Blockchain fee share falls to a fifth as application-layer tokens capture growth
Research shows blockchains now collect under a fifth of onchain fees, with DeFi applications driving nearly all revenue growth into 2026.
The share of onchain fees captured by base-layer blockchains has fallen to roughly a fifth of the total, according to a new report from venture firm 1kx, a shift that reframes where investors should look for value accrual in crypto markets. The finding carries implications for how institutional allocators price layer-1 tokens against the applications that increasingly sit above them.
The 1kx Onchain Revenue Report found that blockchains’ share of total onchain fee generation has collapsed from around 56% in 2021 to just 22% in the first half of 2025, with projections pointing to a fall below 20% by the end of that year. Applications, by contrast, now capture roughly three-quarters of all revenue generated onchain, Crypto Briefing reported, citing the study.
DeFi drives the reversal
DeFi protocols accounted for 63% of all onchain fees collected in the first half of 2025, the report found, with trading activity and derivatives volume identified as the principal drivers. That marks a structural inversion of the model that prevailed earlier in the decade, when blockchains themselves captured the majority of transaction fees through congestion pricing.
Transaction costs have fallen by roughly 90% from their 2021 peak, according to the report, a consequence of scaling upgrades, wider layer-2 adoption and more efficient block space markets. Cheaper execution has effectively pushed the economic centre of gravity away from the settlement layer and towards the software built on top of it.
Within what remains of blockchain-layer fee income, concentration is high: Tron, Ethereum and Solana together accounted for roughly 80% of blockchain-layer fees in the first half of 2025, the report found, leaving little room for smaller layer-1 networks to compete on transaction revenue alone.
Growth is arriving entirely at the app layer
Total onchain fee revenue for 2025 is projected at $19.8 billion, a 35% increase year-on-year, with 2026 projections pushing that figure above $32 billion — a further 63% increase. Crucially, 1kx attributes the entirety of that expected growth to the application layer, with no growth projected from blockchains themselves.
Value returned to token holders has followed the same pattern. The report puts distributions in the first half of 2025 at $9.7 billion, generated primarily through application-level buybacks and token burns rather than base-layer issuance or fee capture.
A test for layer-1 investment cases
For institutional investors weighing exposure to digital assets, the findings sharpen a question that has circulated in venture and treasury circles for some time: whether base-layer tokens can justify valuations built on network-effect narratives if the fee economics increasingly favour the applications built on top of them.
Ethereum’s own token-economic design has already come under scrutiny on related grounds, with researchers this year proposing changes to staking rewards partly in response to questions about long-term value capture at the protocol level. The 1kx data adds a fee-based dimension to that debate, suggesting that even as network usage and total onchain activity expand, the commercial upside is concentrating in DeFi protocols, trading venues and other application-layer businesses rather than in the chains that host them.
That has practical consequences for how funds and treasuries structure exposure across the stack, and for how regulators assess where economic risk and reward genuinely sit within blockchain ecosystems as tokenisation and onchain finance continue to scale into 2026.
Read more: Ethereum researchers propose burning rewards to cap staking at half of supply
