It’s too early to know if DeFi is “dead,” but platforms that share revenue with liquidity providers and token holders could be the ones that survive the bear market.
At the moment, liquidity is hard to come by, but crypto traders and protocols still need inflow and revenue to remain functional.
As the crypto winter drags on, savvy crypto investors have realized that one of the reliable sources of passive income that still exists can be found on protocols that generate revenue and share some of it with their respective communities.
Platforms that earn real yield through useage fees are the obvious winner in the bear market, That mean perpetuals and options as they are profitable bear or bull. Thats why #GMX is hot, #snx fees up massively and #eth is just a no brainer.
— Collingwood.lens (@Fraxima1ist) July 13, 2022
Let’s take a look at some of the protocols that continue to thrive in the current down market.
DeFi might be dead, but platforms with revenue will thrive
Data from Token Terminal shows revenue positive platforms are primarily the nonfungible token (NFT) marketplaces like LooksRare and OpenSea.
Top dapps based on cumulative protocol revenue in the past 180 days. Source: Token Terminal
Aside from a few select protocols including MetaMask, Decentral Games, Axie Infinity and Ethereum Name Service, the majority of the remaining protocols with the highest revenue are decentralized finance platforms, showing that while DeFi is down, it’s not out of the game.
Fee sharing helps to lure liquidity
DeFi protocols and decentralized applications (DApps) that offer fee sharing to token holders and liquidity providers are also revenue positive.
Historical view of crypto/web3 projects that generate fee revenue to their token holders.
Protocol revenue market share leaders in ’21:
Q3: Axie Infinity
Q4: Ethereum pic.twitter.com/zNRFnss7c4
— Token Terminal (@tokenterminal) January 29, 2022
As the bear market continues to batter prices and eliminate unprofitable and poorly managed platforms, protocols that offer token holders passive income streams have a higher chance of enduring until the next bull market begins.
Related: DeFi Summer 3.0? Uniswap overtakes Ethereum on fees, DeFi outperforms
Synthetix (SNX) makes a comeback
A good example of how fee sharing can help boost a token and DeFi protocol was recently seen with Synthetix (SNX), which made waves when it partnered with Curve Finance to create Curve pools for several of its Synths assets.
Since the cross-chain collaboration was established, the protocol revenue for Synthetix has seen a tremendous increase that coincided with a rise in the price of SNX from $1.56 to its current price at $2.59.
SNX daily price vs. protocol revenue in the past 180 days. Source: Token Terminal
The increase in revenue did not go unnoticed by crypto Twitter, which was quick to point out the rapid turnaround for the platform.
$SNX @synthetix_io bypassed @AaveAave in daily fees Also, @SushiSwap @CurveFinance @MakerDAO combined. pic.twitter.com/w1dBVHL2YD
— Wega (@William24931283) July 7, 2022
How it all plays out for Synthetix in the long run, is anyone’s guess. For now, the platform is demonstrating that generating revenue and sharing some of that revenue with token holders is one way to retain market share during a market downturn.
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