The truth moment of the encryption industry: Revenue is the only PMF validator.

Original Author | Castle Labs (@castle_labs)

Compiled | Odaily Planet Daily (@OdailyChina)

Translator | DingDang (@XiaMiPP)

! Moments of Truth in the Crypto Industry: Earnings, is the only PMF validator

In the business world, it is often said that "business is business," but when we try to apply traditional business models to the cryptocurrency industry, the issues become much more complex. The core purpose of this article is to reflect on: Should the cryptocurrency industry also return to the essence of business, reshape its product logic, and create products that genuinely meet user demand and can continuously generate revenue?

The crypto industry is at an inflection point: the failure of the hype model

The cryptocurrency industry is currently facing a critical moment: the project model driven by "hype" is being constantly "slapped in the face" by the real market.

Unlike Web2 startups that always build long-term value around "revenue", Web3 projects follow another set of "imbalanced scripts": fundraising, token issuance, hype generation, incentivizing new users, and then leaving it to the market to decide their fate.

This path instills a false perception in users: that the product exists for "speculation" rather than to provide real value. Users often only stay for a few months, collect airdrops, and then leave. As a result, the project incurs sunk costs instead of gaining long-term users.

The result is that the core focus of the project is not on PMF (Product-Market Fit) and revenue, but rather on financing and launch, while whether the product is actually being used is of little importance.

Worse still, this model appears to succeed because it is built on a series of unhealthy and unsustainable premises. The cryptocurrency industry is inherently cyclical, with sharp fluctuations and fleeting trends. Most projects lose their innovative drive after the hype fades and fail to provide reasons for users to stay.

Considering the extremely low cost of on-chain migration, and that users have no account system or KYC barriers, users can leave at any time. Projects with no user stickiness and no revenue support have a very low chance of surviving during turbulent periods.

If you want to traverse cycles, "income" must become a long-term core.

If we want this industry to truly mature and develop, Web3 projects must fundamentally transform and make "revenue" the core objective, rather than relying on luck or trends.

In this way, the project can determine the user's real needs and stickiness, form a stable cash flow, and possess the ability to withstand cycles.

According to data from decentralised.co, the liquidity of newly launched tokens is continuously declining, and the rate of token issuance far exceeds the rate of new capital injection into the market.

This means that the space for extracting value from old users is rapidly shrinking, competition faced by projects is becoming increasingly fierce, while the available funds are becoming scarcer.

Revenue is the "reality test" for crypto projects.

As mentioned earlier, the essence of the problem is that there is a flaw in the product design logic: we are not creating tools that can truly solve problems, but rather we are making speculative products that are only valuable in a heated environment.

This is also why I believe: income is the ultimate standard for evaluating whether a cryptocurrency project is healthy. Teams willing to transition from speculation-driven valuation models to fundamental logic will have a better chance of surviving and growing. Projects that continue to rely on storytelling will find it increasingly difficult to survive in a future where liquidity becomes scarcer.

Four Key Points for Building a Revenue Model

1. Fee-based Business Logic: Projects should charge users based on the practicality of the product, rather than solely relying on token appreciation. The industry needs to abandon the misconception that "users should not pay."

2. Strong User Retention Mechanism: The portability of cryptocurrencies is too high, and the cost for users to switch is almost zero. Therefore, projects must strive to create "long-term relationships" that encourage users to return repeatedly not for airdrops, but for practicality.

3. Track Real Business Metrics: Instead of focusing on token market capitalization, TVL, or incentive metrics, the team should pay more attention to "operational data" such as revenue generated per user, customer acquisition cost, and customer lifetime value.

4. Real Income Driven Buyback Mechanism: Drawing on the logic of traditional stock markets, token buybacks are driven by real income. For example, Hyperliquid allocates over 50% of its protocol revenue to token buybacks, achieving significant results.

Who is executing? Who is redeeming?

Crypto Fees data shows that established projects like Uniswap and Aave remain the most stable "cash flow machines." This also explains why they continue to attract attention. Users are willing to pay for value, which is the most essential positive feedback.

Note: cryptofees has not obtained Solana data.

The DeFi community's focus on profitability is also rising. @0x Breadguy analyzed the P/E (price-to-earnings ratio) of multiple protocols, which is an important indicator of the relationship between a token's "value and earnings." DefiLlama data also shows that since May 2025, the TVL of mainstream protocols has grown by over 15%.

The above is the price-to-earnings (P/E) ratio of the top 15 apps calculated from the annualized data of the last 30 days, and compared to the current market capitalization (MC):

1) **The yield performance of Shadow and Pharoah is exceptionally strong, with annualized returns even exceeding their overall market capitalization. However, it is important to note that their circulation rates (the proportion of circulating tokens to total supply) are only about 11% and 13%, respectively, so caution should be exercised when interpreting the data.

**2）**PancakeSwap may be the most balanced project in terms of fees, valuation, and liquidity currently.

3) Hyperliquid performs exceptionally well — even with a market capitalization of 11 billion dollars, it still achieves an income ratio far exceeding that of many medium and small DeFi protocols, which is simply insane.

Another researcher @JustDeauIt proposed the "Real Yield" indicator, which refers to: the portion of fees paid by on-chain users (including MEV income) that is directly allocated to stakers. It mainly answers the most concerned question from investors: How much value from real economic activities can I obtain by buying and staking the tokens of this chain?

Key dimensions of measurement include the on-chain transaction fees paid by users and MEV revenue, the economic vitality of the L1 on-chain ecosystem, the total asset scale protected by the network (TVL), the total amount of staked assets in the network, the liquidity rate of assets in DeFi, the supply and circulation efficiency of stablecoins, the new issuance scale of RWA, the liquidity of cross-chain bridge assets, the economic interlinkage between L1 and L2 and their upper-level applications, infrastructure, and the operating income paid to staking service providers.

It can truly reflect the intrinsic economic health of a public chain, rather than just relying on surface indicators such as inflation, destruction, narrative, or TVL to "tell a story."

New Trend: Revenue-Oriented DeFi Applications Are Rising

Recently, we have seen a new category of applications designed with "income as the goal" that is growing rapidly.

DeFi-based aggregate trading interface

DeFi trading applications have achieved impressive results in terms of revenue performance. These products provide users with an efficient and smooth on-chain trading experience through clear value propositions and high-quality execution capabilities, allowing them to seamlessly connect to trading platforms across multiple blockchains.

The target users of this type of application are professional traders who value execution efficiency, system stability, and ease of use. As long as the experience is good enough and the efficiency is high enough, users are willing to pay for it—because an excellent tool can directly enhance their profitability.

For example, @AxiomTrading has precisely hit this demand, achieving commercialization in a very short time. Its platform axiom.trade was launched only 4 months ago, and its revenue has already surpassed 100 million dollars, making it one of the fastest-growing startups in the crypto space.

A mobile DeFi application powered by Hyperliquid

Another direction worth paying attention to is DeFi-driven mobile applications. DeFi is one of the most transformative innovations in cryptocurrency, but its complexity makes it difficult for the general public to adopt. However, this situation is now changing.

A range of mobile-first experiences built on Hyperliquid's infrastructure are now starting to emerge, delivering a user experience that is far greater than ever before.

Applications like @dexaridotcom and @LootbaseX provide a convenient experience comparable to centralized exchanges while retaining users' complete control over their assets and the decentralized nature of trading. These types of products not only lower the barriers to using DeFi but also release users' potential needs in mobile scenarios.

I believe that this mobile, lightweight, and highly secure DeFi application will further promote the exploration of diverse business models and will more easily stimulate users' willingness to pay. Because for ordinary users, a product that is "available, easy to use, and worth paying for" is the true growth engine of DeFi.

These more mature designs with clearer goals not only attract new users but also have a clear monetization path. They are expected to lead a new trend centered around "revenue", and will encourage more builders to move towards pragmatic innovation.

Conclusion

It is foreseeable that the next wave of mass adoption in the crypto industry will be led by revenue-driven products. These products have greater user stickiness, attract real monetary investments more effectively, and are more likely to establish long-term user relationships and genuine market demand.