Centralized Companies Dominate Crypto Revenue Streams
The debate over the distribution of crypto revenues between on-chain actors and centralized companies has been ongoing. According to ARK Invest, approximately $8 billion in annual revenues are generated on-chain compared to nearly $70 billion for centralized crypto companies.
This significant gap highlights that open-source protocols have not yet captured most of the value, as some had theorized. Lorenzo Valente, a researcher at ARK, emphasizes the magnitude of this discrepancy.
Stablecoins are another example of this issue. In the second quarter, $14.8 trillion of USDC circulated on-chain, representing a 151% increase year-on-year. However, Circle's revenues only saw a limited increase, with $701 million in revenues and reserve income, up 7%. The majority of this revenue came from interest generated by reserves, whose average yield has fallen to 3.5%
Hyperliquid is an example of the 'Fat App Thesis', which counters the famous 'Fat Protocol Thesis'. It controls its blockchain, trading engine, and interface, allowing it to retain a significant share of the generated value.