Hello,
Hyperliquid has earned about a billion dollars in fees over the last 12 months. It did this without ever raising a dollar from a venture fund. Fragment, the marketplace where Telegram users trade usernames and phone numbers, earned over $350 million over the same period without ever launching a token or raising funds from a VC.
For a decade, an average crypto startup first raised funds from VCs, launched a token, and then hoped business sense would prevail to justify the former two. That model has flipped as the best crypto projects prefer to build from a business-first approach.
Hyperliquid and Fragment aren’t exceptions. The broader market has taken note of such protocols and has followed suit. More crypto companies are doing away with tokens and VC money as the industry rapidly merges with fintech.
Even where tokens exist, investors now prefer to bet on cash flows to stories.
1kx’s 2026 blockchain revenue report tracks fees across more than 2,600 crypto protocols and 100 listed companies. The report establishes how the industry is fast entering its earnings era. And, oddly, it’s happening in a year when total crypto revenue fell about 30%.
In today’s piece, I argue three things. Revenue has replaced the token as the preferred way for crypto companies to fund themselves. Markets now price tokens based on what they pay. And, lastly, I show how value flows to whoever owns distribution, rather than to a token.
On to the story…
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Why Launch a Token?
A token was a default option for crypto startups for multiple reasons. It not only brought in the money to launch but also handled the marketing. A token launch always made enough noise to grab attention. That attention also brought in customers.
Revenue has made all these jobs redundant.
Among crypto protocols that earn fees, 157 launched a token in 2025. Only 24 had done so by the end of September this year. 1kx partly attributes that to the ongoing bear market. Launches do dry up when prices fall across the board, but the protocols that are skipping the token route aren’t exactly those struggling to survive.
Protocols without a token now collect 31% of all fees paid to crypto applications, up from 20% last year. They earned more in absolute terms this year than in 2025, even as fees at token-backed protocols fell by more than a third.
One of the reasons for skipping tokens is how fast they can start making money. In 2026, 22 protocols reached $100 million in annualised fees within six months of switching on charges. Seven of those started charging fees only in 2025 or later.
Blockchains lend this speed to crypto businesses that is not otherwise available to off-chain businesses.
An average fintech must build or license its infrastructure, sign up partners and gather enough liquidity before earning a dollar. However, a crypto startup can just plug into public blockchains, shared liquidity and wallets that its users already hold on day one.
The other aspect is capital efficiency. The top 20 revenue-earning protocols earn $6.30 in fees per dollar raised. Axiom, a trading app with no token, earns 607 times what it raised.
What makes this observation even more stark is that the media crypto app outside the top 20 earns about 8 cents a year for every dollar raised.
The head of the market raised revenue. The tail raised money. For years, venture rounds and token launches hid the difference between raising revenue and funds. This capital efficiency highlights how the leaders raised revenue while the tail raised money.
This worked until the token was all that mattered to the industry and investors. A token could be listed and sold whether or not anything beneath it worked. With a mature industry and investor collective, that cover is now gone. Although Hyperliquid, one of the most profitable protocols, has a native token - HYPE, it followed the revenue and not preceded it.
So, revenue first, token last, if at all.
Markets Price the Payout
Once a token stopped being the preferred fundraising route, it raised an important question: what does it pay for then?
For most of crypto’s history, tokens rose and fell on narratives, supply schedules and exchange listings. What separated the ones that rose from the fallen? Whether a protocol sends value back to its holders, usually by using its fees to buy its own token from the market.
This year, that factor won outright. A 1kx index of tokens that pay holders returned 82% between January and September. During the same period, Bitcoin lost 5%, and the top 100 tokens outside Bitcoin and Ether lost 7%.
Some of these tokens also beat publicly listed crypto companies.
Coinbase stock fell 18% this year. Robinhood was flat, and Circle rose 4%. Tokens with no legal claim, board of directors, or regulator outperformed companies that had them all. How? By doing the one thing equity investors understand. They handed value back to the investors in cash.
In 2024, the same index rose 63% while Bitcoin more than doubled. In 2025, it lost 14% while Bitcoin lost 6%. This year, the market has changed what it rewards.
Valuations have caught up. A decentralised exchange that pays its holders now trades at a median of six times its annual fees. Listed exchanges and brokers mostly trade at single-digit multiples of their sales, with Coinbase at eight.
Protocols are responding by paying generously. In Q3 2026, they transferred $1.5 billion to token holders, about 40% of all fees paid on blockchains. Apple’s dividends and buybacks came to 27% of its revenue in the second quarter.
A token that doesn’t pay back its investors is just a worse asset than the token that does.
Distribution Is the New Token
The token’s third job was bringing in users. Airdrops, liquidity mining and points programmes all paid people in tokens to show up. That job has been taken over by distribution. The user base is now either bought or borrowed from someone.
This is evident in the case of Circle. The USDC-issuer earns interest on the Treasury bills backing its dollar stablecoin and hands about 60% of that to the partners that distribute it. Coinbase alone received $655 million in the first half of this year.
The company that issues the dollar keeps less of it than the exchange that hands it out.
Uniswap also has a similar story. Without Robinhood Chain, its fees would be down 54% from a year ago. Two-thirds of Uniswap’s fees now come from a single distribution partner.
Hyperliquid has built distribution into its design. Its HIP-3 protocol version lets outside developers build their apps and launch their markets on top of it. In return, it parts with a portion of its fee income with them. Those builders and market creators now take 16% of Hyperliquid’s fees.
All three elements taken together show that every time a new financial technology matures, the instrument stops being the point, and the cash flow takes over. I’ve argued before that value in this new layer of finance accrues to whoever owns distribution, not to the asset class. Crypto tokens are also now being judged by this rule.
Read: Who Captures Value in Web 2.5?
That’s healthy. A token that pays is an asset that can be valued. A protocol that can fund itself from its own revenue doesn’t have to sell its future to a fund before it even has a product. This doesn’t dismiss the need for a token. It just shows that launches of new tokens will now have to mimic share classes that are issued by businesses that already earn revenue. These tokens will be priced based on what they pay out.
The pleasant irony here is that one of the most convincing cases for crypto’s best businesses no longer needing venture capital and tokens comes in a 78-page report written by a venture fund.
That’s it for today. I’ll be back with the next one.
Until then, happy reading!
Prathik
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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.
Hyperliquid at roughly a billion in fees with zero VC money is wild. And the point that revenue is up in an earnings era even with total crypto revenue down about 30% reads pretty constructive to me. Is Fragment the cleaner example, or is Hyperliquid the one to watch?