Web3 Revenue Shift: DeFi Apps and Wallets Overtake Blockchains in Fee Capture

Web3 revenue patterns are evolving, and for the first time, DeFi apps and cryptocurrency wallets are taking a bigger piece of the pie of fees compared to the underlying blockchain platforms, a clear indicator of a shift in the way economic value is created in the space.

DeFi Apps and Protocols Emerge as Blockchain Industry’s Top Earners

DeFi apps and protocols have risen through the ranks to be among the biggest earners in the blockchain space, with statistics indicating that 17 DeFi platforms are some of the biggest earners in the Web3 space.

The DeFi platforms, ranging from decentralized exchange platforms, borrowing platforms, and derivative platforms, earn more than many layer one and layer two blockchains. This indicates a shift in focus from the underlying layer to the application layer.

Source: DeFiLlama

The growth has been fueled by active use, repeat transaction volumes, and protocol fees that increase independently of gas prices. As the cost of blockchain infrastructure continues to drop and efficiency improves, DeFi platforms are being leveraged for their revenue streams rather than their transaction fees, positioning them as the primary economic engines of the Web3 ecosystem.

Fee Income: From Blockchains to Apps

Historically, blockchains such as Ethereum, Bitcoin, and Solana have been maintained by transaction fees (gas) that users pay for security and for reaching consensus. But for the first half of this year, applications such as decentralized exchanges (DEXs), lending protocols, and consumer applications have been collecting significantly more fees than the basic blockchains from gas fees.

DeFi and finance applications alone accounted for $6.1 billion in fees during this period, while fees for blockchains decreased by 40% to $2.1 billion.

Source:  Nansen

This is a result of a number of trends: scaling solutions and gas compression have reduced basic transaction costs significantly, and fee capture is less dependent on high network costs, and engagement with DeFi protocols has increased, creating repeatable utility revenue.

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Rise of Wallets and Consumer Apps

Not all fee growth is driven by revenue-generating applications. Wallet ecosystems that enable easy integration with Web3 services such as Phantom, MetaMask, and Coinbase Wallet have experienced huge adoption, and fees earned by wallets have seen year-over-year growth as wallets begin to integrate swapping, DeFi, and cross-chain interactions. Wallet fees have been growing at a pace that has surprised many and have claimed a significant share of the fee market.

Apart from the wallets themselves, the revenue generated from other consumer-facing applications such as NFT marketplaces and blockchain games is significant and indicates that people are willing to pay for interactions that are utility-driven and functional.

Why the Shift Matters

The changeover of fee revenue from blockchains to applications is a result of the development of Web3 adoption. Gas costs being lowered due to scaling solutions such as rollups and account abstraction mean that basic transactions are now inexpensive and have led to a reduction in the revenue base of the main network.

On the other hand, use cases that have real-world utility, like trading, lending markets, and simple wallet interactions, are the ones that are profiting from the repeated use rather than the one-time gas. This suggests that the Web3 economy is transitioning from speculative to sustainable, usage-based models.

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