DeFi Protocols Show Strong Fee Growth Despite Price Losses

Despite ongoing price losses of up to 50 percent for altcoins, fee data from leading DeFi protocols paint a different picture. According to analysis by Jamie Coutts, the ten highest-revenue protocols – predominantly on Ethereum and Solana – show a ratio of less than ten between market capitalization and annualized fees. Traditional financial companies like Visa trade at multiples of this valuation ^[1].

Lending protocols in particular are experiencing strong growth: Sky increased its fee revenue by 204 percent in 90 days, Morpho by 160 percent. Nevertheless, many tokens are structurally decoupled from protocol revenues – a consequence of regulatory uncertainty in the past.

This could change with the governance proposal "Aave Will Win." The protocol plans to transfer all product revenues directly to the DAO, while the development team Aave Labs receives a funding package of 25 million US dollars plus tokens. This would create a direct connection between protocol success and token performance for the first time.

Institutional investors such as BlackRock and Apollo have already invested in DeFi projects. Analysts see the combination of low valuations and tokenomics reforms as an interesting starting point for long-term oriented investors ^[1].