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Crypto protocols have generated $7.42 billion in cumulative revenue since the beginning of 2026, according to Castle Labs. Despite those figures, many protocol tokens continue to underperform, creating a growing gap between successful businesses and the value received by token holders.
The report argues that investors are increasingly evaluating crypto projects like traditional businesses, focusing less on speculation and more on revenue, token economics, and how value reaches holders.
Revenue Is Growing, But Token Holders Are Not Always Benefiting
Castle Labs examined six major protocols, including Aave, Aerodrome, Hyperliquid, Pump.fun, Sky and Uniswap, which generated a combined $726 million in revenue during the first half of 2026.
Revenue came from different business models. Hyperliquid earned fees from perpetual trading, spot markets, ticker auctions, priority fees and HyperEVM gas. Aave generated income through borrower interest spreads, flash loans, liquidation penalties and GHO stability fees.
Sky collected revenue from collateralized loans, liquidation penalties, Peg Stability Module trading fees, Direct Deposit Modules and real-world assets.
Aerodrome and Uniswap generated trading fees from decentralized exchange activity, while Pump.fun earned revenue through swap fees and token graduation fees.
Castle Labs noted that revenue alone does not determine whether a token performs well. Investors also need to examine whether revenue is sustainable over time and how much of it actually reaches token holders.
Emissions Can Cancel Out Revenue
One of the biggest reasons for weak token performance is token emissions. The report compared protocol revenue distributed to holders against inflation, unlocks, and incentive programs.
After accounting for those emissions, Aerodrome, Sky, and Uniswap all showed negative net token flows, meaning more value was being created through new token issuance than was flowing back to existing holders.
Castle Labs said a protocol generating $100 million in revenue looks very different if it also mints $200 million worth of new tokens every year.
The report recommends that investors evaluate four core questions before buying any token, i.e., how the protocol earns revenue, how that revenue is distributed, how much value is lost through emissions and unlocks, and whether equity holders receive stronger economic rights than token holders.
Buybacks Help, But They Are Not a Cure
Protocols distribute value primarily through buybacks or direct fee sharing. Buybacks use protocol revenue to purchase tokens from the open market. Those tokens may be burned permanently or moved into treasury reserves for future incentives.
Hyperliquid has burned more than 47 million HYPE tokens, equal to about 4.72% of total supply. Uniswap has burned a total of 107 million $UNI tokens, including a 100 million $UNI burn completed in December 2025. Lighter has burned approximately 15.6 million LIT tokens, around 6.6% of supply, using protocol revenue.
Other projects are expanding buyback programs. Maple Finance recently approved a revenue-linked buyback model that adjusts allocations as protocol revenue changes. Still, Castle Labs said buybacks alone cannot overcome poor tokenomics or weakening fundamentals.
Pump.fun is an example of this. The protocol has generated roughly $450 million in revenue over the past year and completed more than $315 million in buybacks, yet its token remains about 60% below its launch price. The report attributes the decline to rapid token unlocks, failed airdrop expectations, weak communication and continued selling pressure.
Aave has also struggled despite completing roughly $45 million in buybacks since April 2025. Castle Labs pointed to governance changes, the Kelp DAO incident and growing competition from Morpho.
The report also noted that Aave’s average buyback price was around $182, while the token now trades near $90, leaving the protocol with an unrealized loss on those purchases.
Why Protocol Revenue Isn’t Reaching Token Holders
Castle Labs also stated that some protocols keep most revenue inside their treasury instead of distributing it to holders. Others operate with separate equity and token structures, giving shareholders stronger economic rights than token holders.
The report cited Ripple as an example. Since 2025, Ripple Labs stock has gained about 105%, while $XRP has declined roughly 45% over the same period. According to Castle Labs, equity holders benefit from company performance, while $XRP holders have no direct claim on that revenue.
Castle Labs concluded that strong protocol revenue alone is insufficient to drive long-term token performance. Instead, investors should assess how protocols generate revenue, distribute it to token holders, and manage emissions and incentives. The report added that as the industry matures, more protocols are expected to align token value with business performance through mechanisms such as buybacks, fee sharing, and other value-accrual models.
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