49 posts tagged with "DeFi"

Crypto venture capital doesn't just fund companies—it telegraphs where the industry is headed. In 2025, that signal was unmistakable: $49.75 billion poured into blockchain projects, a 433% surge from 2024's depressed levels. The money wasn't distributed evenly. DeFi captured 30.4% of all funding. Infrastructure projects absorbed $2.2 billion. And a handful of mega-deals—Binance's $2 billion raise, Kraken's $800 million equity round—reshaped the competitive landscape.

But behind the headline numbers lies a more nuanced story. While total funding exploded, many projects faced down rounds and valuation compression. The days of raising at 100x revenue multiples are over. VCs are demanding profitability paths, real user metrics, and regulatory clarity before writing checks.

This is the state of crypto venture capital in 2026—who's funding what, which narratives attracted capital, and what builders need to know to raise in this environment.

Jump Crypto spent three years building Firedancer, a validator client capable of processing over one million transactions per second. Instead of waiting for Solana to fully deploy it, a team of former Jump engineers, Goldman Sachs quants, and Pyth Network builders decided to launch their own chain running Firedancer in its purest form.

The result is Fogo—a Layer 1 blockchain with sub-40ms block times, ~46,000 TPS in devnet, and validators strategically clustered in Tokyo to minimize latency for global markets. On January 13, 2026, Fogo launched mainnet, positioning itself as the infrastructure layer for institutional DeFi and real-world asset tokenization.

The pitch is simple: traditional finance demands execution speeds that existing blockchains cannot deliver. Fogo claims it can match them.

2025 became the year L2s went from blockchain's great hope to its greatest embarrassment. Most new rollups launched to fanfare, attracted millions in TVL during airdrop farming cycles, then collapsed into ghost towns within weeks of their token generation events. The mercenary capital moved on. The genuine users never arrived.

Yet amid this L2 fatigue, Initia launched its mainnet in April 2025 with a radically different proposition: what if instead of building yet another isolated L2, you built an entire network of interconnected rollups from the ground up—with native interoperability, shared liquidity, and VM flexibility baked into the architecture?

The market took notice. Initia raised $24 million from Delphi Ventures, Hack VC, Binance Labs, and Nascent—reaching a $350 million valuation before mainnet. Their token hit $1.44 within weeks of launch. More than a dozen L2s are already building on their infrastructure.

This is the story of Initia's bet that the L2 problem isn't too many chains—it's that those chains were never designed to work together.

The tokenized real-world asset market just crossed $33 billion. But if you look beneath the headline number, a striking imbalance emerges: private credit commands 58% of all tokenized RWA flows, treasuries take 34%, and equities—the asset class most people would expect to lead—barely registers at 2%.

This isn't a random distribution. It's the market telling us exactly which assets are ready for tokenization and which face structural barriers that no amount of blockchain innovation can immediately solve.

Tether made $10 billion in profit during the first three quarters of 2025. With fewer than 200 employees, that's over $65 million in gross profit per person—making it one of the most profitable companies per employee on Earth.

Circle isn't far behind. Despite sharing 50% of its reserve revenue with Coinbase, the USDC issuer generated $740 million in Q3 2025 alone, keeping 38% margins after distribution costs.

Now platforms are asking an obvious question: why are we sending this money to Circle and Tether?

Hyperliquid holds nearly $6 billion in USDC deposits—about 7.5% of all USDC in circulation. Until September 2025, every dollar of interest on those deposits flowed to Circle. Then Hyperliquid launched USDH, its own native stablecoin, with 50% of reserve yields flowing back to the protocol.

They're not alone. SoFi became the first U.S. national bank to issue a stablecoin on a public blockchain. Coinbase launched white-label stablecoin infrastructure. WSPN rolled out turnkey solutions letting enterprises deploy branded stablecoins in weeks. The great stablecoin margin recapture has begun.

Hyperliquid holds $5.97 billion in USDC deposits—nearly 10% of Circle's total circulating supply. At a conservative 4% Treasury yield, that represents $240 million in annual revenue flowing to Circle. Hyperliquid sees none of it.

So Hyperliquid launched USDH.

This isn't an isolated move. Across DeFi, the same calculation is playing out: why surrender hundreds of millions in yield to third-party stablecoin issuers when you can capture it yourself? MetaMask launched mUSD. Aave is building around GHO. A new class of white-label infrastructure from M0 and Agora is making protocol-native stablecoins viable for any platform with scale.

The stablecoin duopoly—Tether and Circle's 80%+ market share—is fracturing. And the $314 billion stablecoin market is about to get much more competitive.

In early 2024, yield-bearing stablecoins held about $1.5 billion in total supply. By mid-2025, that figure had exploded past $11 billion—a 7x increase that represents the fastest-growing segment of the entire stablecoin market.

The appeal is obvious: why hold dollars that earn nothing when you could hold dollars that earn 7%, or 15%, or even 20%? But the mechanisms generating these yields are anything but simple. They involve derivatives strategies, perpetual futures funding rates, Treasury bills, and complex smart contract systems that even experienced DeFi users struggle to fully understand.

And just as this new category gained momentum, regulators stepped in. The GENIUS Act, signed into law in July 2025, explicitly prohibits stablecoin issuers from offering yield to retail customers. Yet instead of killing yield-bearing stablecoins, the regulation triggered a flood of capital into protocols that found ways to stay compliant—or operate outside U.S. jurisdiction entirely.

This is the story of how stablecoins evolved from simple dollar pegs into sophisticated yield-generating instruments, who's winning the battle for $310 billion in stablecoin capital, and what risks investors face in this new paradigm.

The Market Landscape: $33 Trillion in Motion​

Before diving into yield mechanisms, the scale of the stablecoin market deserves attention.

Stablecoin transaction volumes soared 72% to hit $33 trillion in 2025, according to Artemis Analytics. Total supply reached nearly $310 billion by mid-December—up more than 50% from $205 billion at the start of the year. Bloomberg Intelligence projects stablecoin payment flows could reach $56.6 trillion by 2030.

The market remains dominated by two giants. Tether's USDT holds about 60% market share with $186.6 billion in circulation. Circle's USDC commands roughly 25% with $75.12 billion. Together they control 85% of the market.

But here's the interesting twist: USDC led transaction volume with $18.3 trillion, beating USDT's $13.3 trillion despite having a smaller market cap. This higher velocity reflects USDC's deeper DeFi integration and regulatory compliance positioning.

Neither USDT nor USDC offers yield. They're the stable, boring bedrock of the ecosystem. The action—and the risk—lives in the next generation of stablecoins.

How Ethena's USDe Actually Works​

Ethena's USDe emerged as the dominant yield-bearing stablecoin, reaching over $9.5 billion in circulation by mid-2025. Understanding how it generates yield requires understanding a concept called delta-neutral hedging.

The Delta-Neutral Strategy​

When you mint USDe, Ethena doesn't just hold your collateral. The protocol takes your ETH or BTC, holds it as the "long" position, and simultaneously opens a short perpetual futures position of the same size.

If ETH rises 10%, the spot holdings gain value, but the short futures position loses an equivalent amount. If ETH falls 10%, the spot holdings lose value, but the short futures position gains. The result is delta-neutral—price movements in either direction cancel out, maintaining the dollar peg.

This is clever, but it raises an obvious question: if price movements net to zero, where does the yield come from?

The Funding Rate Engine​

Perpetual futures contracts use a mechanism called funding rates to keep their prices aligned with spot markets. When the market is bullish and more traders are long than short, longs pay shorts a funding fee. When the market is bearish, shorts pay longs.

Historically, crypto markets trend bullish, meaning funding rates are positive more often than negative. Ethena's strategy collects these funding payments continuously. In 2024, sUSDe—the staked version of USDe—delivered an average APY of 18%, with peaks touching 55.9% during the March 2024 rally.

The protocol adds additional yield from staking a portion of its ETH collateral (earning Ethereum's native staking yield) and from interest on liquid stablecoin reserves held in instruments like BlackRock's BUIDL tokenized Treasury fund.

The Risks Nobody Wants to Discuss​

The delta-neutral strategy sounds elegant, but it carries specific risks.

Funding Rate Reversal: During sustained bear markets, funding rates can turn negative for extended periods. When this happens, Ethena's short positions pay longs instead of receiving payments. The protocol maintains a reserve fund to cover these periods, but a prolonged downturn could drain reserves and force yield rates to zero—or worse.

Exchange Risk: Ethena holds its futures positions on centralized exchanges like Binance, Bybit, and OKX. While collateral is held with off-exchange custodians, the counterparty risk of exchange insolvency remains. An exchange failure during volatile markets could leave the protocol unable to close positions or access funds.

Liquidity and Depeg Risk: If confidence in USDe falters, a wave of redemptions could force the protocol to unwind positions rapidly in illiquid markets, potentially breaking the peg.

During August 2024, when funding rates compressed, sUSDe yields dropped to about 4.3%—still positive, but far from the double-digit returns that attracted initial capital. Recent yields have ranged between 7% and 30% depending on market conditions.

Sky's USDS: The MakerDAO Evolution​

While Ethena bet on derivatives, MakerDAO (now rebranded as Sky) took a different path for its yield-bearing stablecoin.

From DAI to USDS​

In May 2025, MakerDAO completed its "Endgame" transformation, retiring the MKR governance token, launching SKY at a 24,000:1 conversion ratio, and introducing USDS as the successor to DAI.

USDS supply surged from 98.5 million to 2.32 billion in just five months—a 135% increase. The Sky Savings Rate platform reached $4 billion in TVL, growing 60% in 30 days.

Unlike Ethena's derivatives strategy, Sky generates yield through more traditional means: lending revenue from the protocol's credit facilities, fees from the stablecoin operations, and interest from real-world asset investments.

The Sky Savings Rate​

When you hold sUSDS (the yield-bearing wrapped version), you automatically earn the Sky Savings Rate—currently around 4.5% APY. Your balance increases over time without needing to lock, stake, or take any action.

This is lower than Ethena's typical yields, but it's also more predictable. Sky's yield comes from lending activity and Treasury exposure rather than volatile funding rates.

Sky activated USDS rewards for SKY stakers in May 2025, distributing over $1.6 million in the first week. The protocol now allocates 50% of revenue to stakers, and spent $96 million in 2025 on buybacks that reduced SKY's circulating supply by 5.55%.

The $2.5 Billion Institutional Bet​

In a significant move, Sky approved a $2.5 billion USDS allocation to Obex, an incubator led by Framework Ventures targeting institutional-grade DeFi yield projects. This signals Sky's ambition to compete for institutional capital—the largest untapped pool of potential stablecoin demand.

The Frax Alternative: Chasing the Fed​

Frax Finance represents perhaps the most ambitious regulatory strategy in yield-bearing stablecoins.

Treasury-Backed Yield​

Frax's sFRAX and sfrxUSD stablecoins are backed by short-term U.S. Treasuries, purchased through a lead bank brokerage relationship with a Kansas City bank. The yield tracks the Federal Reserve's rates, currently delivering around 4.8% APY.

Over 60 million sFRAX are currently staked. While yields are lower than Ethena's peaks, they're backed by the U.S. government's credit rather than crypto derivatives—a fundamentally different risk profile.

The Fed Master Account Gambit​

Frax is actively pursuing a Federal Reserve master account—the same type of account that banks use for direct access to Fed payment systems. If successful, this would represent unprecedented integration between DeFi and traditional banking infrastructure.

The strategy positions Frax as the most regulation-compliant yield-bearing stablecoin, potentially appealing to institutional investors who can't touch Ethena's derivatives exposure.

The GENIUS Act: Regulation Arrives​

The Guiding and Establishing National Innovation for US Stablecoins Act (GENIUS Act), signed in July 2025, brought the first comprehensive federal framework for stablecoins—and immediate controversy.

The Yield Prohibition​

The act explicitly prohibits stablecoin issuers from paying interest or yield to holders. The intent is clear: prevent stablecoins from competing with bank deposits and FDIC-insured accounts.

Banks lobbied hard for this provision, warning that yield-bearing stablecoins could drain $6.6 trillion from the traditional banking system. The concern isn't abstract: when you can earn 7% on a stablecoin versus 0.5% in a savings account, the incentive to move money is overwhelming.

The Loophole Problem​

However, the act doesn't explicitly prohibit affiliated third parties or exchanges from offering yield-bearing products. This loophole allows protocols to restructure so that the stablecoin issuer doesn't directly pay yield, but an affiliated entity does.

Banking groups are now lobbying to close this loophole before implementation deadlines in January 2027. The Bank Policy Institute and 52 state banking associations sent a letter to Congress arguing that exchange-offered yield programs create "high-yield shadow banks" without consumer protections.

Ethena's Response: USDtb​

Rather than fight regulators, Ethena launched USDtb—a U.S.-regulated variant backed by tokenized money-market funds rather than crypto derivatives. This makes USDtb compliant with GENIUS Act requirements while preserving Ethena's infrastructure for institutional customers.

The strategy reflects a broader pattern: yield-bearing protocols are forking into compliant (lower yield) and non-compliant (higher yield) versions, with the latter increasingly serving non-U.S. markets.

Comparing the Options​

For investors navigating this landscape, here's how the major yield-bearing stablecoins stack up:

sUSDe (Ethena): Highest potential yields (7-30% depending on market conditions), but exposed to funding rate reversals and exchange counterparty risk. Largest market cap among yield-bearing options. Best for crypto-native users comfortable with derivatives exposure.

sUSDS (Sky): Lower but more stable yields (~4.5%), backed by lending revenue and RWAs. Strong institutional positioning with the $2.5B Obex allocation. Best for users seeking predictable returns with lower volatility.

sFRAX/sfrxUSD (Frax): Treasury-backed yields (~4.8%), most regulatory compliant approach. Pursuing Fed master account. Best for users prioritizing regulatory safety and traditional finance integration.

sDAI (Sky/Maker): The original yield-bearing stablecoin, still functional alongside USDS with 4-8% yields through the Dynamic Savings Rate. Best for users already in the Maker ecosystem.

The Risks That Keep Me Up at Night​

Every yield-bearing stablecoin carries risks beyond what their marketing materials suggest.

Smart Contract Risk: Every yield mechanism involves complex smart contracts that could contain undiscovered vulnerabilities. The more sophisticated the strategy, the larger the attack surface.

Regulatory Risk: The GENIUS Act loophole may close. International regulators may follow the U.S. lead. Protocols may be forced to restructure or cease operations entirely.

Systemic Risk: If multiple yield-bearing stablecoins face redemption pressure simultaneously—during a market crash, regulatory crackdown, or confidence crisis—the resulting liquidations could cascade across DeFi.

Yield Sustainability: High yields attract capital until competition compresses returns. What happens to USDe's TVL when yields drop to 3% and stay there?

Where This Goes Next​

The yield-bearing stablecoin category has grown from novelty to $11 billion in assets remarkably quickly. Several trends will shape its evolution.

Institutional Entry: As Sky's Obex allocation demonstrates, protocols are positioning for institutional capital. This will likely drive more conservative, Treasury-backed products rather than derivatives-based high yields.

Regulatory Arbitrage: Expect continued geographic fragmentation, with higher-yield products serving non-U.S. markets while compliant versions target regulated institutions.

Competition Compression: As more protocols enter the yield-bearing space, yields will compress toward traditional money market rates plus a DeFi risk premium. The 20%+ yields of early 2024 are unlikely to return sustainably.

Infrastructure Integration: Yield-bearing stablecoins will increasingly become the default settlement layer for DeFi, replacing traditional stablecoins in lending protocols, DEX pairs, and collateral systems.

The Bottom Line​

Yield-bearing stablecoins represent a genuine innovation in how digital dollars work. Instead of idle capital, stablecoin holdings can now earn returns that range from Treasury-rate equivalents to double-digit yields.

But these yields come from somewhere. Ethena's returns come from derivatives funding rates that can reverse. Sky's yields come from lending activity that carries credit risk. Frax's yields come from Treasuries, but require trusting the protocol's banking relationships.

The GENIUS Act's yield prohibition reflects regulators' understanding that yield-bearing stablecoins compete directly with bank deposits. Whether current loopholes survive through 2027 implementation remains uncertain.

For users, the calculus is straightforward: higher yields mean higher risks. sUSDe's 15%+ returns during bull markets require accepting exchange counterparty risk and funding rate volatility. sUSDS's 4.5% offers more stability but less upside. Treasury-backed options like sFRAX provide government-backed yield but minimal premium over traditional finance.

The yield stablecoin wars have just begun. With $310 billion in stablecoin capital up for grabs, protocols that find the right balance of yield, risk, and regulatory compliance will capture enormous value. Those that miscalculate will join the crypto graveyard.

Choose your risks accordingly.

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This article is for educational purposes only and should not be considered financial advice. Yield-bearing stablecoins carry risks including but not limited to smart contract vulnerabilities, regulatory changes, and collateral devaluation.

In 2025, something unprecedented happened in crypto: a single decentralized exchange generated more revenue than the entire Ethereum blockchain. Hyperliquid, a purpose-built Layer 1 for perpetual futures trading, closed the year with $844 million in revenue, $2.95 trillion in trading volume, and over 80% market share in decentralized derivatives.

The numbers force a question: How did a protocol that didn't exist three years ago surpass networks with $100 billion+ in total value locked?

The answer reveals a fundamental shift in how value accrues in crypto—from general-purpose chains to application-specific protocols optimized for a single use case. While Ethereum struggles with revenue concentration in lending and liquid staking, and Solana builds its brand on memecoins and retail speculation, Hyperliquid quietly became the most profitable trading venue in DeFi.

The Revenue Landscape: Where the Money Actually Goes​

The 2025 blockchain revenue rankings shattered assumptions about which networks capture value.

According to CryptoRank data, Solana led all blockchains with $1.3-1.4 billion in revenue, driven by its spot DEX volume and memecoin trading. Hyperliquid ranked second with $814-844 million—despite being an L1 with a single primary application. Ethereum, the blockchain that supposedly anchors DeFi, came in fourth with roughly $524 million.

The implications are stark. Ethereum's share of app revenue has declined from 50% in early 2024 to just 25% by Q4 2025. Meanwhile, Hyperliquid controlled over 35% of all blockchain revenue at its peak.

What's remarkable is the concentration. Solana's revenue comes from hundreds of applications—Pump.fun, Jupiter, Raydium, and dozens of others. Ethereum's revenue distributes across thousands of protocols. Hyperliquid's revenue comes almost entirely from one thing: perpetual futures trading on its native DEX.

This is the new economics of crypto: specialized protocols that do one thing extremely well can outperform generalized chains that do everything adequately.

How Hyperliquid Built a Trading Machine​

Hyperliquid's architecture represents a fundamental bet against the "general-purpose blockchain" thesis that dominated 2017-2022 thinking.

The Technical Foundation​

The platform runs on HyperBFT, a custom consensus algorithm inspired by Hotstuff. Unlike chains that optimize for arbitrary smart contract execution, HyperBFT is purpose-built for high-frequency order matching. The result: theoretical throughput of 200,000 orders per second with sub-second finality.

The architecture splits into two components. HyperCore handles the core trading infrastructure—fully on-chain order books for perpetuals and spot markets, with every order, cancellation, trade, and liquidation happening transparently on-chain. HyperEVM adds Ethereum-compatible smart contracts, letting developers build on top of the trading primitive.

This dual approach means Hyperliquid isn't choosing between performance and composability—it's achieving both by separating concerns.

The Order Book Advantage​

Most DEXs use Automated Market Makers (AMMs), where liquidity pools determine pricing. Hyperliquid implements a Central Limit Order Book (CLOB), the same architecture used by every major centralized exchange.

The difference matters enormously for professional traders. CLOBs deliver precise price discovery, minimal slippage on large orders, and familiar trading interfaces. For anyone accustomed to trading on Binance or CME, Hyperliquid feels native in a way that Uniswap or GMX never could.

By processing perpetual futures—the highest-volume derivative in crypto—through an on-chain order book, Hyperliquid captured professional trading flow that previously had no viable decentralized alternative.

Zero Gas Fees, Maximum Velocity​

Perhaps most importantly, Hyperliquid eliminated gas fees for trading. When you place or cancel an order, you pay nothing. This removes the friction that prevents high-frequency strategies from working on Ethereum or even Solana.

The result is trading behavior that matches centralized exchanges. Traders can place and cancel thousands of orders without worrying about transaction costs eating into returns. Market makers can quote tight spreads knowing they won't be penalized for cancellations.

The Numbers That Matter​

Hyperliquid's 2025 performance validates the application-specific thesis with brutal clarity.

Trading Volume: $2.95 trillion cumulative, with peak months exceeding $400 billion. For context, Robinhood's crypto trading volume in 2025 was roughly $380 billion—Hyperliquid briefly surpassed it.

Market Share: 70%+ of decentralized perpetual futures volume in Q3 2025, with peaks above 80%. The protocol's aggregate market share versus centralized exchanges reached 6.1%, a record for any DEX.

User Growth: 609,000 new users onboarded during the year, with $3.8 billion in net inflows.

TVL: Approximately $4.15 billion, making it one of the largest DeFi protocols by locked value.

Token Performance: HYPE launched at $3.50 in November 2024 and peaked above $35 in January 2025—a 10x return in under three months.

The revenue model is elegantly simple. The platform collects trading fees and uses 97% of them to buy and burn HYPE tokens. This creates constant buy pressure that scales with trading volume, turning Hyperliquid into a revenue-sharing machine for token holders.

The JELLY Wake-Up Call​

Not everything was smooth. In March 2025, Hyperliquid faced its most serious crisis when a sophisticated exploit nearly drained $12 million from the protocol.

The attack exploited how Hyperliquid handled liquidations for illiquid tokens. An exploiter deposited $7 million across three accounts, took leveraged long positions on JELLY (a low-liquidity token) on two accounts, and opened a massive short on the third. By pumping JELLY's price 429%, they triggered their own liquidation—but the position was too large to liquidate normally, forcing it onto Hyperliquid's insurance fund.

What happened next revealed uncomfortable truths. Within two minutes, Hyperliquid's validators reached consensus to delist JELLY and settled all positions at $0.0095 (the attacker's entry price) rather than the $0.50 market price. The attacker walked away with $6.26 million.

The rapid validator consensus exposed significant centralization. Bitget's CEO called the response "immature, unethical, and unprofessional," warning Hyperliquid risked becoming "FTX 2.0." Critics pointed out that the same protocol that ignored North Korean hackers trading with stolen funds acted immediately when its own treasury was threatened.

Hyperliquid responded by refunding affected traders and implementing stricter controls on illiquid asset listings. But the incident revealed the tension inherent in "decentralized" exchanges that can freeze accounts and reverse transactions when convenient.

Hyperliquid vs. Solana: Different Games​

The comparison between Hyperliquid and Solana illuminates different visions for crypto's future.

Solana pursues the general-purpose blockchain dream: a single high-performance network hosting everything from memecoins to DeFi to gaming. Its $1.6 trillion in spot DEX volume during 2025 came from hundreds of applications and millions of users.

Hyperliquid bets on vertical integration: one chain, one application, one mission—being the best perpetual futures exchange in existence. Its $2.95 trillion in volume came almost entirely from derivatives traders.

The revenue comparison is instructive. Solana processed roughly $343 billion in 30-day perp volume through multiple protocols. Hyperliquid processed $343 billion through a single platform—and generated comparable revenue despite lower spot trading activity.

Where Solana wins: broad ecosystem diversity, consumer applications, and memecoin speculation. Solana's DEX volume exceeded $100 billion monthly for six consecutive months, driven by platforms like Pump.fun.

Where Hyperliquid wins: professional trading execution, perpetual futures liquidity, and institutional-grade infrastructure. Professional traders migrated specifically because Hyperliquid rivals centralized exchanges in execution quality.

The verdict? Different markets. Solana captures retail enthusiasm and speculative activity. Hyperliquid captures professional trading flow and derivatives volume. Both generated massive revenue in 2025—suggesting there's room for multiple approaches.

Competition Is Coming​

Hyperliquid's dominance isn't guaranteed. By late 2025, competitors Lighter and Aster briefly surpassed Hyperliquid in perpetual trading volume by capturing memecoin liquidity rotations. The protocol's market share fragmented from 70% to a more contested landscape.

This mirrors Hyperliquid's own history. In 2023-2024, it disrupted incumbents dYdX and GMX with superior execution and zero-fee trading. Now new entrants apply the same playbook against Hyperliquid.

The broader perpetual market tripled to $1.8 trillion in 2025, suggesting rising tides could lift all participants. But Hyperliquid will need to defend its moat against increasingly sophisticated competitors.

The real competition may come from centralized exchanges. When analysts were asked who could realistically challenge Hyperliquid, they pointed not to other DEXs but to Binance, Coinbase, and other CEXs that might copy its features while offering deeper liquidity.

What Hyperliquid's Success Means​

Hyperliquid's breakout year offers several lessons for the industry.

Application-specific chains work. The thesis that dedicated L1s optimized for single use cases would outperform general-purpose chains just received a $844 million proof point. Expect more projects to follow this model.

Professional traders want real exchanges, not AMMs. The success of on-chain order books validates that sophisticated traders will use DeFi when it matches CEX execution quality. AMMs may be adequate for casual swaps, but derivatives require proper market structure.

Revenue beats TVL as a metric. Hyperliquid's TVL is modest compared to Ethereum DeFi giants like Aave or Lido. But it generates far more revenue. This suggests crypto is maturing toward businesses valued on actual economic activity rather than locked capital.

Centralization concerns persist. The JELLY incident showed that "decentralized" protocols can act very centralized when their treasuries are threatened. This tension will define DeFi's evolution in 2026.

Looking Forward​

Analysts project HYPE could reach $80 by late 2026 if current trends continue, assuming the stablecoin market expands and Hyperliquid maintains its trading share. More conservative estimates depend on whether the protocol can fend off emerging competitors.

The broader shift is unmistakable. Ethereum's declining revenue share, Solana's memecoin-driven growth, and Hyperliquid's derivatives dominance represent three different visions of how crypto creates value. All three are generating meaningful revenue—but the application-specific approach is punching far above its weight.

For builders, the lesson is clear: find a specific high-value activity, optimize relentlessly for it, and capture the entire value chain. For traders, Hyperliquid offers what DeFi always promised—permissionless, non-custodial, professional-grade trading—finally delivered at scale.

The question for 2026 isn't whether decentralized trading can generate revenue. It's whether any single platform can maintain dominance in an increasingly competitive market.

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This article is for educational purposes only and should not be considered financial advice. The author holds no positions in HYPE, SOL, or ETH.

There's no such thing as free yield. Yet yield-bearing stablecoins now command $11 billion in supply—up from $1.5 billion in early 2024—with JPMorgan predicting they could capture 50% of the entire stablecoin market. In a world where USDT and USDC offer 0% returns, protocols promising 6-20% APY on dollar-pegged assets are rewriting the rules of what stablecoins can be.

But here's the uncomfortable truth: every percentage point of yield comes with corresponding risk. The recent USDO depeg to $0.87 reminded markets that even "stable" coins can break. Understanding how these next-generation stablecoins actually work—and what can go wrong—has become essential for anyone allocating capital in DeFi.