

The issuers who can make local currencies easier to send, settle, and embed into existing payments infrastructure will be the ones to benefit from the enormous potential of non-USD stablecoins. If they can build conducive conditions for better adoption, DeFi integration will follow naturally.

That’s it for this week. I will be back with another one.

Until next time, stay curious,
Prathik

Token Dispatch is a daily crypto newsletter handpicked and crafted with love by human bots. If you want to reach out to 170,000+ subscriber community of the Token Dispatch, you can explore the partnership opportunities with us 🙌

📩 Fill out this form to submit your details and book a meeting with us directly.

Disclaimer: This newsletter contains analysis and opinions of the author. Content is for informational purposes only, not financial advice. Trading crypto involves substantial risk - your capital is at risk. Do your own research.

DeFi protocols often report on their volume, sharing TVL charts and fee dashboards. What they rarely do is publish a full set of financial statements, including income broken down by segment, cash flow reconciliations, and treasury positions by quarter.

For a Solana liquidity protocol, Meteora’s 53-page annual token holder’s report for 2025 sets a new precedent.

The headline number shows over $182 billion in trading volume facilitated, growing 250% year-on-year (YoY). Meteora generated over a billion dollars in fees and a healthy treasury, earning it a 24-month runway. In a year when SOL lost nearly a third of its market capitalisation, Meteora remained one of the busiest platforms on Solana.

Read Meteora's 2025 Annual Report

One of the interesting stories in this report is its income statement, which reveals how Meteora’s flagship product and its most profitable products are two different things.

In today’s analysis, we will examine how this model works and explore where the billion dollars in fees flow after each stakeholder takes their share.

The Volume-Revenue Inversion

Meteora runs four on-chain programmes: DLMM, DAMM v1, DAMM v2, and DBC. The Dynamic Liquidity Market Maker (DLMM) is the protocol’s flagship product, the one the Liquidity Provider (LP) Army rallies around, and the one most people associate with the protocol. DAMM v1 and v2 are constant-product automated market makers (AMMs). Dynamic Bonding Curve (DBC) powers token launches through customisable bonding curves. Each programme collects swap fees from traders and splits them between liquidity providers and the protocol.

In FY2025, DLMM facilitated $168.3 billion in trading volume, while the remaining flowed through DAMM ($11.5 billion) and DBC ($2.4 billion) pools. It’s evident that DLMM is Meteora.

Yet, volume is not revenue.

DLMM generated $43.1 million in protocol revenue, barely a third of total revenue, despite generating 92% of the total volume. However, fees from DAMM pools and the launchpad partner (DBC) together generated $78.0 million, about 64% of Meteora’s total revenue.

This shows that Meteora’s flagship product, with utmost attention, and the major revenue-generating product are not the same. DLMM brings the volume, the brand recognition, and the LP community, while the DAMM and launch infrastructure bring the margin. Both are essential, and the interplay between them is what makes the model work.

But why does its flagship product generate only a third of the protocol’s revenue? To understand that, we need to look at the various kinds of assets that trade on each programme and the fees they generate per dollar of volume.

The Compounding Advantage

The gap in contribution is partly explained by the take rate, calculated as a percentage of fees retained by Meteora after paying the LPs. This rate varies across programmes. On DLMM, LPs keep 95%, and Meteora retains 5%. On DAMM and DBC, LPs keep 80%, and Meteora retains 20%. That’s because Meteora charges a premium on the newer programmes for the additional infrastructure they provide, including anti-sniper protections, dynamic fee mechanisms, and composable launch tooling that goes beyond routing swaps.

That’s a 4x differential between the flagship product and the one that contributes the most to its margins. But that explains only part of the gap.

The other part is explained by varying fee intensity, the amount of swap fees generated per dollar of volume.

DLMM primarily routes established trading pairs. SOL-USDC, major tokens, assets with deep order books and tight spreads. These pools compete on execution quality, which means fee tiers are set low to attract aggregator flow. Across FY2025, DLMM pools generated $907.3 million in fees on $168.3 billion in volume, with a fee-to-volume ratio of 0.54%.

The DAMM and DBC pools serve a different market. New token launches, memecoins, long-tail assets, and high-volatility, low-liquidity pairs. Fee tiers on these pools run wider to compensate LPs for the impermanent loss risk that comes with providing liquidity to assets that can move 30% in a day. DAMM pools generated $254.4 million in fees on $11.5 billion in volume, with a fee-to-volume ratio of 2.21%, roughly four times that of DLMM.

This is what compounds the gap between what both products contribute. For every dollar of volume, the DAMM and DBC pools generate approximately 4x as much in fees. Meteora then retains 4x more of those fees as protocol revenue.

This differentiation of how these two programmes work is key to Meteora’s structure. DLMM is built to win on execution and scale, while operating in a tight-fee, high-throughput and aggregator-friendly environment. The launch infrastructure stands out for its unique tooling, configurable economics, and a fee structure that reflects the premium value it provides to token creators. Together, they give Meteora a diversified top line that most single-product DeFi protocols lack.

But diversification only matters if both engines keep running. The quarterly data shows what happens when one of them stalls.

When the Launch Cycle Cools

In Q1, Meteora’s entire $36.5 million in revenue came from LP pools, when the launchpad infrastructure hadn’t shipped yet. DLMM contributed 58% of that quarter’s revenue. By Q2, partner fees first appeared at $8.6 million after Meteora went fully permissionless and launched DBC and DAMM v2. Immediately, DLMM’s share of revenue dropped from 58% to 17%.

Q3 was the launchpad quarter. Believe’s Internet Capital Markets (ICM) trend drove launch volume through Meteora’s bonding curves, and partner fees surged to $15.1 million, more than half the quarter’s total. For the first time, launch infrastructure was contributing more to the top line than both LP pool programmes combined.

Then Q4 arrived. Partner revenue fell 77% to $3.5 million as launchpad activity cooled. DLMM’s share climbed back to 47%.

The quarterly view reveals the trade-off.

The high-margin launch business can dominate revenue in a good quarter, but it’s cyclical. The lower-margin DLMM business doesn’t spike as hard, but it’s not over-reliant on narratives. In Q4, when launchpad revenue hit its lowest point, LP pool revenue from DLMM and DAMM still covered $13.8 million, comfortably above the protocol’s $1.5 million monthly burn rate.

While DLMM holds the fort during testing cycles, the launch infrastructure works as a catalyst during favourable times.

Where the Billion Dollars Go

In FY2025, Meteora generated $1.31 billion in swap fees, of which LPs received $1.19 billion (~90%). After their cut, Meteora retained $121.1 million in protocol revenue.

But Meteora did not receive all the $121.1 million it earned.

Fees are collected in the same tokens being traded. On a SOL-USDC pool, that means fees arrive in SOL and stablecoins. On a memecoin launch pool, fees accrue in the just-launched token, and that token can depreciate by 80% before the protocol converts it into a stable asset. Of the $121.1 million in accrued revenue, only $72.5 million was captured in the treasury as SOL and USDC/USDT. The remaining $48.6 million, roughly 40%, eroded in the gap between earning the fee and liquidating the token.

However, this difference between what is accrued and what is earned is present in every crypto protocol similar to Meteora.

The protocol has since addressed the leakage. Starting January 2026, a programme-level update periodically converts non-stablecoin fees into USDC. If it works as intended, the gap between earned and realised revenue should narrow meaningfully in FY2026.

What This Means

Meteora’s report gives us a complete picture of its economics, something that a DeFi protocol rarely offers.

It offers us a transparent understanding of how a protocol can facilitate $182 billion in trades, generate over a billion in fees, and still see only $72.5 million land in its treasury. But that’s the reality of running liquidity infrastructure, where most of the value rightly accrues to the capital providers who make it work.

What is most compelling is the architecture underneath. Meteora has built a model where a high-volume, lower-margin product sustains the brand and community, while a lower-volume, higher-margin product funds the protocol’s growth.

The 2026 roadmap signals that the team clearly sees this. Their planned convergence of LP and trading tools is an attempt to widen DLMM’s revenue potential by pulling traders, a far larger user base, onto the same platform. Meteora Labs and the Bedrock initiative are bets on expanding the variety and quality of assets launching through its infrastructure, which is where the margin lives.

Both moves point toward strengthening both engines rather than choosing between them.

For the broader DeFi industry, the lesson is not to lean too much into volume as a metric. Revenue composition is what determines whether a protocol can survive a down cycle, fund its own development, and compound over time. Meteora had the confidence to publish the numbers that make this distinction visible. More DeFi protocols should follow suit.

Until next time, stay curious,
Prathik

Token Dispatch is a daily crypto newsletter handpicked and crafted with love by human bots. If you want to reach out to 170,000+ subscriber community of the Token Dispatch, you can explore the partnership opportunities with us 🙌

📩 Fill out this form to submit your details and book a meeting with us directly.

Disclaimer: This newsletter contains analysis and opinions of the author. Content is for informational purposes only, not financial advice. Trading crypto involves substantial risk - your capital is at risk. Do your own research.

Everyone agrees that stablecoins are growing. Their supply in circulation has more than doubled, while the adjusted volume has more than tripled. All in just two years. Last month, stablecoins recorded a new all-time high in monthly adjusted volume. Some dismiss these figures, while Crypto Twitter (CT) celebrates them in real time.

But numbers alone tell us little about growth. What also matters is the context in which the growth is occurring, like who is using stablecoins, for what purposes, and whether the pattern of usage is changing. Allium was kind enough to give us an early glimpse of their latest report on stablecoin infrastructure, ‘Stablecoins: The emergence of a new payment rail’. It’s an important read because the charts show that stablecoin usage is shifting from enabling low-cost cross-border remittances to supporting general commerce and vendor payments across businesses.

Most of the debate around stablecoins today centres on whether they are financial products, such as narrow banks, Treasury-bill wrappers, yield vehicles, or simply payment infrastructure. The policy-level arguments over stablecoin interest assume that stablecoins are primarily financial instruments. But the data in the report suggests otherwise. The recent composition of stablecoin activity increasingly resembles a payment rail rather than a savings product.

It’s the same pattern we saw with the evolution of the Automated Clearing House (ACH) network: from replacing paper cheques in payroll to becoming a foundational backbone for general commerce, B2B payments, and consumer bill payments.

In today’s deep dive, I will weave together data from Allium’s stablecoin infrastructure report to show why it changed how I think about where stablecoins are heading.

The Velocity Divergence

Since January 2024, the stablecoin supply in circulation (calculated by deducting non-circulating supply from total supply) has grown by over 100%. Over the same period, adjusted volume (calculated by removing wash trading, entity-internal flows, and round-trip transfers) grew by 317%.

In the accumulation stage of any new asset, supply typically grows faster than usage. As the asset matures, usage grows faster than supply. That’s because asset holders are spending more of the asset. Here, as adjusted volume grows much faster than the circulating supply of stablecoins, it shows the maturity of stablecoins from store-of-value assets to a preferable medium of exchange or transfer of value.

This shift is reflected in stablecoin velocity, calculated as adjusted volume divided by circulating supply.

Stablecoin velocity has increased from 2.6x to over 6x in the past two years, reflecting that each dollar of stablecoin supply is now turning over 2.3 times more actively than it was in January. If you benchmark this against traditional payment rails, it shows how mature stablecoin usage has become.

Another metric that establishes the maturity of stablecoin usage is transaction count. It’s least susceptible to large-value noise. So, when the payment transaction count grows faster than the volume, it indicates that the average payment amount is decreasing. This behaviour is typical of a payment rail finding its footing, rather than of an experimental tool being shuttled between exchanges.

This raises the question of who is making all these payments and what they are paying for.

In 2025, the consumer-to-consumer (C2C) category remained the largest channel, ahead of consumer-to-business (C2B), business-to-business (B2B), and business-to-consumer (B2C). But its growth rate was the slowest among the four.

The slower growth in C2C reinforces the maturity of stablecoin usage, since person-to-person transfers are the simplest use case. They require no merchant integration, no invoicing tools, no API and face few procedural barriers to adoption. This is how every new payment technology typically begins.

In India, when the Unified Payments Interface (UPI) was launched a decade ago, retail users were the first to jump on board, driven by cashbacks and other customer acquisition strategies. I recall how I used to make transfers between my two accounts using Google Pay, initially launched as Tez in India, when it offered me a dollar in cashback. Shops and establishments joined the party only when business tools, reports, and a dedicated payment-confirmation audio device system were rolled out.

As infrastructure matures, commercial use cases begin to absorb market share. And that transition appears to be happening now.

High growth in C2B suggests that more users are using stablecoins for general commerce, subscriptions, and merchant payments. Meanwhile, B2B growth indicates adoption among commercial counterparties for invoicing, supply chain payments, and treasury operations. Both growth rates (131% for C2B and 87% for B2B) are outpacing the 76% overall payment growth, indicating that the commercial share of payment volume is expanding.

When you pair the growing C2B volume with the average ticket size of C2B transactions, which fell from $456 to $256, it suggests a trend of people paying for recurring purchases using stablecoins.

Although the peer-to-peer category remains dominant in absolute terms, it is soon ceding ground.

The quarterly share data makes this rotation even harder to miss.

The share of C2C as a percentage of total payment volume has never crossed 50% after dropping below the halfway mark in Q1 of 2025.

The world appears to be moving beyond experimenting with stablecoins for low-risk, less frequent peer-to-peer transfers to consistently using them for frequent payments.

When I first started tracking stablecoin adoption, one of the dominant narratives in favour of stablecoins was about how it enables cross-border remittances and could disrupt the Western Union thesis by allowing workers in developed economies to send money home. But the data says something different.

About three-quarters of stablecoin payment volume now occurs domestically. Over the past year, cross-border volume at the country level has dropped from 44% of total payments to roughly 25-29%. At the regional level, 84% of payment flows remain within the same geographic region.

Based on all our earlier charts, it’s clear that stablecoins aren’t competing with SWIFT for international settlement. Instead, the B2B metrics, including 74% domestic dominance, a falling average transaction size, payroll, and growing invoicing use cases, point to stablecoins competing with domestic payment rails like ACH.

For context, ACH B2B payments grew about 10% in 2025, while stablecoin B2B payments grew 87% over the same period. I am aware that the absolute scale isn’t even comparable, and we have to consider the low-base effect of stablecoins. Yet, the growth is hard to ignore.

The Path Ahead

For a long time, I viewed cross-border remittances and peer-to-peer transfers as the primary drivers of stablecoin adoption. The idea that someone in India could receive dollars from a family member in Dubai without losing 7-8% to an intermediary on a bank holiday is a compelling narrative. This story still exists, but perhaps no longer the main story.

I find it interesting how quietly and quickly the domestic commerce thesis has overtaken everything else. The fact that the C2C category has not reclaimed 50% market share for over a year now has not been a metric I have seen go viral in any of the CT chatter. But it’s the metric where stablecoins pivot from being a crypto product to financial infrastructure that enables commerce between a consumer and a business, or between two businesses.

It’s also worth noting that Allium’s labelled payment volume is an analysis built on the wallets they managed to cover, identify and label. While that analysis shows payment volume to be just 2-3% of the total adjusted stablecoin volume, that can only be a lower bound, considering that there will most likely be so many more wallets that Allium couldn’t include in its coverage.

Going forward, I will be closely watching whether C2B and B2B shares continue to gain ground and whether the average ticket-size compression holds in the upcoming quarters. If both trends persist even through a crypto market downturn, it would confirm that stablecoin payment infrastructure has begun to decouple from speculative crypto activity on a sustained basis.

That’s it for this week’s piece. I will be back with the next one.

Until then, stay curious,
Prathik

Token Dispatch is a daily crypto newsletter handpicked and crafted with love by human bots. If you want to reach out to 200,000+ subscriber community of the Token Dispatch, you can explore the partnership opportunities with us 🙌

📩 Fill out this form to submit your details and book a meeting with us directly.

Disclaimer: This newsletter contains analysis and opinions of the author. Content is for informational purposes only, not financial advice. Trading crypto involves substantial risk - your capital is at risk. Do your own research.

“Forecasts usually tell us more about the forecaster than of the future.”

— Warren Buffett

Hello,

Money filters out cheap talk. Advocates believe this is why prediction markets are reliable. We saw people accurately predict the 2024 U.S. Presidential Election results on Polymarket and Kalshi. However, prediction markets aren’t new, nor is their success in accurately predicting political outcomes.

In October 1988, a group of economists at the University of Iowa backed their academic curiosity with a small-scale, real-money prediction market. They launched a futures market on the presidential election where participants could buy contracts that paid $1 if George H.W. Bush won and $0 if Michael Dukakis did. On election eve, Bush contracts were trading at 53 cents, while the conventional polls called the race tight. Bush ultimately won with 53.4% of the vote and a healthy 8-point margin.

Since that academic experience, such real-money futures markets have outperformed the conventional polls in every election in which forecasting was done more than 100 days in advance. In 74% of U.S. presidential elections since 1988, prediction markets have come closer to the eventual outcome than the polls.

This success stems from the mechanism that forces the expression of genuine belief backed by real money at stake, something the surveys could never do. The person who actually believed Bush would win bought the contract and held it. There was little incentive for random participants to spoil the prediction by placing $50 behind a claim they didn’t believe in. When this behaviour is aggregated across thousands of traders, the information converges on a price that reflects the genuine conviction of a larger population, rather than a small, disproportionate sample.

Iowa’s small academic experiment, run on a shoestring budget, has evolved into an institutional infrastructure today.

Last week, a working paper by Fed-affiliated economists said Kalshi, the largest regulated prediction market in the U.S., could serve as a valuable real-time benchmark for policymakers. The same week, NYSE president Lynn Martin said Polymarket, the world’s largest prediction market by volume, moved S&P futures on election night by pricing a Donald Trump victory before any news organisation called the race. Later, Kalshi announced a partnership with a trading platform handling $2.6 trillion in daily institutional volume.

In today’s deep dive, I will examine whether prediction markets can serve as a reliable barometer for policymaking and what risks they pose.

Prediction Markets as Policymaking Tools

The working paper found that Kalshi’s predictions were statistically similar to Bloomberg’s consensus, with almost identical forecast errors for core CPI and unemployment.

In fact, the paper also finds that Kalshi’s forecasts for the core CPI are significantly superior to Bloomberg’s estimates.

Despite similar statistical performance, what sets Kalshi apart is its ability to provide more frequent, real-time updates to probability curves for macroeconomic indicators such as GDP growth, core CPI, and unemployment. For estimates like inflation, the Bloomberg consensus is available only in the months leading up to a release. That makes conventional estimates less frequent, with wider gaps that don’t reflect real-time updates to expectations.

Kalshi not only provides predictions for an outcome but also the real-time range of uncertainty and tail risks. In early April 2025, uncertainty about trade policy temporarily heightened inflationary expectations. Although the uncertainty did not materialise, Kalshi priced the changing dynamics in real time. The monthly Bloomberg estimates will never capture this nuance.

Today, Kalshi’s market odds move in real-time when a Fed governor speaks at an FOMC meeting. They price in every remark by the governor and offer policymakers a glimpse of how traders interpreted the intended message.

For instance, when Christopher J. Waller made accommodative remarks ahead of the July 2025 FOMC, the probability of no rate change dropped to 75%. After the June jobs report came in stronger than expected, it snapped back above 90%. The entire expectation of traders, backed by real money, is visible to policymakers in a way that no other instrument currently does.

Who’s Trading on These Markets?

Before deciding how much to trust prediction markets, it is important to examine who is trading and what the volume represents.

Between September 2024 and January 2026, the volume on the FOMC meetings grew 11-fold from $59 million to $660 million on Polymarket. In total, Polymarket’s FOMC markets have processed $2.6 billion, more than the platform’s culture, economics, geopolitics, and science categories combined.

So, who is trading such volumes on FOMC meetings? While there’s no easy way to find out on a pseudonymous prediction platform like Polymarket, I’d like to guess. It’s difficult to look beyond macro hedge fund analysts involved in drafting the labour statistics report or money market fund managers who profit if rate cuts don’t come.

Why them? Iowa markets worked because people putting money where their mouths are outnumbered participants who were just betting on noise without reliable information. Noting the risk of over-assuming, I’d like to think that when real stakes and money of this magnitude are involved, people with reliable information will gravitate toward the market, leading to more accurate price discovery.

What to Watch Out For

None of this means that prediction markets can be the perfect measuring tools for policymakers.

The probability in prediction markets also reflects traders’ risk preferences. It is not a raw reflection of expectations of an outcome. For example, when Kalshi prices a 15% probability of an adverse CPI print, whereas conventional surveys price at 10%, the gap can be justified by two factors. First, prediction markets may be pricing in real-time information that the Bloomberg consensus misses. Second, traders might be paying a premium on prediction markets to hedge against unfavourable outcomes.

Policymakers must understand what the gap reflects before they look at the information as a signal for their policymaking.

While Kalshi appears to be reliable for macroeconomic signals to policymakers, over 85% of its total notional volume is accounted for by the Sports category.

Currently, at least 20 federal lawsuits are contesting the regulatory arbitrage enabled by prediction markets through nationwide sports betting. FOMC markets on Kalshi are reliable partly because sports betting provides the platform’s baseline liquidity through active traders, tight bid-ask spreads, and market-making infrastructure that keep all Kalshi markets functioning. Macro markets benefit from this foundation even though they operate independently. If sports betting disappears under regulatory pressure, the platform loses the liquidity engine that keeps spreads tight and prices continuous across all categories, including FOMC. Thinner macro markets become easier to move with less capital, and therefore more susceptible to manipulation.

The working paper recommends using Kalshi as a monitoring tool, not a decision-making input. But making that intention public is itself the problem.

The authors suggest using Kalshi more as a tool to interpret incoming data and check the real-time interpretation of Fed communications. Yet, since the intention to refer to prediction markets is made public, it could create a feedback loop.

For example, a policymaker at the Fed could see Kalshi pricing a 15% probability of a rate cut, lower than what they expected to convey with their decisions. In response, they might soften the phrasing in their next remarks, which could then prompt conventional rate markets worldwide to move. The problem here is that while Kalshi’s FOMC market is $660 million, the Fed Funds Futures market is tens of billions of dollars. The former needs a relatively small position to swing the odds. A well-capitalised actor who understands that moving Kalshi can influence what the Fed says next, if not what it decides, can use a relatively small position to move a much larger market. Policymakers’ communication can become the target of manipulation.

This scenario highlights the difference between Iowa’s 1988 futures markets and the prediction markets of 2026. The Iowa economists were trying to determine whether a market with real stakes could produce better forecasts than a survey. At the time, policymaking wasn’t being closely watched enough to deter manipulators.

The prices reflected genuine belief because these prices did not move the world. They merely allowed those with opinions to monetise them. Once the Fed publicly announces, if and when it does, its intention to use prediction markets as policy input, that property is lost. It also introduces a performative element to trading.

Yet, it is not a miscalculated suggestion to include prediction market odds in the policy toolkit. Financial commitment still filters out cheap talk. Informed participants continue to dominate price discovery. What results is a signal that surveys can never match in terms of speed and distributional richness. And this case is stronger for FOMC markets than any other application. There are participants on both sides, enabling genuine hedging capabilities, and the markets are more reflective of real-time expectations through frequent pricing of real-time events.

Policymakers should make it mandatory to demand open-source data transparency as a condition of official adoption. If the data cannot be audited, the manipulation could go undetected. They should understand that both the signal and noise come from the same place. People with real money and genuine beliefs can tell you in real time what they think.

The window of opportunity for anyone powerful enough to game the system did not exist when Iowa economists ran their academic experiment for decades. Today, that window is wide open than ever before.

That’s it for this week’s piece. I will be back with the next one.

Until then, stay curious,
Prathik

Token Dispatch is a daily crypto newsletter handpicked and crafted with love by human bots. If you want to reach out to 200,000+ subscriber community of the Token Dispatch, you can explore the partnership opportunities with us 🙌

📩 Fill out this form to submit your details and book a meeting with us directly.

Disclaimer: This newsletter contains analysis and opinions of the author. Content is for informational purposes only, not financial advice. Trading crypto involves substantial risk - your capital is at risk. Do your own research.

Over a year ago, becoming a Digital Asset Treasury (DAT) looked like a no-brainer for scores of corporates looking for a bump in their share price.

Some Microsoft shareholders convened and requested that the Board evaluate the benefits of holding some Bitcoin on its balance sheet. They even mentioned Strategy (formerly known as MicroStrategy), the largest publicly listed Bitcoin DAT.

There was a financial flywheel for everyone to follow.

Buy a pile of BTC/ETH/SOL. Watch the stock trade above the pile’s value. Issue more shares at that premium. Buy more coins with that money. Repeat. The financial flywheel behind a publicly-listed ticker seemed nearly flawless to tempt investors. They were paying more than two dollars to gain indirect exposure to Bitcoin worth only a dollar. Those were crazy times.

But time tests the best of strategies and flywheels.

Today, most of these wrappers have a market-cap-to-net-asset-value (mNAV) ratio below 1, as the crypto market has lost more than 45% of its market capitalisation over the last four months. This indicates that the market values these DAT companies at less than the value of their crypto treasuries. This changes how the financial flywheel operates.

Because a DAT is more than a wrapper around an asset. In most cases, it is a company with overhead, financing, legal and operational costs. In a mNAV-premium era, DATs funded their crypto purchases and their costs by selling more stock or raising more debt. In a mNAV-discounted era, this flywheel falls apart.

In today’s analysis, I will show you what prolonged discounts on mNAVs mean for DATs and whether they can survive crypto bear markets.

Between 2024 and 2025, over 30 companies rushed to transform into DATs. They built treasuries around blue-chip cryptocurrencies, such as BTC, ETH, and SOL, along with a long tail of memecoins.

At its peak on October 7, DATs held cryptocurrencies worth $118 billion, with the market cap of these companies exceeding $160 billion. Today, DATs hold cryptocurrencies worth $68 billion, with a discounted market cap of just over $50 billion.

All their fortunes were tied to one thing: their ability to wrap an asset and manufacture a story that makes the wrapper trade above the asset value. That difference became the premium.

The premium became the product. If the stock traded at 1.5x the mNAV, the DAT could sell $1 of stock and buy $1.5 of crypto exposure, and characterise the transaction as “accretive”. Investors paid the premium, believing that the DAT could continue selling stock at a premium and use the proceeds to accumulate more coins, thereby increasing the crypto per share over time.

The problem is that premiums don’t stay forever. The moment the market stops paying extra for the wrapper, the “sell stock to buy more coins” flywheel stumbles.

When the stock no longer trades at 1.5x the value of its assets, each new share issued buys less crypto. The premium ceases to be a tailwind and becomes a discount. This is exactly what my colleague, Saurabh, highlighted in his piece for Decentralised.Co.

Read: Asset-Wrapped Equities

With the underlying crypto market struggling, stock premiums have now turned into discounts.

The stock prices of leading DATs in BTC, ETH, and SOL have fallen more than the cryptocurrencies themselves over the past year.

Once the markup premium of the stock over the underlying asset vanishes, investors will naturally ask why they can’t just buy the cryptocurrency cheaper somewhere else, say on decentralised or centralised exchanges or exchange-traded funds (ETFs).

Bloomberg’s Matt Levine asks an important question: If DATs won’t trade even at NAV, let alone a premium, then why shouldn’t the investors force the company to liquidate its crypto treasury or buy back the shares?

Many DATs, including the leader of the pack - Strategy, try to convince the investors that they will hold their crypto through the bear cycle and wait for the premium-era to be back. But I see a more critical problem here. If DATs can’t raise additional funds for an unforeseeable and prolonged period, where will they source funds to operate the shop? These DATs have bills and salaries to pay.

Strategy is an outlier for two reasons.

• It reported holding $2.25 billion in reserves to cover its dividend and interest obligations for approximately 2.5 years. This is important because Strategy is no longer relying solely on zero-coupon convertible bonds to raise funds. It also has preferred instruments with significant dividend payouts.

• It also has an operating business that, however small, still records recurring revenue. In Q4 2025, Strategy reported $123 million in total revenue and $81 million in gross profit. Although Strategy’s bottom line could swing significantly based on the mark-to-market value of crypto prices in each quarter, its business intelligence arm is the only source of tangible cash flow.

But this still doesn’t make Strategy’s play invincible. The market can still punish the equity, as it has over the past year, and impair Strategy’s ability to continue raising funds at lower costs.

While Strategy may weather the crypto bear cycle, newer DATs that lack sufficient reserves or an operating business to cover their unavoidable expenses will feel the squeeze.

This distinction is even clearer with ETH DATs.

BitMine Immersion, the largest ETH-based DAT, has a marginal operating business to support its ETH-treasury. In the quarter that ended on November 30, 2025, BMNR reported total revenue of $2.293 million, comprising consulting, leasing, and staking revenue.

The balance sheet shows the company holding digital assets valued at $10.56 billion and cash equivalents of $887.7 million. BMNR’s operations contributed to a net negative cash flow of $228 million. All of its cash requirements were met through the issuance of new shares.

Raising funds was relatively easier for BMNR last year, as its stock traded at an mNAV premium for most of the year. Over the past six months, the mNAV has declined from 1.5 to about 1.

So, what happens when the equity doesn’t trade at a premium anymore? Issuing more shares at a discount could reduce the per-share price of ETH and make it less attractive to investors than buying ETH directly from the market.

It explains why BitMine said last month that it would invest $200 million for a stake in Beast Industries, a private company owned by YouTuber Jimmy “MrBeast” Donaldson. The company said it would “explore ways to collaborate on decentralised finance initiatives”.

ETH and SOL DATs may also argue that staking income, which BTC DATs can’t boast, could help them remain afloat during market meltdowns. But that still doesn’t solve the problem of meeting the cash flow obligations of a company.

Even with staking rewards, which accrue in crypto - either ETH or SOL, DATs will not be able to pay salaries, audit fees, listing costs and interest, as long as they are not converted to fiat. The company must either have enough fiat revenue or sell or rehypothecate its treasury to meet its cash needs.

This is evident in Forward Industries, the biggest SOL-holding DAT.

FWDI recorded a net loss of $586 million in Q4 2025 despite earning $17.381 million in staking and related revenue.

The management explicitly stated that its “existing cash balance and working capital will be sufficient to meet our liquidity needs through at least February 2027”.

FWDI also discloses an aggressive capital-raising strategy that involves at-the-market share issuance, buybacks, and a tokenisation experiment. However, all these may be unsuccessful attempts to manage the wrapper price if the mNAV premium doesn’t exist for an extended period.

The Road Ahead

Last year’s DAT boom centred around the speed of asset accumulation and raising funds by issuing stock at a premium. As long as the wrapper traded at a premium, DATs could keep turning expensive equity into more coins per share and call it “beta”. Investors pretended that the only risk was the asset price.

But premiums don’t stay forever. Crypto cycles could turn them into discounts. I wrote about this when we first observed premiums declining within weeks of the 10/10 liquidation event last year.

Read: Where’s DAT Beta? 🎁

However, this bear cycle will prompt DATs to evaluate whether their wrappers should continue to exist once they no longer trade at a premium.

One way to address this dilemma is for the company to enhance its efficiency to complement its DAT strategy with a cash-flow-positive business or surplus reserves. That’s because when the DAT story stops selling during bear markets, a routine corporate story decides its survival.

If you read Strategy & Marathon: Faith and Power, you’ll recollect why Strategy still manages to stay afloat across multiple crypto cycles. However, the newer cohort, including BitMine, Forward Industries, SharpLink, and Upexi, cannot rely on the same muscle.

Read: SharpLink and Upexi: DATs with Tradeoffs

Their current experiment with staking yield and a thin operating business could collapse under market pressure unless they consider alternative options to cover real-world obligations.

We observed this with ETHZilla, an Ethereum treasury company, when it sold approximately $115 million of its ETH holdings and purchased two jet engines last month. The DAT then leased the engines to a major airline and engaged Aero Engine Solutions to manage them on a monthly fee basis.

Going forward, I will evaluate not only the digital-asset accumulation strategy but also the conditions under which it can survive. In the ongoing DAT cycle, only those who can manage their dilution, liabilities, fixed obligations, and trading liquidity will be able to outlast market downturns.

That’s it for this week’s quantitative analysis. I will be back with the next one.

Until then, stay curious,
Prathik

Token Dispatch is a daily crypto newsletter handpicked and crafted with love by human bots. If you want to reach out to 200,000+ subscriber community of the Token Dispatch, you can explore the partnership opportunities with us 🙌

📩 Fill out this form to submit your details and book a meeting with us directly.

Disclaimer: This newsletter contains analysis and opinions of the author. Content is for informational purposes only, not financial advice. Trading crypto involves substantial risk - your capital is at risk. Do your own research.

Just when you think finance is boring, it surprises us. Lately, it seems that everyone is rebuilding finance in ways few would have anticipated. Even those coming from the entertainment and media industries.

Take Jimmy Donaldson, also known as “MrBeast” on YouTube and the owner of a snack empire, who acquired a banking app to make financial literacy and money management accessible among teens and young adults. Why? Perhaps nothing comes closer to monetising a 466-million subscriber base with a financial product.

This summer, CME Group, the world’s largest derivatives marketplace, is launching Single Stock futures that will allow users trade futures on more than 50 top U.S. single stocks, including Alphabet, NVIDIA, Tesla, and Meta.

Such reinventions show us what’s changing in how people want to engage with finance. Few things demonstrate this better than the explosion of perpetual markets in the past couple of years.

Perpetual futures, or perps, are a type of financial derivative contract that allows market participants to speculate on an asset’s price without an expiration date. Perps also let people express opinions on assets quickly and cheaply. They are more fascinating than traditional markets because they offer instant access and leverage. Unlike traditional markets, these require no brokerage onboarding, no jurisdictional paperwork, and don’t follow “conventional” market hours.

Moreover, on-chain perp markets can make any asset, traditional or crypto, available for trading in a permissionless and highly leveraged manner. This makes speculation fun. Especially when humans can’t resist betting on the trajectory of an asset during choppy times outside conventional market hours. This enables risk to be priced in real time.

Consider what happened a couple of weeks ago. When both the traditional and crypto markets were in meltdown, traders flocked to Hyperliquid, driving perpetual gold and silver trading into a frenzy. On January 31, Hyperliquid alone captured 2% of the world’s daily silver market trading volume on its Silver perp market that was launched barely a month ago.

That explains why perp volume dashboards are increasingly dominating crypto communities and forums. Volume is an absolute number. It appears big, refreshes every few minutes and makes for great leaderboards. But then it misses a key nuance. Volume can reflect motion that could lack meaning. A market can trade a lot because it’s deep. However, it can also trade due to rewards and incentives that encourage greater activity. This activity is often recursive and lacks meaning.

This week, I delved deeper into additional metrics for perp trading markets, which, when paired with volume, add greater nuance and tell different stories than volume alone.

Let’s get started

The user-friendly interface of perpetual markets has made them a low-barrier, default interface for expressing opinions across various markets and global assets.

The wide range of options to trade derivatives on both traditional and crypto assets on a single platform with high leverage has led perps to surpass spot volume on decentralised exchanges. From 44% in February 2025, perp volume dominance has surged to ~75% today relative to spot volume.

This increased perp activity has been even more pronounced in the past few months.

The cumulative perpetual trading volume across all platforms for the four years ending July 31, 2025, totalled $6.91 trillion. In just the last six months, that volume has doubled to $14 trillion.

All this growth has occurred despite the crypto market cap slipping almost 40% between August 1, 2025, and February 9, 2026.

The activity indicates that traders increasingly prefer derivatives trading, hedging, and short-term positioning, especially when the spot market becomes choppy and bearish.

But there’s a catch here. With so much activity, it’s easy to misinterpret the volume metric. Especially because perp trading isn’t merely buying and selling an asset after holding it for long periods. It also includes repeatedly resizing a bet with leverage and tighter timeframes.

So, when the market’s turnover accelerates quickly, an inevitable question crops up in my mind: Is all the record-high volume reflecting more capital inflow, or is it because the same capital is cycling faster?

This is where looking at Open Interest (OI) helps. While volume reflects capital flow, OI measures outstanding exposure. On perp exchanges, OI is the total dollar value of active and unsettled long and short contracts held by traders.

If perp trading is adopted by mass markets, one would expect not only greater capital flows but also a proportionally larger outstanding exposure.

From averaging around $4 billion in February last year, OI has more than tripled to roughly $13 billion. In fact, it averaged ~$18 billion throughout January before declining by ~30% in the first week of February.

Although perp volume has doubled over the last five months, OI rose by roughly 50%, from $13 billion to approximately $18 billion, before falling back to $13 billion.

To understand this better, I look at how capital efficiency, OI as a percentage of Daily Volume, has moved over the past year.

The OI/Volume ratio has jumped 50%, from 0.33x last year to 0.49x today. But that progress hasn’t been smooth. The ratio experienced multiple peaks and troughs during its 50-basis-point growth.

The first phase was a quiet one, between February and May 2025. The OI/Volume ratio averaged ~0.46x, with average OI around $4.8 billion and average daily volume around $11.5 billion.

Then the ratio jumped and averaged about 0.72x between June and mid-October, the second phase. In this period, average OI rose to $14.8 billion, and daily volume averaged $23 billion. This signalled not only record-high trading volumes but also increased risk exposure and greater capital commitments to these derivatives.

In the third phase, the market reversed. The start of this phase coincided with the mass liquidation on October 10 that wiped out over $19 billion in leveraged positions within 24 hours.

From mid-October to late December, the OI/Volume ratio dropped to ~0.38x, driven mainly by a rise in volume while open interest stayed mostly stagnant. October, November, and December recorded the three highest monthly trading volumes in 2025, averaging over $1.2 trillion.

During the same period, OI averaged ~$15 billion, marginally less than the average in the preceding three months.

This is where I wish to add more nuance to the analysis of the perp market at the protocol level. This helps us understand how efficient perp exchanges are at converting trading activity into sticky capital and revenue.

As of February 10, here’s how the top five perp exchanges by 24h volume stack up:

With an OI to average daily volume (across 7 days) proportion of over 45%, Hyperliquid converts a large share of its volume into persistent positions. It shows that $4.5 out of every $10 traded on the platform is committed to active positions. This matters because a higher OI rate yields tighter spreads, deeper liquidity and the confidence to scale size without slippage.

Hyperliquid’s fee income reinforces this story. At approximately 3.2 basis points of take rate, Hyperliquid is converting the largest share of 24-hour volume into fee income.

Aster, currently ranked second, also has a decent OI/Volume capital efficiency of 34%, despite having almost half the volume of Hyperliquid. What stands out, though, is monetisation. With a lower take rate of ~1.6 bps, Aster is prioritising capital retention on its platform over fee maximisation.

Meanwhile, edgeX and Lighter perform similarly on the capital-efficiency ladder, with 21% OI/Vol. However, edgeX is comparable to Hyperliquid in fee monetisation, at 2.8 bps.

What stands out is that the perp market today is less of a plain-vanilla growth story and requires a nuanced interpretation of multiple metrics. At the aggregate level, volume has exploded. In six months, cumulative perp volume grew more than it did in the four years before. But the picture becomes clearer when OI and volume are read together.

Yet, what’s a clearer win is when the OI/Vol ratio grows. It is a direct signal of patient capital willing to trust and bet on various products and markets emerging on perpetual trading exchanges.

What is more interesting to monitor is how individual players progress from here and what they choose to optimise for. Over time, exchanges that optimise for conviction and monetise it sustainably will matter far more than those that top the volume charts by relying on rewards and incentives.

That’s it for this week’s quantitative analysis. I will be back with the next one.

Until then, stay curious,
Prathik

Token Dispatch is a daily crypto newsletter handpicked and crafted with love by human bots. If you want to reach out to 200,000+ subscriber community of the Token Dispatch, you can explore the partnership opportunities with us 🙌

📩 Fill out this form to submit your details and book a meeting with us directly.

Disclaimer: This newsletter contains analysis and opinions of the author. Content is for informational purposes only, not financial advice. Trading crypto involves substantial risk - your capital is at risk. Do your own research.

Credit is the economy’s time machine. It allows businesses to bring tomorrow’s cash flows into today’s decision-making.

I consider it one of the most underrated aspects of the financial world.

Seldom do people notice credit when it works. But it appears in how businesses function. An effective credit system enables businesses to replenish inventory before shelves are completely empty. A factory can upgrade its obsolete equipment before it breaks down. A founder can hire an extra person before human resource redundancies become a crisis.

The gap between a good idea and its execution is often due to limited access to credit. This gap is what banks promise to fill.

Banks accept deposits from customers through bank accounts and extend credit to those seeking loans. They pay their customers lower interest rates than they charge borrowers, pocketing the difference as profit. However, bank credit comes with challenges. The credit demand-supply mismatch is one of the most significant ones.

Private credit pitches in where banks can’t reach, but the gap persists. This gap reflects investors’ reluctance to lend in the current credit markets.

In March 2025, a report by IFC–World Bank MSME Finance Gap estimated a financing gap of approximately $5.7 trillion across 119 emerging markets and developing economies (EMDEs). That’s about 19% of their collective GDP.

In this context, I find last week’s developments in the on-chain credit space promising. On-chain lending isn’t new. We saw a crazy cycle in 2022 that is still debated today for various reasons. But this current cycle feels different.

In this week’s analysis, I dive into all that has changed in the on-chain credit market and tell you why it makes me feel it could change credit for good.

Let’s get started, shall we?

We’ve had money markets on Ethereum for years. Over-collateralised borrowing, liquidation bots, rate curves, and occasional liquidation cascades are not new at all. So, when credit-related announcements came out last week, it was the players who joined the game and how they are repackaging credit that grabbed my attention, not the primitive itself.

What excites me is that these isolated partnership announcements collectively signal a broader convergence. What began in siloed DeFi during the summer of 2022 is now coming together. Vault infrastructure, non-custodial wrappers, professional risk managers, and automated yield optimisation are all being integrated and distributed.

Kraken rolled out DeFi Earn, a retail-friendly wrapper that routes lender deposits into vaults (Veda, in this case). The vaults will then direct funds to lending protocols such as Aave. Chaos Labs will serve as the risk manager, monitoring the engine. Kraken promises to offer its lenders an annual percentage yield (APY) of up to 8%.

What changes with vaults? They offer lenders self-custody and visibility. Instead of handing their money to a fund manager, as in traditional credit markets, and waiting for monthly disclosures, vaults are integrated with smart contracts that mint claims on the funds and display real-time deployment on the blockchain.

Around the same time, Bitwise, the world’s largest crypto fund manager, launched non-custodial vault strategies on Morpho, an on-chain lending platform.

That’s not the first time on-chain lending has received institutional validation. In 2025, Coinbase launched USDC lending, enabling a smart contract wallet to connect and route deposits into Morpho via on-chain vaults. Steakhouse Financial curated this to allocate funds across markets and optimise returns.

It comes at a time when the on-chain lending market is looking set to explode. The data establishes this.

The total value locked (TVL) in lending protocols stands at $58 billion, up 150% over two years. Yet, this figure is only 10% above the 2022 highs.

This is where the active loans outstanding dashboard reflects a more accurate picture.

The dashboard shows a solid foundation laid by incumbents, including Aave and Morpho, with active loans exceeding $40 billion over the last few months, more than double the 2022 highs.

Both Aave and Morpho today make six times the fees they did two years ago.

While these visuals demonstrate investors’ confidence in lending protocols, I find the growth in vault deposits over time even more compelling.

In October 2025, total vault deposits exceeded the $6-billion mark for the first time ever. Today, those deposits stand at $5.7 billion, more than double last year’s amount ($2.34 billion).

These charts show that users are choosing products that offer a comprehensive ecosystem, including vaults, yield-optimisation strategies, risk profiles, and professional managers.

This is the evolution I am optimistic about, in contrast to what we observed during DeFi Summer. At that time, the lending market appeared to be a closed loop. Users leveraged the loop by depositing collateral, borrowing against it, using the proceeds to purchase additional collateral, and redepositing it to earn higher yields. Even if the price of collateral fell, these users at least received incentives from the platform for using the platform's lending protocols. But when the incentives themselves fade? The loop snapped.

Even the current cycle is built on the same primitive - over-collateralised borrowing, but is based on a different and robust foundation. Vaults today have become wrappers that convert protocols into automated asset managers. Risk managers have taken centre stage to set guardrails.

This shift changes how on-chain lending appeals to investors and lenders.

During DeFi Summer, lending protocols were merely another avenue to make quick money. It worked until the incentives dried out. Users opened Aave, added funds, borrowed against collateral, and repeated the process until the incentives dried out. We saw this with Aave’s Avalanche deployment, where incentives attracted deposits and initially financed the loop. But when the subsidy weakened, the loop unwound. As a result, outstanding debt on Avalanche dropped 73% quarter-on-quarter in Q3 2022.

Today, lending has evolved into a well-supported ecosystem with specialised actors, each responsible for risk, yield optimisation, and liquidity.

Here’s how I’d put the entire stack together.

At the bottom is the settlement money in stablecoins. They can be moved instantly, parked anywhere, deployed at any time, and, crucially, measured easily.

Above this sit familiar money markets, like Aave, where lending and borrowing are enforced by software code and collateral.

Then comes the world of wrappers and routers, which pool and route funds from lenders to borrowers. Vaults act as wrappers that package the entire lending product in a way that makes sense to retail investors. It could appear as “deposit $X, and earn up to Y%,” as Veda wallets do on Kraken’s Earn platform.

Curators sit above these protocols, deciding what collateral to allow, liquidation thresholds, exposure concentration, and when to unwind a position when collateral value declines. Think of what Steakhouse Financial does on Morpho or how asset managers like Bitwise feed their judgment directly into vault rules.

In the background, AI systems operate 24/7 to manage on-chain credit risk and serve as the nervous system for the lending ecosystem when humans are away. Manual risk management is difficult to scale. Constrained risk management increases credit risk during periods of volatility. It could result in substandard yield at best, or liquidation at worst.

The AI optimisation engine tracks borrowing demand, oracle deviations and liquidity depth to trigger timely withdrawals. It triggers alerts when vault exposure drifts beyond pre-established thresholds. It advises on de-risking actions and supports the risk team in decision-making.

It is this round-the-clock optimisation, de-risking, audited vaults, curated strategies, institutional validation, and professional risk managers that make the current market feel safer and carry fewer risks.

But none of these completely eliminates risk. One of the most overlooked risks is liquidity risk.

While a vault offers “better liquidity” than siloed protocols, it still operates in the same market as those protocols. Vaults can make it difficult to exit funds by increasing unwinding costs in thin markets.

Then there is the risk of the curator’s discretion.

When users deposit in a vault, they are trusting someone’s discretion on what markets to allocate to, which collateral to trust, and what unwinding thresholds to set. This is how credit works everywhere, but lenders should understand that non-custodial does not necessarily mean risk-free.

Despite these challenges, on-chain lending is changing the crypto landscape and, by extension, economies.

Credit markets run on the cost of time and operations.

Enormous spending on verifying, monitoring, reporting, settling, and enforcing transactions makes traditional credit costly. A large portion of the interest they charge borrowers is avoidable and not necessarily tied to the “time value of money”.

On-chain credit compresses both time and operating costs.

Stablecoins minimise settlement time, smart contracts cut enforcement time, transparent ledgers reduce audit and reporting time, and vaults eliminate user complexity. These cost savings become even more significant when addressing the credit gap in small and medium enterprises.

On-chain credit won’t fill the credit gap overnight, but a lower cost of credit will make verification easier and make access more inclusive. And that could reshape economies.

That’s it for this week’s quantitative analysis. I will be back with the next one.

Until then, stay curious,
Prathik

Token Dispatch is a daily crypto newsletter handpicked and crafted with love by human bots. If you want to reach out to 200,000+ subscriber community of the Token Dispatch, you can explore the partnership opportunities with us 🙌

📩 Fill out this form to submit your details and book a meeting with us directly.

Disclaimer: This newsletter contains analysis and opinions of the author. Content is for informational purposes only, not financial advice. Trading crypto involves substantial risk - your capital is at risk. Do your own research.

Money has a fascinating way of telling stories. It reveals what it thinks of the world by how it moves through global markets.

In a confident market, money behaves like a talent scout. It takes chances, experimenting with a pitch deck, a prototype, or a vision of the future that might seem outlandish today. It shows its belief through the signed cheque for funding.

In a nervous market, however, money acts more like a cautious auditor. It gravitates toward things that are already proven. Think of businesses with healthy cashflows, a user base, distribution or a strong team.

Then, there’s a third scenario, somewhere in between. Here, money starts recycling existing ideas and jumps between hands. We see this happen when business ownership changes through mergers, acquisitions, realignments of business arms, and so on. All these scenarios show money moving, but that doesn’t create new liquidity.

This is why anyone reading into the capital flows and funding numbers should approach them with caution. A large funding number might signal fresh risk-taking, or it could just mean money is changing hands among existing businesses.

The Crypto Fundraising Report 2025 reveals one such figure: $50.6 billion raised across 1,409 rounds in 2025, more than 200% higher than the $15.5 billion raised in 2024. It sounds like a party, but only the breakdown of this figure shows the true picture.

In today’s analysis, I will dive into these numbers and explain what last year’s movement of money tells us about the trajectory of the crypto market.

On to the story,
Prathik

A significant portion of “capital raised” isn’t necessarily new money flowing into the crypto market. The fundraising report breaks total raised into categories: Venture Capital (VC)/Private, Mergers & Acquisitions (M&As), and Public Sales/IPOs.

Over 40% of the capital raised last year came from M&As, compared to only 9% in 2024. Although the total funds raised more than tripled from the previous year, 2025 was more of a year of consolidation for crypto.

The report interprets these numbers as “moderate growth” in VC activity and “explosion” in M&A. However, I believe there’s more to these figures than meets the eye.

Consolidation of businesses in a relatively new industry, such as crypto, could mean maturity and progress. But when paired with capital flight from other routes, it could tell a different story.

In 2025, money was not merely rerouted from funding new projects to acquiring existing ones. While the total funds raised rose by $35 billion year-on-year, M&As and Public Sale/IPOs accounted for $27 billion of that growth.

VC activity still grew by more than 70% year-on-year (YoY) last year, albeit at a declining share in the overall fundraising categories.

While VCs accounted for over 85% of the total fundraising in 2024, that share slipped to 46% in 2025. This, along with how VCs allocated capital across different stages of crypto projects last year, is what concerns new crypto builders and founders. VCs signed far fewer but larger cheques in 2025 to fund existing projects at a later stage in their life cycle than to fund newer, early-stage projects.

The breakdown shows that Pre-Seed, Seed, and Series A funding fell year-on-year, while Series B and Series C funding more than doubled in 2025.

The behaviour is mirrored even when you look at the number of cheques signed across all funding stages.

Both the above charts collectively tell us that “Yes, capital rose. But it rose where uncertainty is lower, and the founder’s pitch is not more about ‘future of money’ but about ‘here are some proven metrics to bet on’.

While this signals tough competition ahead for early-stage founders, it could mark a value-investing opportunity for investors looking to infuse capital into Series A and Series B projects, according to the State of Venture Economy report by Equal Ventures.

That’s because intense competition to raise funds at the Seed and Pre-Seed stages has driven up valuation premiums.

Higher valuation premiums could mean paying for a growth-stage multiple with the risk profile of a Seed-stage project.

This shift prompts rational capital allocators to reallocate their funding to lower-risk opportunities, such as Series A and Series B projects, which demand lower valuation premiums than Seed, Pre-Seed, Series C, and Series D+ projects.

This, along with the explosion of M&As, shows how the risk appetite is shifting across stages. On the one hand, M&As account for over 40% of all “capital raised”, which is not really “new money” in the same way as fresh capital is infused via VC rounds. On the other hand, later-stage funding is being rewarded because it appears risk-free to underwrite, offering greater certainty and a higher potential for better ROI.

When capital concentrates in select avenues, two things happen.

First, decision-making becomes focused. Founders begin preparing to pitch to a smaller audience that tracks similar metrics and shares notes.

Second, the idea of “quality” becomes standardised. In crypto, this could mean wide distribution, regulatory robustness, enterprise readiness, and a business model that doesn’t rely on bull- and bear-market narratives.

This is why I am sceptical about reading the 2025 Crypto Fundraising report’s numbers being purely bullish. Although funding is up, it is important to understand what’s driving the M&A explosion. Although crypto is a relatively new market, the stack has become crowded, making it difficult to scale distribution.

In such times, it becomes a no-brainer for incumbents to buy and scale what’s already working rather than convincing users to adopt a new one. This is evident in the deals that we saw last year.

Let’s take the top three M&A deals listed in the report: Dunamu, DigitalBridge, and Deribit. They total to $17.2 billion, ~81% of the report’s total M&A value.

Coinbase bought Deribit not because it was betting on innovation or experimenting with it. It was a move to capitalise on a flywheel that Deribit had already put in place. Deribit offered a venue with existing liquidity, client habits and an Options and Derivatives product that can double down as a default casino for sophisticated traders once markets mature.

Coinbase read the signs and prepared in advance.

South Korean internet giant Naver had a similar strategy on its mind when it decided to acquire Dunamu, an operator of the country’s largest cryptocurrency exchange, Upbit, in an all-stock deal valued at $10.3 billion.

The deal married a massive consumer distribution platform (an internet-based fintech giant) with a regulated, high-frequency financial product (an exchange).

What does all this mean for 2026?

I expect the capital concentration to persist until we get a clear exit pathway. My only reservation about the consolidation idea that the report lays out is that maturity doesn’t have to mean the death of innovation. If too much capital is invested in rearranging ownership or doubling down on existing ideas, it could lead to stagnation and fewer breakthrough innovations.

If we don’t see successful IPOs and large liquid listings reopening, expect late-stage investors to continue behaving like strict underwriters, while early-stage founders face attention scarcity.

But I don’t believe the Seed stage is dead in crypto.

2025 provides valuable lessons and clarity for early-stage founders. In 2026, they will need to refine their pitch decks to focus on the metrics that matter most to the market. Like how they have a distribution wedge, how they can ship quickly while staying within regulatory compliance, and why their product can survive without relying on bull markets.

That’s it for this week’s quantitative analysis. I will be back with the next one.

Until then, stay curious,
Prathik

Token Dispatch is a daily crypto newsletter handpicked and crafted with love by human bots. If you want to reach out to 200,000+ subscriber community of the Token Dispatch, you can explore the partnership opportunities with us 🙌

📩 Fill out this form to submit your details and book a meeting with us directly.

Disclaimer: This newsletter contains analysis and opinions of the author. Content is for informational purposes only, not financial advice. Trading crypto involves substantial risk - your capital is at risk. Do your own research.

Every time stablecoins trend, I see people declaring that “stablecoins will kill Visa and Mastercard.” Crypto Twitter and other media outlets talk about traditional finance rails being replaced by new ones. Many nod at this argument, but I find it cute and naive. Aspirational, at best.

This week, I read Artemis’ latest report on stablecoins and card payments. It reinforced the idea that stablecoins are scaling on the existing infrastructure set up by legacy financial cards like Visa and Mastercard, not around them.

The report illustrates how stablecoin payments are scaling rapidly by leveraging distribution and consumer credit, both of which crypto doesn’t naturally have a moat in.

It’s clear from the report that crypto cards are bridging the gap between stablecoin balances and everyday transactions. However, there’s another important story here.

In today’s quantitative analysis, I delve deeper to show why cards, specifically credit cards, offer the biggest opportunity to scale this shift.

On to the story,
Prathik

Retail stablecoin payments have grown from $1.7 billion in January 2023 to $3.5 billion in August 2025. However, this growth hasn’t been driven by merchants accepting stablecoins at checkout. About 75% of this growth came from leveraging existing consumer behaviour - specifically swiping a card.

Crypto card payments grew to over $1.5 billion in August 2025, five times (5x) the volume in August 2023 ($0.28 billion). The average monthly volume shot up from $250 million in early 2023 to over a billion dollars in 2025. During the same period, P2P stablecoin payments remained stagnant at an average monthly rate of $1.5 billion.

The growth of card payments might seem surprising, but they scaled by riding on the two card benefits that users love most: tap-to-pay distribution and rewards.

P2P stablecoin transfer volume stagnated because it is driven by need. People use them to overcome capital constraints, banking downtime, and remittance friction. Once these urgent use cases are addressed, there’s little room for these transfer categories to grow. That’s because making these transfers still requires users to understand how stablecoins and crypto wallets work.

But cards can move the entire spending activity, including shopping for toys and television sets and paying for subscriptions, to stablecoin channels. This doesn’t require people to understand stablecoins. They can tap-to-pay via stablecoins, just as they do with fiat currency.

Distribution Beats Brand

The Artemis report also shows that brand matters less than the infrastructure they integrate into. It shows that both Visa and Mastercard support over 130 crypto card programmes each, yet Visa captures over 90% of on-chain card volume.

That’s because volume follows the network that integrates best with the middle layer of the infrastructure, including issuers, processors, programme managers, and compliance-heavy operations teams that make the card experience frictionless for users.

In this case, Visa partnered early with the middle layer, while Mastercard initially focused more on partnering with exchanges. A relationship with a major issuer can lead to dozens of card programmes and unlock an entire pipeline of launches.

Through Visa and Mastercard, stablecoins can be adopted by millions of users.

Once the network for transferring and processing conversions between stablecoins and fiat has been established, both users and merchants will experience minimal friction when paying and accepting stablecoins via cards.

But why should people wake up one day and just move to stablecoin payments? They probably won’t. How do you fix that, then?

The Rewards Moat

This is where the inherent feature of cards, via subsidies and rewards, comes into play.

Both merchants and users become ready to shift to stablecoin payments when you make it economically irresistible for them to do so.

Think cashback, reward points, lounge access, no-cost EMIs, surcharge waivers, and other small perks. They all add up, making it easier to form a new habit.

Although this turns out to be a net negative for card issuers, they don’t view cards as a single business line.

Crypto card issuers have followed the playbook to acquire customers. Gemini, EtherFi, Coinbase One, and other crypto cards serve much more than merely enabling payments. Through the rewards they offer, they act as an acquisition funnel, bringing in new transacting users and retaining a chunk of them as active users. The issuers then cross-sell other services, such as lending, trading, subscriptions and yield products.

But I see greater potential here to increase stickiness.

The Credit Opportunity

In the majority of today’s crypto cards, users still have to hold either stablecoins or fiat currency in their crypto cards before they spend. Like a debit card. Pre-funding means friction. It requires either the users to hold a new kind of money - stablecoins, or the merchants to be integrated into the stablecoin infrastructure. That’s a big ask when it comes to expecting people to change how they hold, spend, or receive their money on a daily basis.

But what if, instead of expecting users and merchants to transact in stablecoins, settlement is handled via fiat infrastructure? The user can deposit whatever crypto they own into a yield-bearing vault, earn interest on that collateral, and take a fiat loan against those funds. It works like a credit card at checkout – spend now, settle later. Here, the credit limit isn’t set by a bank; instead, it is a secured credit line backed by the crypto parked in the vault, expressed as a loan-to-value (LTV). If the collateral drops, your borrowing capacity could shrink. The remaining transaction will then be settled as any other fiat-based transaction between the user and the merchant. Spend now, settle later.

This credit wrapper (third option in the graphic above) brings back the convenience of credit to the spending journey without requiring either the user or the merchant to hold stablecoins. It feeds on consumer behaviour without expecting them to change their spending habits.

Let me show you how with a personal experience.

When India launched the Unified Payments Interface (UPI) to digitise payments on mobile phones, I was late to the party. It worked great, no doubt. But it didn’t appeal to the credit lover in me. Of course, I still used it occasionally for its convenience or when I didn’t have my wallet. But that changed in 2022 when it started letting me pay via my RuPay credit card. Once it allowed me to link my credit card to any payments app, such as Google Pay or PhonePe, it married UPI’s ease of use with the convenience of paying with credit cards. I could use my credit limit and accumulate reward points even without physically swiping the card.

Numbers show the impact.

As of November 2025, RuPay accounted for 38% of all credit card transactions in India by volume and 8% by value, up from 10% and 1.8%, respectively, a year ago. RuPay credit card transactions through UPI almost doubled to $7.4 billion between April and October 2024, from $3.89 billion between April 2023 and March 2024.

The Artemis report shows how stablecoin growth is becoming less about the stablecoins themselves and more about how they are wrapped and distributed. The report shows numbers on distribution partnerships, incentive budgets, and credit design. But what excites me the most is watching credit-led products that remove the entire crypto settlement process from the user experience.

Stablecoins will likely become an invisible part of the infrastructure, while familiar processes like underwriting, risk controls, and rewards become the user-facing products.

Throughout this process, expect Visa and Mastercard to continue their usual business and support the entire payment infrastructure as they seamlessly move money — crypto or otherwise.

That’s it for this week’s quantitative analysis. I will be back with the next one.

Until then, stay curious,
Prathik

Token Dispatch is a daily crypto newsletter handpicked and crafted with love by human bots. If you want to reach out to 200,000+ subscriber community of the Token Dispatch, you can explore the partnership opportunities with us 🙌

📩 Fill out this form to submit your details and book a meeting with us directly.

Disclaimer: This newsletter contains analysis and opinions of the author. Content is for informational purposes only, not financial advice. Trading crypto involves substantial risk - your capital is at risk. Do your own research.

I like crypto’s seasonal traditions. Uptober. Recktober. People in the community throw a lot of stats around these events. And humans love trivia, don’t they?

The trend stories and reports around them are even more interesting: ‘this time, the ETF flows are different’; ‘crypto funding has finally matured this year’; ‘BTC is ready for a rally this year’, and many more. Recently, while going through one such report, ‘State of DeFi 2025’, some charts on how crypto protocols have been generating “serious revenue” caught my attention.

These charts show the dominant protocols across crypto that generated the most revenue during the year. They stand as testimony to one fact many in the industry have discussed over the last year: crypto has finally begun to find revenue sexy. But what’s shaping this revenue?

Implicit in these charts was also another, lesser-known story to chase. Where are these fees going?

Last week, I dug into DefiLlama’s fee and revenue data (revenue being fees retained after paying liquidity providers and suppliers) to find answers.

In today’s quantitative analysis, I attempt to add nuance to these numbers and show how and where money flows in crypto.

Onto the story,
Prathik

Crypto protocols generated over $16 billion in revenue last year, more than double the approximately $8 billion in 2024.

Value capture expanded across the crypto industry, with many new categories emerging in decentralised finance (DeFi) over the last 12 months, such as decentralised exchanges (DEXs), token launchpads, and perpetual DEXs.

Yet the profit centres that generated the highest revenue remained concentrated in older categories—most notably stablecoin issuers.

The top two stablecoin issuers, Tether and Circle, accounted for over 60% of all revenue generated in crypto throughout the year. In 2025, their share dipped only marginally to 60% from about 65% the previous year.

But what the perpetual DEXs— barely present in 2024, achieved in 2025, cannot be underestimated. Hyperliquid, EdgeX, Lighter, and Axiom collectively accounted for 7-8% of the industry’s total revenue, far more than the combined share of protocols in established DeFi categories such as lending, staking, bridges, and DEX aggregators.

So what could drive revenue in 2026? I find the answer in the same three factors that influenced revenue concentration in crypto last year: carry, execution, and distribution.

The carry trade means that whoever holds and moves money earns a return on holding and moving that money.

Stablecoin issuers’ revenue models are both structural and fragile. Structural, because they scale with supply and circulation. Each digital dollar they hold is backed by Treasuries, which earn interest. Fragile, because the model depends on a macroeconomic variable over which issuers have little control: the Fed’s interest rate. And the easing phase has just begun. As rates fall further this year, so will the revenue dominance of stablecoin issuers.

Then comes the execution layer. This is where DeFi protocols built perp DEXs, 2025’s most successful DeFi category.

The simplest way to understand how perp DEXs grabbed meaningful shares so quickly is to look at how they help their users execute actions. They built venues that helped users get in and out of risk on demand, with minimal friction. Even when the markets aren’t moving much, someone can still hedge, have some leverage, score arbitrage, rotate funds or simply research and place positions for the future.

They allow users to execute continuous, high-frequency trades without the inconvenience of moving the underlying asset, unlike spot DEXs.

Although the execution part sounds simple and is lightning fast, there’s so much more than what meets the eye. These perp DEXs must build a robust trading interface that doesn’t crack under load, host a matching and liquidation system that can hold the ground amid chaos, and provide sufficient liquidity depth to keep traders busy. In perpetual DEXs, liquidity is the secret sauce. Whoever offers constant and ample liquidity attracts the highest trading activity.

In 2025, Hyperliquid dominated the perp DEX space by offering ample liquidity enabled by the largest number of market makers on the platform. As a result, Hyperliquid was the most dominant perp dex in terms of fee collection in 10 out of the 12 months last year.

Ironically, even these DeFi category perp DEXs clicked because they didn’t expect traders to understand blockchain and smart contracts, and instead functioned like familiar, traditional exchanges.

Once all the above are taken care of, exchanges generate revenue on autopilot by charging marginal fees on traders’ high-frequency, high-volume trading activity. And this goes on even when spot prices are moving sideways, simply because of the range of options available to traders on the platforms.

This is precisely why I find perps DEXs, despite having single-digit revenue dominance last year, to be the only category that could even remotely challenge stablecoin issuers’ dominance.

The third factor, distribution, drives incremental revenue in crypto projects, such as token issuance infrastructure. Think pump.fun and LetsBonk. It’s not very different from what we see in Web2 companies. Although Airbnb and Amazon don’t own any of their inventory, their massive distribution play has helped them transcend their roles as aggregators and reduce the marginal cost of adding more supply.

Crypto issuance infrastructure also doesn’t own the crypto assets, such as memecoins, tokens and micro communities, created via its platform. Yet by making the user journey frictionless, automating the listing process, providing ample liquidity, and simplifying trading, it can become the default venue for people looking to create crypto assets.

In 2026, two questions may decide the trajectory of these revenue drivers: Will the stablecoin share of industry revenue slip from the 60% zone as rate cuts bite into the carry trade? Will perp venues push beyond their 7-8% foothold as execution consolidates?

Turning Revenue into Ownership

All three factors – carry, execution, and distribution – show how crypto revenue arises. But that’s just one part of the story. It is equally, if not more, important to understand what share of the gross fee is distributed to tokenholders before the net revenue is retained by the protocols.

Value transfer via token buybacks, token burns, and fee-sharing signifies that a token is an economic claim on ownership, rather than merely a governance badge.

In 2025, users across DeFi and other protocols paid roughly $30.3 billion in fees. Of that, $17.6 billion was retained by protocols as revenue after paying liquidity providers and suppliers. About $3.36 billion of total revenue was returned to tokenholders through staking rewards, fee sharing, buybacks, and token burns.

That translates to 58% of fees becoming protocol revenue, and about 19% of revenue being captured by tokenholders.

This is a significant shift from the last cycle. We saw a growing share of protocols that attempted to make the token behave like a claim on operating performance. This gave investors a tangible incentive to stay invested and go long on projects they believed in.

I wrote about how Hyperliquid and pump.fun did this last year, here: Burn, Baby, Burn.

The crypto world is far from perfect, and most protocols still distribute nothing to token holders. But when you zoom out, you see the needle has moved a fair bit, signalling that things are changing.

The holder revenue as a percentage of the total revenue earned by the protocols has ticked up consistently through the last year. It surpassed the earlier record high of 9.09% early last year and even crossed 18%, at its peak in August 2025.

The impact of this is felt in token trades. If I am holding a token that never rewards me, my trades are based on the media narrative around it. But when I hold a token that pays me, whether through buybacks or fee sharing, I start treating it as a yield-bearing asset. Although it might not be as safe and reliable, it still changes how the market prices the token. Its valuation gets pulled a bit closer to fundamentals and farther from media narratives.

When investors look back at 2025 to understand where crypto revenue will flow in 2026, they will heavily factor in incentives. The teams that prioritised value transfer also stood out from the rest last year.

Hyperliquid built a culture around routing about 90% of its revenue back to its users via its Hyperliquid Assistance Fund.

Among token launchpads, pump.fun reinforced the idea of rewarding its community for activity generated on the platform. It has offset 18.6% of the circulating supply of its native token, $PUMP, via daily buybacks.

In 2026, expect “value transfer” to stop being a niche choice and become table stakes for any protocol that wants its token to trade on fundamentals. Last year trained the market to separate protocol revenue from tokenholder value. Once tokenholders see a token behave like an ownership claim, going back to the alternative starts to look irrational.

I don’t think the ‘State of DeFi 2025’ report tells us anything fundamentally new about crypto discovering revenue. That has been a trending observation for the past few months. What the report does is throw light on the numbers, which, when probed further, reveal the recipe most likely to succeed for anyone looking to generate revenue in crypto.

By examining the trend of revenue dominance among protocols, the report makes clear that whoever controls the pipes—carry, execution, and distribution—stands to earn the most.

In 2026, I expect more projects to start converting fees into durable, disciplined payouts for their tokenholders, especially as the rate-cut era makes the carry trade less attractive.

That’s it for this week’s quantitative analysis. I will be back with the next one.

Until then, stay curious,
Prathik

Token Dispatch is a daily crypto newsletter handpicked and crafted with love by human bots. If you want to reach out to 200,000+ subscriber community of the Token Dispatch, you can explore the partnership opportunities with us 🙌

📩 Fill out this form to submit your details and book a meeting with us directly.

Disclaimer: This newsletter contains analysis and opinions of the author. Content is for informational purposes only, not financial advice. Trading crypto involves substantial risk - your capital is at risk. Do your own research.

Bet on the future by trading shares in outcomes, elections, sports, markets, you name it.

Polymarket turns collective wisdom into real-time probabilities.

Now merged with X, predictions integrated with live social insights from Grok & X posts.

Think you know what’s coming next? Prove it.

Explore Polymarket

Hello

Hope you are having a great holiday with your loved ones and spending some time relaxing, reflecting and recharging.

We’re taking a brief pause from publishing new pieces this week. Instead, we are revisiting a handful of stories from 2025, ones that still hold up or feel more interesting now than when we first wrote them. With each recap, we’re adding a little colour on what’s changed since, and what’s worth carrying into the year ahead.

Today, we are rewinding to why prediction markets didn’t fade after the 2024 election cycle and found a more durable use case.

Onto the story,
Prathik

When we wrote about prediction markets more than a couple of months back, the volume and other metrics were shooting up. The peak seemed to be approaching, and the volume growth looked set to plateau soon.

Nobody knew for sure, though. The trajectory of prediction markets surprised most of the world after the euphoria died down following the 2024 US Presidential elections.

Political volumes had peaked, traders were rotating out, and there was a concern that the category had lived through its “once-every-four-years” moment. If elections were the main engine, relevance would always be cyclical.

In our story, we argued that elections won’t be the endgame.

Read: The Sports Engine 🎰

Sports, as a category, offered what politics couldn’t. The frequency, repetition, and muscle memory ensured that prediction markets fed on something that was not cyclical, like elections. Prediction markets capitalised on humans’ innate desire to speculate on everything and allowed them to monetise those speculations.

The user data now clearly reflects that shift.

On Polymarket, the share of daily users who have never interacted with US election markets has climbed steadily and recently touched ~40%, the highest level on record.

Volume followed users.

Both Kalshi and Polymarket have seen their spot volume touch record highs in October and November. Together, the two largest prediction platforms did nearly $10 billion in monthly volume, their strongest showing yet.

This surge isn’t slowing down. December volumes are already tracking higher as we speak.

What’s changed since we wrote The Sports Engine is not just where the activity is coming from, but how visible it has become.

Polymarket briefly topped the App Store’s sports category in early December. Kalshi has moved from being a niche CFTC-regulated exchange to powering prediction markets inside mainstream platforms. And with Coinbase integrating prediction markets directly into its app, monetising speculation is now as easy as a tap of a button, alongside trading, payments, or staking.

If 2025 showed that prediction markets could retain users, the next phase will be about distribution. As exchanges and consumer platforms turn “monetised opinions” into a routine feature, prediction markets may stop feeling like bets reserved for a sophisticated crop of users.

That’s it for today’s recap.

Wish you a happy holiday week,
Prathik

Token Dispatch is a daily crypto newsletter handpicked and crafted with love by human bots. If you want to reach out to 200,000+ subscriber community of the Token Dispatch, you can explore the partnership opportunities with us 🙌

📩 Fill out this form to submit your details and book a meeting with us directly.

Disclaimer: This newsletter contains analysis and opinions of the author. Content is for informational purposes only, not financial advice. Trading crypto involves substantial risk - your capital is at risk. Do your own research.

They are building a modern energy company from the ground up — using blockchain infrastructure to make electricity cheaper, more transparent, and more efficient.

Instead of bloated utilities, hidden fees, and zero accountability, Fuse Energy brings:

• Lower-cost energy through smarter infrastructure

• Transparent billing powered by on-chain systems

• Faster settlements and real-time data

• A path toward cleaner, decentralised energy markets

This isn’t “crypto for crypto’s sake.” It is blockchain doing real-world work, starting with energy.

If you care about where Web3 actually touches reality, Fuse Energy is worth paying attention to.

Try Fuse Energy

Hello,

As an ETH-bullish guy, I am guilty of doing this annoying habit this year. I’d open ETH charts and perform my little mental math ritual to gauge how deep in the red my portfolio was. Afterwards, I’d close it, hoping to see it turn green in the not-so-distant future.

As the year ends, I expect most ETH holders who bought at the start of the year to be disappointed. However, Ethereum, the blockchain, has stood out amid the price action and wealth generation its token, ETH, has generated over the past 12 months.

Today’s story is about how Ethereum and ETH have performed this year.

It hasn’t been a good one if you define “good” as “making money”. But, if you look beyond the returns on its native token, ETH became easier to hold in 2025, mainly through market-driven wrappers such as exchange-traded funds (ETFs) and digital asset treasuries (DATs). Ethereum’s two upgrades, Pectra and Fusaka, also made it easier and faster to use the chain at scale.

In today’s quantitative analysis, I will show how 2025 unfolded differently for Ethereum, the network, and ETH, the asset, and what it means for both as we head into 2026.

Ethereum Gets a Shelf

For most of the last two years, the idea of “institutional ETH” seemed like a far-fetched dream. As of June 30, ETH ETFs had accumulated just over $4 billion in inflows since their inception a year ago. Publicly listed firms had just begun warming up to the idea of holding ETH in corporate treasuries.

A turnaround of fate followed in the second half of the year.

Between June 1, 2025, and September 30, 2025, cumulative inflows into ETH ETFs had turned almost fivefold, surpassing $10 billion.

This ETF surge brought with it a psychological shift. It made buying the asset much easier and expanded ETH’s reach beyond builders and traders to a third group seeking exposure to the second-largest cryptocurrency.

This brings me to the second development that emerged this year.

Ethereum’s Newest Buyer

For nearly half a decade, Bitcoin corporate treasuries seemed like the most natural form of treasury, thanks to Michael Saylor’s Strategy (formerly known as MicroStrategy). At least until cracks began to show, the thesis appeared to be the cleanest form of crypto exposure for corporations. Companies listed on the stock exchange bought scarce cryptocurrencies, which drove up crypto prices, which in turn boosted the company’s share price. The firm could then leverage this to sell more shares at a premium.

Read: Where’s DAT Beta? 🎁

So, when ETH treasuries became a thing in June this year, it initially puzzled many. It was what ETH made possible, which BTC treasuries didn’t, that made them stand out. Especially after Joe Lubin, co-founder of Ethereum and founder and CEO of ConsenSys, announced his decision to chair SharpLink Gaming’s board and lead its $425 million Ethereum treasury strategy. The bet seemed calculated.

Soon after, many more corporations followed SharpLink’s lead.

Today, the top five ETH treasury firms hold 5.56 million ETH, over 4.6% of the Ethereum supply, worth more than $16 billion at current prices.

When buyers seek an asset through wrappers like ETFs and treasury vehicles, the asset starts to behave like a balance-sheet line item. It attracts governance, reporting, board-level discussions, quarterly updates and risk committees.

The staking angle allows ETH treasuries to offer something their BTC counterparts can’t.

While Bitcoin treasuries help corporates realise gains only when they sell their BTC at a profit, holding ETH itself allows ETH treasuries to earn more ETH by staking it to secure the network.

If companies can find a way to complement their business revenues with staking income, they can sustain their treasury business.

Read: ETH’s Treasury Turnaround 🏛️

And then, people started paying attention.

The Elusive Marketing

People who have followed Ethereum through its journey know how closely marketing and Ethereum often run in parallel. Instead, it tends to look boring until an external event, such as a product wrapper, a cycle shift, or a new narrative, forces people to take note of Ethereum’s potential.

This time, attention grew as ETH DATs rose and inflows into ETH ETFs increased. I measured this attention in one of the crudest ways possible: by checking whether retail users, who usually don’t care about blockchain roadmaps, were thinking about Ethereum.

Google Trends surged during the July-September period, in line with the momentum of ETH DATs and ETFs. Traditional routes to owning Ethereum sparked retail curiosity. Curiosity brought attention.

But attention alone is not enough. It is fickle and can vanish as quickly as it rises, which brings us to one of the most under-appreciated reasons why Ethereum believers count the year as a big success.

Hosting Internet’s On-Chain Dollars

If you zoom out far enough from any price chart, the troughs and crests can seem like mere consequences of fluctuating sentiment. But stablecoins and tokenised real-world assets (RWAs) are not like that. They are rooted in strong fundamentals, bridging traditional finance with decentralised finance.

In 2025, Ethereum still retained its crown as the most favoured platform for the dollar layer, enabling stablecoin circulation and the tokenisation of real-world assets.

On tokenised RWAs, you see the same phenomenon.

Ethereum still accounts for the majority of “distributed” tokenised asset value at the time of writing. This means that more than half of the tokens that allow their holders to buy, manage, and hold their tokenised RWAs were issued on the Ethereum chain.

So, while ETFs made it easier to buy ETH, treasuries allowed buyers to hold ETH through a regulated Wall Street route, gaining exposure to leveraged ETH.

All this further integrated Ethereum into traditional capital markets, where people were already comfortable holding assets in a regulated environment.

The Dual Upgrades

Ethereum underwent not one, but two major upgrades in 2025. These upgrades made the network feel less congested, more stable, and more usable as a base layer for those looking to settle their transactions on a trusted platform.

Pectra went live in May, expanding blob capacity to improve scalability and reduce Layer-2 (L2) transaction costs by providing more space for L2s to post their compressed data. It also enabled higher transaction throughput, faster confirmations and better overall efficiency for rollup-centric applications.

Later in the year, Fusaka followed to scale further and enhance the user experience.

Read: DAwn of Ethereum ⛓️

Overall, Ethereum spent 2025 optimising to behave like dependable financial infrastructure. The upgrades prioritised uptime, throughput and cost predictability. These qualities are vital for rollups, stablecoin issuers, and institutional users settling value on-chain. These choices make Ethereum more reliable at scale, even if they don’t significantly support the short-term link between network activity and ETH price.

Where That Leaves Us

If you are looking for a simple, binary takeaway from the year — “Ethereum good” or “Ethereum bad” — 2025 might not offer a clear answer.

Instead, it presents a more interesting, but uncomfortable truth.

In 2025, Ethereum made its way into the books of fund issuers (ETFs) and the balance sheets of public companies (DATs), and it retained attention that aligned with institutional allocation.

ETH holders, however, lived through a year where the price chart didn’t mirror the blockchain’s progress.

ETH holders who bought on January 1 are still down at least 15%. The year did see ETH register an all-time high near $4,953 in August, but that didn’t last. It now trades near a five-month low.

Ethereum will still enter 2026 with robust upgrades and a heavy volume of stablecoins and tokenised RWAs. If the network can capitalise on the momentum from these wins, it can channel it into long-term price action.

That’s all for this week’s quantitative analysis. I will be back with the next one.

Until then, stay sharp,
Prathik

Token Dispatch is a daily crypto newsletter handpicked and crafted with love by human bots. If you want to reach out to 200,000+ subscriber community of the Token Dispatch, you can explore the partnership opportunities with us 🙌

📩 Fill out this form to submit your details and book a meeting with us directly.

Disclaimer: This newsletter contains analysis and opinions of the author. Content is for informational purposes only, not financial advice. Trading crypto involves substantial risk - your capital is at risk. Do your own research.

They are building a modern energy company from the ground up — using blockchain infrastructure to make electricity cheaper, more transparent, and more efficient.

Instead of bloated utilities, hidden fees, and zero accountability, Fuse Energy brings:

• Lower-cost energy through smarter infrastructure

• Transparent billing powered by on-chain systems

• Faster settlements and real-time data

• A path toward cleaner, decentralised energy markets

This isn’t “crypto for crypto’s sake.” It is blockchain doing real-world work, starting with energy.

If you care about where Web3 actually touches reality, Fuse Energy is worth paying attention to.

Try Fuse Energy

Hello

Private credit is having a moment on tokenised real-world assets (RWA) dashboards. Tokenised private credit was the fastest-growing category over the past year, jumping from under $50,000 to approximately $2.4 billion.

If you exclude stablecoins, which offer payment rails that span all on-chain activities, tokenised private credit ranks second only to on-chain commodities. Top tokenised commodities include Tether’s and Paxos’ gold-backed currencies, and Justoken’s cotton, soybean oil, and corn-backed tokens. It appears to be a serious category with real borrowers, cash flows, underwriting, and yields that are less reliant on market cycles than commodities.

But the story gets complicated only when you dig deeper.

That $2.4 billion outstanding tokenised private credit is a fraction of the total loan amount outstanding. It tells us how only a portion of the overall asset can actually be held and moved across on-chain via tokens.

In today’s quantitative analysis, I will examine the reality behind the numbers on tokenised Private Credit and what they mean for the category’s future.

Let’s jump to the story,

The active loans value on RWA.xyz is a little over $19.3 billion. Yet, only about 12% of these assets can be held and moved around in tokenised form. This shows the two sides of tokenised private credit.

One is “represented” tokenised private credit, where blockchain merely provides an operational upgrade by enabling an on-chain registry of the outstanding loans that originated in the traditional private credit market. The other is a distributional upgrade, where a blockchain-powered market emerges alongside the conventional (or off-chain) private credit market.

The former are recorded in the public ledger solely for recordkeeping and reconciliation. On the other hand, distributed assets are the ones that can be moved into a wallet and transferred.

Once we understand this taxonomy, you will no longer ask whether private credit is going on-chain. Instead, you will replace it with a sharper question: How much of private credit, the asset, is originating on the chain? The answer to this question is what offers some inspiration.

The trajectory of tokenised private credit is what inspires confidence.

Until last year, almost the entire tokenised private credit was just an operational upgrade. The loans existed, the borrowers repaid, and the platforms serviced, while the blockchain only recorded them. The entire tokenised private credit was merely recorded on-chain and not transferable as tokens. In a year, that on-chain transferable slice has climbed to 12% of the tracked private credit stack.

It shows the growth of tokenised private credit as a distributable on-chain product. This allows investors to hold fund units, pool tokens, notes, or structured exposures in token form.

If this distributed slice continues to expand, private credit will look less like a ledger of loans and more like an investable on-chain asset class. That shift changes what lenders receive from the deal. Beyond yield, lenders will receive an instrument with improved operational visibility, faster settlement, and more flexible custody. Borrowers will have access to capital that is not tied to a single distribution channel, which could prove helpful in a risk-off environment.

But who will drive the distributable private credit pile?

The Figure Effect

Right now, a disproportionate share of the outstanding loans comes from a single platform, while the rest of the ecosystem contributes to a long tail.

While Figure has held a monopoly in the tokenised private credit market since October 2022, its dominance has fallen from over 90% in February to 73% today.

But what’s more interesting here is Figure’s private credit model.

Despite accounting for over $14 billion in tokenised private credit today, the leader of the pack holds all that value in “represented” assets value and none in distributed value. This shows that Figure’s model is an operational pipeline which records loan originations and ownership trail on the Provenance blockchain.

Meanwhile, some smaller players are enabling distribution for tokenised private credit.

While Figure and Tradable hold all their tokenised private credit as represented value, Maple’s is distributed entirely via the blockchain.

When you zoom out, it is clear that a lion’s share of the $19 billion in active on-chain loans is currently recorded on the blockchain. But what cannot be refuted is the trend over the past few months: more private credit has been distributed via the blockchain. And this trend can only get stronger, given the scope of growth for tokenised private credit.

Even at $19 billion, RWAs currently account for less than 2% of the overall $1.6 trillion private credit market.

But why does “movable, and not just recorded” private credit matter?

Movable private credit offers more than merely liquidity. Exposure to private credit through a token outside one’s platform offers portability, standardisation, and faster distribution.

An asset acquired through a traditional private credit route gives the holder a position that is trapped inside the ecosystem of that specific platform. Such an ecosystem offers limited transfer windows and a paperwork-heavy process on the secondary markets. In secondary markets as well, negotiations are slow and dominated by specialists. This places more power in the market’s existing infrastructure rather than in the hands of the asset holder.

A distributed token can reduce these frictions by enabling faster settlement, clearer ownership changes, and simpler custody.

More importantly, “movable” is a prerequisite for standardising the distribution of private credit at scale, which it has historically lacked. In the traditional world, private credit came packaged as funds, Business Development Companies (BDCs) and Collateralised Loan Obligations (CLOs), each adding layers of intermediaries and opaque fees.

On-chain distribution offers a different path: a programmable wrapper enforces compliance (whitelists), cash flow rules, and disclosures at the instrument level rather than through manual processes.

That’s all for this week’s quantitative analysis. I will be back with the next one.

Until then, stay sharp,
Prathik

Token Dispatch is a daily crypto newsletter handpicked and crafted with love by human bots. If you want to reach out to 200,000+ subscriber community of the Token Dispatch, you can explore the partnership opportunities with us 🙌

📩 Fill out this form to submit your details and book a meeting with us directly.

Disclaimer: This newsletter contains analysis and opinions of the author. Content is for informational purposes only, not financial advice. Trading crypto involves substantial risk - your capital is at risk. Do your own research.

When I think of stablecoins, I often see them as mere bridges between dollars and blockchains. Nothing more. They can be powerful infrastructure components that quietly enable on-chain products in ways that are often easy to miss.

As a business, a stablecoin issuer’s revenue is straightforward and linked to the interest rates announced by the U.S. Federal Reserve. The higher the interest rates, the fatter the top-line the issuer earns on U.S. Treasury Bills (T-Bills) backing its stablecoin circulation.

However, in recent years, the world’s largest circulating stablecoin issuer has evolved its reserve strategy to better align with macroeconomic conditions.

In this week’s quantitative analysis, I will dive into why and how Tether is transforming its enormous carry engine by replacing a part of that with gold and bitcoin, especially as we approach a shift in the rate cycle.

Let’s jump to the story,
Prathik

Polymarket: Where Your Predictions Carry Weight

Bet on the future by trading shares in outcomes, elections, sports, markets, you name it. Polymarket turns collective wisdom into real-time probabilities.

Now merged with X, predictions integrated with live social insights from Grok & X posts.

Think you know what’s coming next? Prove it.

👉 Explore Polymarket!

The T-Bill Machine

One look at Tether’s T-Bill Reserves explains how it became a profit machine when interest rates were high. USDT holders earned 0%, while Tether earned 5% on a massive $100 billion pile of U.S. Treasuries in the last couple of years.

Even with a lower average rate of around 4.25% for most of 2025, Tether reported a year-to-date net profit of over $10 billion as of September 30, 2025. In comparison, Circle, the second-largest stablecoin issuer, reported a net loss of $202 million for the same period.

For most of the past three years, Tether’s business model perfectly aligned with the macroeconomic backdrop. The U.S. Fed kept rates between 4.5% and 5.5%, Tether held over $100 billion in T-bills, and every percentage point of yield produced roughly a billion dollars in annual income.

At a time when most crypto companies were struggling with operating losses, Tether built a multibillion-dollar surplus by simply being long on short-term government debt.

But what happens when the interest rate cycle turns, and cuts are expected in the coming years?

The Rate-Cycle Problem

The CME FedWatch data suggests that by December 2026, the Fed Funds rate is over 75% likely to fall between 2.75-3% and 3.25-3.50% from the current range of 3.75-4%. It is already down sharply from the 5% regime Tether benefited from through 2024.

Lower interest rates could shrink Tether’s revenue from interest on the T-bills it holds.

A percentage-point cut in liquidity across the US economy could shave at least $1.5 billion off Tether’s annual revenue. That’s more than 10% of its annualised net profit for 2025.

So, how does Tether protect its profitability in this world? One where the incoming Fed chair, after Jerome Powell’s term ends in 2026, is more likely to make larger and faster rate cuts in line with U.S. President Donald Trump’s expectations.

This is where Tether’s reserve strategy has diverged the farthest from that of any other stablecoin issuer.

The Diversification Strategy

Between September 2021 and October 2022, Tether cut its reliance on commercial papers — unsecured, short-term debt instruments issued by large corporations — by over 99%. From over $30 billion in September 2021, it slashed the investments to almost zero.

It replaced these with U.S.-backed T-Bills to increase transparency among investors.

During the same period, Tether’s T-Bill reserves grew from under $25 billion to $40 billion.

Between Q3 2023 and Q3 2025, Tether’s reserve components have transformed with assets that you would seldom find on the balance sheets of stablecoin issuers.

As of September 2025, Tether had accumulated roughly 100+ tonnes of gold, valued at approximately $13 billion. It also held over 90,000 BTC, valued at close to $10 billion. Together, these two account for 12-13% of its reserves.

In comparison, its rival Circle held just 74 Bitcoin (BTC) worth around $8 million.

Why pivot now?

The rise in gold and Bitcoin allocations aligns with the period when forward curves stopped pricing in interest rate hikes.

The interest rate jumped from under 1% to over 5% between May 2022 and August 2023 to tackle rising inflation. It made economic sense to maximise topline through exposure to T-Bills during this period. But once interest rates peaked in 2023, with no further hikes expected, Tether saw it as a time to start preparing for when the rate cycle turned.

Why Gold and BTC When Yields Fall?

Gold tends to perform well when yields on T-Bills decline. This is driven by expectations of rising inflation and the reduced opportunity cost of holding gold rather than lower-yielding T-bills.

We saw this happen this year, when gold prices jumped by over 30% between August and November, when the Fed cut the interest rate by 50 basis points.

Even when the Fed cut rates by 1.5 percentage points to pump liquidity into the economy during the COVID-19 pandemic, gold prices rose 40% over the following five months.

BTC has lately followed the same macro behaviour. With loosening monetary policy and expanding liquidity, bitcoin often responds like a high-beta asset.

So, while a high-interest-rate environment can maximise revenue through T-Bills, exposure to BTC and gold can provide potential upside in a low-interest-rate regime.

This allows Tether to account for unrealised gains, or even realise some of it by selling gold or Bitcoin from its treasury, especially during a low-interest phase when its revenue is squeezed.

But not all are convinced about increasing exposure to gold and BTC on Tether’s balance sheet.

The Peg Problem

While T-Bills still account for 63% of Tether’s reserves, the growing exposure to high-risk assets such as Bitcoin and unsecured loans has raised concerns among rating agencies.

Two weeks ago, S&P Global Ratings reassessed Tether’s ability to maintain USDT’s peg to the U.S. dollar to 5 (weak) from 4 (constrained). It flagged increasing exposure to corporate bonds, precious metals, bitcoin and secured loans as part of its reserves.

The agency flagged that these assets accounted for almost 24% of total reserves. What’s irked the agency more is that although T-Bills still back a majority of reserves, the USDT issuer provides limited transparency and disclosure about what the riskier class of assets constitutes.

Then there’s also the fear of destabilising the peg to the USDT token.

S&P said in its note, “Bitcoin now represents about 5.6% of USDT in circulation, exceeding the 3.9% overcollateralisation margin, indicating the reserve can no longer fully absorb a decline in its value. A drop in the bitcoin’s value combined with a decline in the value of other high-risk assets could therefore reduce coverage by reserves and lead to USDT being undercollateralised.”

On the one hand, Tether’s shift in reserve strategy seems rational to tackle an imminent low-interest-rate regime. The $13-billion profit engine will not be sustainable when the rate cuts come, and they will. An upside in gold and BTC held could help offset some of the lost revenue.

On the other hand, the shift unnerves rating agencies, and rightly so. A stablecoin issuer’s first and foremost job is to protect the peg to the underlying currency — in this case, the US dollar. Everything else, including the yield it generates, its reserve diversification strategy and the unrealised gains it can make, becomes secondary. If the peg fails, the business falls.

When volatile assets back the circulating token, the peg’s risk profile changes. A significant enough markdown in BTC, which we have continued to experience over the last two months, will not necessarily break USDT’s peg, but will shrink the buffer between them.

Tether’s story will unfold with the impending loosening of monetary policy. This week’s rate cut decision will be the first indicator of the stablecoin giant’s ability to defend its peg and signal toward its future trajectory.

That’s all for this week’s quantitative analysis. I will be back with the next one.

Until then, stay sharp,
Prathik

Token Dispatch is a daily crypto newsletter handpicked and crafted with love by human bots. If you want to reach out to 200,000+ subscriber community of the Token Dispatch, you can explore the partnership opportunities with us 🙌

📩 Fill out this form to submit your details and book a meeting with us directly.

Disclaimer: This newsletter contains analysis and opinions of the author. Content is for informational purposes only, not financial advice. Trading crypto involves substantial risk - your capital is at risk. Do your own research.

November has historically been a mixed bag for crypto. This year, too, the month stands out in stark contrast to the last two.

BTC and ETH closed the month 17% and 22% in the red, as against 37% and 47% gains in November 2024, respectively. While that could be attributed to the euphoria surrounding Donald Trump’s re-election as POTUS, they were up 9% and 13% in November 2023.

This year’s crypto rout in November was driven by a broader market meltdown over the past two months, fueled by tariff wars and uncertainty about macroeconomic conditions.

The contrast is evident even across the exchange-traded fund (ETF) dashboards for 2025 and 2024.

In November 2024, Bitcoin spot ETFs attracted about $6.5 billion in net inflows, while Ethereum ETFs added $1 billion. ETF issuers were holding bitcoin worth over $105 billion and ETH wrappers worth $11 billion. Twelve months later, BTC ETFs saw about $3.5 billion in net outflows in November 2025. Ethereum wrappers shed about $1.4 billion. Roughly a $12-billion negative swing in monthly demand for the two flagship wrappers.

On paper, ETF issuers manage more assets today than a year ago. Cumulative net inflows are positive, total assets are up, at least marginally. But the ETF flows flipping from green to red in the last few months tell us how much issuers miss out on fee collections.

In this week’s quantitative analysis, I will examine how the three largest sponsors of BTC and ETH spot ETFs performed when demand for and prices of their underlying assets declined.

Now, onto the story,
Prathik

Raiku, Where Every Transaction Actually Lands

On Solana, speed’s great, but reliability? That’s the real missing piece. Raiku fixes that.

• Guaranteed block inclusion and low-latency execution under load

• Built for institutions, market-makers, and high-performance apps

• Recently raised $13.5 million led by Pantera Capital to scale its architecture

If you’re building on Solana and want your actions to mean something, not just a race for gas, Raiku sets the standard.

Explore Raiku!

Bitcoin spot ETFs attracted $3.2 billion and $2.7 billion in the first two weeks of October — the highest and 5th highest weekly flows in 2025.

Until then, BTC ETFs seemed on track to finish second half of 2025 without ever seeing back-to-back outflow weeks.

Then came the worst crypto liquidation event ever recorded. The crypto markets are still reeling from the $19-billion wipeout.

ETH ETFs also pulled in $1.8 billion in net inflows over the same period.

Both BTC and ETH ETFs have seen outflows in five of the following seven weeks since the liquidation event, totalling over $5 billion and $2 billion, respectively.

By the week ending November 21, the net asset value (NAV) held by BTC ETF issuers was down from about $164.5 billion to roughly $110.1 billion. The NAV of ETH ETFs fell almost 50%, from about $30.6 billion to about $16.9 billion. Some of that damage came from the price declines of BTC and ETH. The rest came from coins pulled entirely out of wrappers. Together, they erased around a third of the combined BTC and ETH ETF NAV in less than two months.

A dip in flows tells us more than just investor sentiment. It also has an immediate impact on the money ETF issuers/sponsors make via fees.

Bitcoin and Ethereum spot ETFs are revenue machines for issuers such as BlackRock, Fidelity, Grayscale, and Bitwise. Each fund charges a fee on the assets it holds, typically stated as an annual percentage but accruing on a daily net asset value basis.

Every day, the trust that holds BTC or ETH shares sells a part of its holdings to pay the fee and its other expenses. For the issuer, that translates into an annual revenue run rate that equals Assets Under Management (AUM) multiplied by the fee rate. For holders, it means a gradual dilution of coins over time.

ETF issuers charge fees ranging from 0.15% to 2.50%.

Redemptions or outflows, by themselves, do not directly make or lose money for the issuer. However, outflows result in fewer assets held by the issuer at the end of the day, on which they charge a fee.

On October 3, BTC and ETH ETF issuers collectively held $195 billion in assets. At the fee levels above, that corresponds to a very healthy fee pool. By November 21, the same products had about $127 billion of assets left.

If annualised fee revenue is calculated based on AUMs at the end of the week, the prospective income from BTC ETFs declined by more than 25% over the last two months.

ETH ETF issuers saw a greater impact, with annualised revenue declining by 35% over the last nine weeks.

The Bigger the Issuer, the Harder they Fall

When you zoom out to the issuer level, the flows tell three slightly different stories for each ETF issuer.

For BlackRock, the picture is one of scale and cyclicality. IBIT and ETHA have become the default instruments for mainstream BTC and ETH exposure for investors who choose the ETF route. That gives the world’s largest asset manager an enormous base to charge its 25 basis points on, especially in times like early October when the AUM was at a record high. But that also meant that when large holders wanted to cut risk in November, IBIT and ETHA were the obvious tickers to sell.

It’s evident in how BlackRock’s annualised fee revenue from BTC and ETH ETFs fell 28% and 38%, more than the average 25% and 35% slide across issuers.

Fidelity’s experience aligns with BlackRock’s, but just at a smaller scale. FBTC and FETH followed the same inflow–outflow rhythm, with October’s enthusiasm giving way to November’s red bars.

Grayscale’s story is more about legacy. At one point, GBTC and ETHE were the only scalable ways for many US investors to own BTC and ETH in a brokerage account. That monopoly is gone with BlackRock and Fidelity leading the tables. What’s made it worse for Grayscale is its high fee structure in its initial wrappers. That led to a prolonged outflow trend over the past two years.

The October–November period also reflects this behaviour among investors. They have rotated capital to cheaper wrappers in good times and cut risk across the board in bad ones.

Grayscale’s initial crypto wrappers charged six to ten times the fee of a low-cost ETF. Although that helps inflate its revenue line, the expense ratio drives away investors and squeezes the AUM base on which it earns its fees. Every dollar that stayed often did so because of frictions such as taxes, mandates, and operational hassles, rather than active investor preference. Every dollar that left was a fresh reminder that, given a clean choice, more holders are voting against the high-fee wrapper.

All these ETF charts tell us a few things about the current phase of crypto’s institutionalisation.

The spot ETFs around October and November indicate that the business of managing crypto ETFs is cyclical, just like the markets of the underlying assets. When prices are high and headlines are friendly, more flows translate into higher fee revenue. It all rushes back out when macro conditions shift.

The big sponsors have built efficient toll roads on top of BTC and ETH, but October and November showed that those roads are not immune to the market cycles. For issuers, the game is about holding on to assets through the next shock, so the fee meter doesn’t waver by 25–35% every time macro winds shift.

While issuers can’t keep investors from redeeming during a sell-off, a yield-generating product can cushion some of the downside.

A covered-call ETF can provide investors with a premium that helps offset some of the price decline of the underlying asset. A staking-style wrapper can also be an option. Such products, though, will have to clear the test of regulatory scrutiny before they can go live.

That’s it for this week’s quantitative analysis. I’ll see you next week.

Until then, stay sharp,
Prathik

Token Dispatch is a daily crypto newsletter handpicked and crafted with love by human bots. If you want to reach out to 200,000+ subscriber community of the Token Dispatch, you can explore the partnership opportunities with us 🙌

📩 Fill out this form to submit your details and book a meeting with us directly.

Disclaimer: This newsletter contains analysis and opinions of the author. Content is for informational purposes only, not financial advice. Trading crypto involves substantial risk - your capital is at risk. Do your own research.

Aren’t you tired of the doomposting on Crypto Twitter (CT) lately? What I find even more frustrating is how conflicted people on CT are about the future of the crypto markets. Some are writing obituaries for the great bull run we had, while others insist it’s just another blip in the market’s cyclical drama. I don’t see anything new here. As always, everyone has their own theory.

Some signs suggest that this time might be different. ETFs recorded $1 billion in net outflows for three straight days for the first time since their inception, funding rates for BTC have flipped, and ‘buy-the-dip’ sentiment has largely been relegated to memes on CT. Yet there have been past instances when BTC has corrected by 25-30% only to register new all-time highs in the following months. How does anybody know for sure which theory is playing out this time?

But there’s one group in the crypto space that doesn’t deal in vibes, astrology, and other blind theories. One group of participants that cannot be misinterpreted. The first participants in the Bitcoin chain: the miners.

They went through their share of struggles after US President Donald Trump announced the first round of reciprocal tariffs on Asian countries, including China, where most of the mining equipment comes from. Yet, their economic reality is tied mainly to simple math, including the halving condition, written in Bitcoin’s whitepaper over 15 years ago.

In this week’s quantitative analysis, I’ll show you where miners’ profitability stands as their revenue gets squeezed following BTC’s price meltdown.

Now, onto the story,
Prathik

Polymarket: Where Your Predictions Carry Weight

Bet on the future by trading shares in outcomes, elections, sports, markets, you name it. Polymarket turns collective wisdom into real-time probabilities.

Now merged with X, predictions integrated with live social insights from Grok & X posts.

Think you know what’s coming next? Prove it.

👉 Explore Polymarket

The BTC miners’ financials are straightforward: they live on a fixed protocol income, with floating real-world expenses. When the market tremors, they’re the first to feel the strain on their balance sheets. Their revenue comes from selling mined BTC, while their operating costs are largely made up of electricity bills to run the heavy computing required for mining.

I spent this week tracking what the network pays them, what it costs to earn that revenue, how much of their profit survives once cash expenses are deducted, and what they take home after accountants have their say.

TL;DR: At current BTC trading levels below $90,000, the mining industry is cornered and far from thriving. Average 7-day miners’ revenue has dropped 35% from $60 million to $40 million over the past two months.

Let me walk you through the top.

Bitcoin’s revenue is mechanical and coded into the protocol. A mining reward of 3.125 BTC per block, combined with an average block time of 10 minutes, yields roughly 144 blocks per day. That’s about 450 BTC mined every 24 hours. Over the course of 30 days, BTC miners worldwide mine 13,500 BTC, which at the current BTC price of ~$88,000, amounts to approximately $1.2 billion. Once you divide that across a record-high hashrate of 1,078 Exahashes per second (EH/s), that billion-dollar pie dissolves into just 3.6 cents of revenue per Terahash per day. That’s the entire economic base that keeps the $1.7 trillion network secure.

On the cost side, electricity charges are the most significant variable, as they vary by location and the efficiency of the mining hardware.

If you are using modern machines, such as S21-class rigs pulling 17 joules per terahash with cheap power, you can still make cash margins. But if your fleet relies on older rigs or you’re paying higher energy rates, every hash you compute adds to your cost. At today’s hash price, which is influenced by network difficulty, Bitcoin’s price, block subsidy, and transaction fees, an S19 running on $0.06 power is barely break-even. If difficulty increases, the price drops slightly, and a heatwave spikes electricity costs, the economics will slide further into the water.

Let me help you break this down with some numbers.

In December 2024, CoinShares estimated the cash cost of producing 1 BTC among listed miners to be ~$55,950 in Q3 2024. Today, Cambridge estimates the cost at ~$58,500. The actual cost of mining BTC can vary from miner to miner. Marathon Digital (MARA), the largest publicly listed Bitcoin miner, spent an average of $39,235 in energy costs to mine each BTC in Q3 2025. Riot Platforms (RIOT), the second-largest listed miner, paid $46,324. Despite BTC trading 30% below its peak at $86,000, these miners are still thriving. But this is not the complete picture.

Miners also have to account for non-cash items, including depreciation, impairments and stock-based compensation. These items collectively make mining a capital-intensive business. Once you factor these in, the total cost of mining one BTC can easily exceed $100,000.

MARA mines BTC using both in-house and third-party-hosted hardware. Just for using all the equipment, it has to pay for electricity, provide for depreciation, and set aside hosting charges. A back-of-the-envelope calculation puts the total mining cost above $110,000 per BTC. Even CoinShares estimated the total mining cost at ~$106,000 in December 2024.

On the surface, the miners’ business looks robust with fat cash margins, a path to positive accounting profit, and enough operational scale to raise capital at will. However, when you zoom out, you start to understand why more miners are choosing to hold their mined BTC or even buy more BTC from the market instead of selling it.

Stronger miners, like MARA, can cover their costs because they have ancillary businesses and access to the capital markets. Many others, however, are just one difficulty increase away from ending up in the red.

When you put all this together, you end up with two break-even scenarios co-existing in the miners’ world.

The first is where industrial miners operate with efficient fleets, cheap power, and capital-light balance sheets. For them, the BTC price can fall from $86,000 to $50,000 before the daily cash flow turns negative. They make over $40,000 in cash profit per BTC today, but it varies from miner to miner if they can squeeze out any accounting profit at current price levels.

The second scenario is where the rest of the miners will struggle to stay above the break-even point once you account for depreciation, impairments, and stock-based expenses.

Even if you assume a conservative all-in cost of producing 1 BTC between $90,000–$110,000, it means many miners are already below their economic break-even. They can keep hashing because their cash cost hasn’t been breached, but their accounting cost has. This will likely drive more miners to hold onto their BTC rather than sell it right now.

Miners will keep mining as long as their economics stay cash-positive. At $88,000, the system looks stable, but only if the miner doesn’t sell their BTC. Once BTC drops further or miners are forced to liquidate their holdings, they start approaching their break-even lines.

So, while price meltdowns will continue to impact the retail and trading community, they are unlikely to hurt miners yet. What, though, could worsen this situation for miners is if their access to capital becomes more constrained. That’s when the flywheel will snap, and miners will need to double down on their ancillary businesses to stay afloat.

That’s it for this week’s quantitative analysis. I’ll see you next week.

Until then, stay sharp,
Prathik

Token Dispatch is a daily crypto newsletter handpicked and crafted with love by human bots. If you want to reach out to 200,000+ subscriber community of the Token Dispatch, you can explore the partnership opportunities with us 🙌

📩 Fill out this form to submit your details and book a meeting with us directly.

Disclaimer: This newsletter contains analysis and opinions of the author. Content is for informational purposes only, not financial advice. Trading crypto involves substantial risk - your capital is at risk. Do your own research.

There is a straightforward theory behind why companies buy crypto for their balance sheets. If the asset they acquire rises in value, their shares should also increase. A corporate wrapper is supposed to provide investors with a cleaner, leveraged way to own crypto, managed by a trusted team.

This approach works well in a bull market, where almost anything works well. It works not so well in a bear market, where the logic reverses itself.

According to most traditional definitions, Crypto has officially entered a bear market. BTC (~30%), ETH (~40%), and SOL (~55%) are well below their peaks; each drifting below its 200-day moving average. BTC Spot ETFs, which were expected to represent durable, regulated demand, have recorded three straight weeks of outflows. On-chain metrics support this. Bitcoin’s MVRV ratio has fallen to levels last seen two years ago, the point at which many holders find themselves underwater.

If you are a company with crypto accounting for a majority of your assets, this is not ideal. Even more so, if the market stops valuing your business and starts valuing you as a publicly listed crypto wallet with employees.

This is what the Digital Asset Treasury group, or, as the crypto circle fondly calls it, ‘DAT’, is going through right now.

In this week’s quantitative analysis, I will show you how the “what if” scenarios that were once feared only as rare-case scenarios for DATs have materialised with the onset of a bear market.

Now, onto the story,
Prathik

The Stablecoin Chain for the Real World

If you’re done juggling volatile tokens just to move value, Stable is your platform.

• Pay fees in USDT – no extra tokens, no surprises

• Free peer-to-peer transfers, sub-second finality

• Native USDT settlement + enterprise-grade throughput (10,000+ TPS on roadmap)

• EVM-compatible, allowing developers already familiar with Ethereum tooling to build faster

  

Whether you’re a dev, business, or crypto user, Stable gives you rails that actually feel like digital dollars, not blocked rails.

👉 Explore Stable

DATs are businesses that, intentionally or otherwise, have become publicly listed proxies for crypto exposure with operating departments. For most of the past year, the market priced them as high-beta versions of the underlying coins. In a downturn, high beta becomes less glamorous.

And with the downturn now arrived, the situation has been anything but kind. DAT stocks were already off their highs a couple of months ago when I wrote the first quantitative analysis piece, here. The risks were clear back then, too, but they seemed distant. Today, those risks have crashed through the door.

Since the October 10 liquidation event - the worst ever in crypto’s history - DATs’ stock prices have fallen much more sharply than the prices of the coins they hold.

Read: Beyond the Wick 📉

Their mNAVs, which are the simplest possible measure of how much the market values their treasuries, have slipped toward one (1) or below. Even Strategy (formerly known as MicroStrategy), the best-known example of the corporate-bitcoin strategy, now trades at its lowest mNAV in 21 months.

None of this is shocking or unexpected. It’s just that the bear market took the theoretical risks of the bitcoin-treasury trade, including dilution, leverage, cyclicality, investor patience, and turned them into observable, measurable things. The “what ifs” are now showing up in the mNAV charts.

mNAV Factor

(and why the market suddenly cares about it)

If you own bitcoin, you know what you own. If you own a company that holds bitcoin, the situation is slightly more complicated. It can vary from one DAT to another. In Strategy’s case, you could be holding a low-coupon bond that gives you the option to convert it into the company’s stock at maturity.

A simple way to quantify this complication is the mNAV (market capitalisation-to-net asset value) ratio. It answers how much extra shareholders are willing to pay for the wrapper.

When the ratio is above 1, shareholders are saying the wrapper adds value to the company’s existing business. They may like the management team, the growth story, or the idea that a business with a bitcoin balance sheet should have more upside than bitcoin itself. Sometimes they just enjoy the volatility. Sometimes it’s just more appealing and a straightforward route for a traditional investor who’s never played with crypto.

When mNAV is below 1, investors consider the company’s value to be less than the value of the crypto it holds.

A decrease in value could be due to excessive crypto leverage, weak operating results, or poor governance. But the broad idea of a below-1 mNAV is simple. Buying the company gives you worse exposure to the crypto asset it holds than buying the asset directly.

For most of 2025, the mNAVs of crypto-treasury firms have been drifting lower after the initial boost most newly turned DATs experience. Since October, these mNAVs have been falling closer to or below 1.

When mNAV dips below 1, it also makes it difficult to issue new equity at a premium, which in turn makes it challenging to fund additional crypto purchases. Most DATs have financed their treasuries with stock, including at-the-market (ATM) programmes, follow-on offerings, or conversion of debt that ultimately becomes stock. The economics only work cleanly when the shares trade at a price above the value of the coins per share.

This pattern has been uniform across crypto assets and firm sizes. Across BTC, ETH and SOL treasuries, the mNAV lines have converged near 1, or dipped below it. Small, experimental and flagship names - none of them have been spared. The reasons could differ depending on how one argues – leverage here, dilution there, a business model somewhere else. But the market is stating in unambiguous terms that the wrapper is risky in ways the underlying asset is not.

In some cases, investors are assigning a lower value to the business than its crypto holdings, even after accounting for its other operations. Strategy is the best example.

Shaky Strategy?

Michael Saylor’s BTC treasury giant has been the world’s most visible test of the DAT strategy. It has executed it consistently and at scale. It is the closest thing to a pure corporate bet on bitcoin’s long-term appreciation that public markets have ever seen.

Yet its mNAV is now at a 21-month low, below 1.

For most of 2024 and early 2025, Strategy traded with a comfortable premium to its bitcoin holdings. Investors treated MSTR as a levered exposure vehicle with an operating business attached. The premium made sense in the cyclical system where the company accumulated BTC, BTC rose, and, with that, the leverage amplified the stock’s upside.

The same logic is now working in reverse.

Strategy’s basic mNAV slipped below 1 for the first time since early-2024. The company slowed its BTC buying pace over the last two months.. But just as I type this, my phone alerted me that Strategy added 8,178 BTC to its treasury. Yet, the risks in the system loom large.

The DATs route looks riskier now than ever before because of this example. When investors feel sceptical about the one with a head start and a sub-$75,000 average BTC purchase cost, the entire wrapper strategy begins to show cracks.

Slowing BTC Purchases

Another concerning signal is that companies are buying less BTC.

DATs bought 115,000 BTC since August 1 this year, of which only 17,000 were purchased since October 10. That includes the 8,178 BTC that Strategy bought as we write this. In the two months leading to the liquidation event of 10/10, DATs had added 90,000 BTC to their treasuries.

While this is a rational thing to do in bear markets, it also reinforces the mNAV problem. If a company does not expand its treasury when prices fall, it suggests negative sentiment within the DAT management team. It makes equity holders question whether the operating business is strong enough to keep accumulating. When this doubt crops up, the mNAV premium disappears.

Where do we go from here?

For most of the past year, DAT businesses and cryptocurrencies were treated as interchangeable. In practice, they are not. Crypto does not have debt covenants or operating losses, whereas companies do. These DATs will still have to report favourable results to maintain investor confidence.

The bear market exposes the old problems that DATs have always carried, and raises crucial lessons for investors.

Leveraged exposure to crypto will now appear riskier, while underlying operating businesses will be thoroughly scrutinised. Steady, consistent accumulation will not be easy to brand as a marketing tagline. mNAV is where all of this will reflect.

That’s it for this week’s quantitative analysis. I’ll see you next week.

Until then, stay sharp,
Prathik

Token Dispatch is a daily crypto newsletter handpicked and crafted with love by human bots. If you want to reach out to 200,000+ subscriber community of the Token Dispatch, you can explore the partnership opportunities with us 🙌

📩 Fill out this form to submit your details and book a meeting with us directly.

Disclaimer: This newsletter contains analysis and opinions of the author. Content is for informational purposes only, not financial advice. Trading crypto involves substantial risk - your capital is at risk. Do your own research.

Crypto’s user base looks massive on paper. Ownership has hit an all-time high, with over 700 million people globally now holding some form of digital asset. If it were a country, it would rank as the third-largest, next only to India and China.

The adoption has risen 7x in under five years. At first glance, the progress seems fast and big, and gives an impression of how much crypto adoption has scaled. Yet, a closer look at other numbers shows that the story here is much more nuanced.

In this week’s quantitative analysis, I bring more numbers and charts to add colour and help you better understand the difference between crypto ownership and usage.

It might be that crypto is not really waiting to onboard the next 100 million users, but rather for a couple of hundred million users, who are already here, to become more active.

Now, onto the story,
Prathik

Polymarket: Where Your Predictions Carry Weight

Bet on the future by trading shares in outcomes, elections, sports, markets, you name it. Polymarket turns collective wisdom into real-time probabilities.

Now merged with X, predictions integrated with live social insights from Grok & X posts.

Think you know what’s coming next? Prove it.

👉 Explore Polymarket

As of August 31, 2025, the number of crypto owners holding any digital asset stands at 716 million, according to a16zcrypto’s ‘State of Crypto 2025’ report. When you compare this number with those from other reports in the past, it has risen 7x from 100 million in 2021.

It makes for a great headline. But it also hides something that raises questions when you look at the portion of these owners who actively use or transact with their digital assets.

The chart shows that less than 10% of the 716 million crypto owners transact with crypto as monthly active users (MAUs). This number throws up multiple possibilities.

Some owners may have bought crypto for experimentation in the past16 years and might have forgotten about it. Some others could be using off-chain, centralised platforms to transact with their crypto. Others could have opted for traditional routes, such as exchange-traded funds or buying shares of Digital Asset Treasuries (DATs), to get crypto exposure.

All these and more scenarios can make interpreting these numbers challenging.

Despite this, an undeniable sign of adoption is that at least 10 million of the 40-70 million monthly active on-chain users were added in just the last year.

On-chain, you see clear signs of a high dormancy rate among those who own wallets.

Of the 350 million wallet addresses created on Ethereum since its genesis, less than 1% are currently active addresses.

While the 30-day simple moving average (SMA) of active addresses on ETH went up from 400,000 in April 2024 to 460,000 in August 2025, the SMA has since dropped below 420,000 active wallet addresses.

Solana’s story is worse.

The real-time active wallets on Solana, which are those with at least one signature in the last year, have come down to 2.6 million as of November 10, down from an average of over 5 million in October-December 2024.

This behavioural drop-off isn’t only visible on-chain. It plays out at the user level on the wallet layer, too, the apps that most users actually interface with.

MetaMask, the most popular self-custody wallet in crypto, has over 143 million installs. But only about 30 million people open the app monthly. That’s a 21% activation rate.

Trust Wallet is worse: with over 200 million installs, only 17 million are monthly active users. That’s 8.5%.

Only Solana-based Phantom enjoys a superior ratio. The relatively sticky wallet sees over 15 million MAUs on a base of ~24 million downloads.

Even after considering Phantom’s numbers, that’s 85% user inactivity across the three top wallets.

When you benchmark these numbers against mainstream fintech, you see how far most crypto apps and chains need to go. Venmo activates 35–40% of its user base every month. PayPal sees similar retention, even with 2024 demographics.

You can attribute the contrast with crypto to ‘early-stage behaviour’. But when the install base is in the hundreds of millions and your active user pool is in the tens, it could hint at a product problem rather than a growth problem.

So, what’s driving this gap between ownership and usage?

Crypto is filled with complexities, from bridging to seed phrases to paying gas fees. These complexities make crypto easy to buy, but hard to use, and even harder to come back to if the user snaps once due to friction.

That’s where the solution to fixing adoption could lie. Crypto doesn’t have to become Venmo overnight. But it can look ahead to the opportunity. The next 100 million users are already within the system, not outside. They just need a reason to restart their activity.

Crypto builders need to give them a reason to return.

The answer probably lies beyond dashboards or token trackers, in building products that can embed wallets as invisible primitives. There are case studies across crypto to learn from.

On Farcaster, users mint NFTs and vote in social feeds using Frames, without separate wallet pop-ups or decentralised applications (dApps). Many Telegram bots let people swap tokens, send tips, and earn yield directly in chat. On-chain Summer on Base brought gasless onboarding to millions through simple mint pages.

Another example is OpenAI’s ChatGPT. The AI product, which now has over 800 million weekly active users, is activating more users weekly than most crypto wallets or chains do monthly. It’s doing so with fewer steps, less friction and no speculation loop.

If crypto builders mimic this, especially when solving for mass adoption, the headline number of 716 million wallets might start translating into something more meaningful.

That’s it for this week’s quants story. I’ll see you next week.

Until then, stay sharp,
Prathik

Token Dispatch is a daily crypto newsletter handpicked and crafted with love by human bots. If you want to reach out to 200,000+ subscriber community of the Token Dispatch, you can explore the partnership opportunities with us 🙌

📩 Fill out this form to submit your details and book a meeting with us directly.

Disclaimer: This newsletter contains analysis and opinions of the author. Content is for informational purposes only, not financial advice. Trading crypto involves substantial risk - your capital is at risk. Do your own research.