# The Verticalisation Thesis: How Blockchain Revenue Models Are Evolving

> Covering the expansion of revenue streams by blockchains

- Source: https://castlelabs.io/research/reports/the-verticalisation-thesis-how-blockchain
- Published: July 2026, 53 pages; data as of July 2026
- Authors: Noveleader, Francesco; with Kaiko Research Team
- Publisher: Castle Labs (https://castlelabs.io)
- Full PDF (free, email required): https://docsend.com/v/sjv2g/verticalisation-of-blockchain-revenue

## Thesis

Blockchains began as businesses that sold blockspace, but cheaper execution, rollup scaling, and competition from faster chains have compressed that revenue stream. The report maps the shift from horizontal ecosystems that rent neutral infrastructure to verticalised chains that own high-value primitives directly. Hyperliquid is the clearest proof point: the chain captures exchange, builder, market-deployer, priority-fee, and stablecoin-alignment revenue rather than relying on gas fees alone.

## Key findings

- Ethereum chain fees fell from $9.91 billion in 2021 to $523 million in 2025, a 94.7% decline as execution and rollup settlement became cheaper.
- Hyperliquid generated more than $1 billion in fees over the previous 12 months, including $881 million from its perpetual DEX and about $24 million from HIP-3.
- Ethereum, Tron, Solana and Hyperliquid held a combined $48 billion in TVL, but the report found revenue aligned more closely with transaction and stablecoin settlement than with TVL alone.

## Key numbers

- $9.91B: Ethereum chain fees at the 2021 peak
- -94.7%: Ethereum fee compression from 2021 to 2025
- $881M: Hyperliquid perp DEX fees over the past year
- $1B+: Hyperliquid fees generated in the last 12 months
- $24M: HIP-3 revenue contribution since launch
- $48B: Combined TVL across Ethereum, Tron, Solana, and Hyperliquid

## Why Blockchain Revenue Is Falling

Most chains make money by selling blockspace: users pay gas to get their transactions executed. That product has turned into a commodity. Blockspace from competing L1s, L2s and blockspace-as-a-product providers is interchangeable for most uses, competition keeps pushing fees down, and the most successful apps now earn more than the chains they run on.

In 2021 Ethereum earned $9.91 billion in chain fees, about $826 million a month at the peak, and its chain fees were 1.94 times the fees of every app on it combined. The rollup-centric roadmap then moved activity to L2s, and the Dencun upgrade in 2024 cut L2 transaction costs by 10x with blobs, which also cut what the L1 earns.

**Chain fees at the peak and in 2025**

| Network | Peak chain fees | 2025 chain fees | Change |
| --- | --- | --- | --- |
| Ethereum | $9.91B (2021) | $523M | Down 94.7% in four years |
| Arbitrum | $65.6M (2023) | $18.2M | Timeboost now adds a second revenue line |
| Avalanche | $63.5M (2023) | $8.4M | Down 86.8% |
| Solana | $713M (2024) | $645M | Down 9.6%, held up by memecoin and DeFi trading |

Source: DefiLlama data in Castle Labs and Kaiko Research, The Verticalisation Thesis (July 2026)

Apps keep growing while chain fees shrink. Over the 30 days to June 2026, application fees on Ethereum, Solana, Base, Arbitrum and Avalanche were far larger than the chain fees each network earned.

## How Hyperliquid Makes Money

Hyperliquid is the chain and the main app at the same time. Instead of renting blockspace to outside exchanges, it runs the perp DEX itself and keeps the fees, most of which go to buying back HYPE. It made about $960 million in protocol fees in 2025 and over $1 billion in the last 12 months, which puts it among the largest fee earners in crypto after Tether and Circle.

The perp DEX earned $881 million over the past year, against $10.4 million from HyperEVM gas. Inside the trading engine, perp fees are about 88% of gross revenue, builder-code distribution about 9% and spot fees about 2%. Each new product adds another line that Hyperliquid takes a cut of.

**Hyperliquid revenue lines, July 2026**

| Revenue line | How it works | What it has earned or done |
| --- | --- | --- |
| Perp DEX | Hyperliquid's own exchange; most fees fund HYPE buybacks | $881M over the past year; weekly totals of $10M to $30M |
| HyperEVM gas | Blockspace sold to apps on the chain | $10.4M over the past year; 1.2% of revenue on average, about 2% at peak |
| HIP-3 markets | Deployers stake at least 500K HYPE to list their own perps and share 50% of the revenue | About $24M since launch; TradeXYZ markets are over 30% of Hyperliquid open interest, peaking near $3B |
| Builder codes | Outside frontends add their own fee on top of base fees | Over 25 active codes; $76M lifetime revenue for builders since October 2024; 5% to 10% of volume |
| HIP-4 outcome markets | Binary options; deployers stake 1M HYPE; no fees during testing, then 50% to Hyperliquid | Live since May 2026; over $250M in volume |
| Priority fees | Traders pay a small fee for lower-latency order processing | Live since April 2026; about $4M so far |
| USDC reserve share (AQAv2) | USDC is the designated quote asset and shares 90% of its reserve income with Hyperliquid | An extra $130M to $150M a year |

Source: Castle Labs and Kaiko Research, The Verticalisation Thesis (July 2026)

HIP-3 shows how the model works in practice. TradeXYZ listed perps on the S&P 500, TSLA, NVDA and other traditional assets, and after the first strike on Iran on 28 February 2026, Hyperliquid was the only venue trading crude oil with active price discovery. Hyperliquid did not list those markets, but it handled distribution and kept a share of the revenue. The biggest builder-code earners are Phantom ($22M), BasedApp ($15M) and pvp.trade ($8M).

## Base vs BSC vs Mantle vs Ink: Why Exchanges Run Their Own Chains

Binance, Coinbase, Bybit and Kraken all run or incubate their own chains, and the sequencer fee is not why. A chain gives the exchange its own onchain distribution, keeps the DeFi revenue that follows its users, and gives its balance-sheet products a place to settle that it controls.

Chain performance tracks the parent exchange, not the technology. The ranking of BSC, Base, Mantle and Ink by TVL, users and revenue mirrors the ranking of their parents by exchange volume almost exactly.

**Exchange chains compared, July 2026**

| Chain | Parent | Revenue over the past year | How it makes money |
| --- | --- | --- | --- |
| Base | Coinbase | $64.0M; up 26%, from about $144K to $182K a day | No token and no DAO; stopped sharing fees with Optimism, so Coinbase keeps 100% of sequencer revenue. Coinbase's onchain loan book settles through Morpho on Base. |
| BSC | Binance | $21.4M | 18.7M transactions a day at about $0.002 each. The chain keeps BNB useful as gas and collateral and keeps Binance's balance-sheet products onchain. |
| Mantle | Bybit | $0.5M | mETH captures staking yield and MUSD anchors a stablecoin stack; $547M in stablecoins |
| Ink | Kraken | $0.2M | Closest in design to Base but without a flagship integration yet; $222M in stablecoins |

Source: Castle Labs and Kaiko Research, The Verticalisation Thesis (July 2026)

Mantle and Ink together hold about $300 million in TVL, less than a single mid-sized DeFi protocol, alongside nearly $800 million in stablecoins. The next year will show whether the exchange funnel turns into real chain revenue.

## Data tables

**New verticalised chains, July 2026**

| Chain | Vertical bet | Key figures |
| --- | --- | --- |
| Plasma | L1 for stablecoin payments: zero-fee USDT transfers without holding XPL, plus the Plasma One card for spending at Visa merchants | TVL peaked at $10B around launch and stands at $1.78B; $3.7K in chain fees in June, 95% below peak |
| MegaETH | Own stablecoin, USDm, issued with Ethena, with reserve income funding MEGA buybacks | USDm market cap about $230M, implying $8M to $9M a year in buybacks at a 3.6% to 3.7% SOFR |
| Robinhood Chain | Arbitrum-stack L2 for tokenised traditional assets that Robinhood itself issues | Live since the start of July 2026; TVL $175M; Robinhood Earn vault on Morpho, curated by Steakhouse, targets 7% APY on a $140M market |
| Tempo | Enterprise chain for stablecoin payments, incubated by Stripe and Paradigm | Gas paid in the stablecoin being sent; Zones privacy for institutions; targets Shopify merchants, DoorDash drivers, Klarna instalments and treasury flows |

Source: Castle Labs and Kaiko Research, The Verticalisation Thesis (July 2026)

**TVL, stablecoins, revenue and valuation of four L1s**

| Chain | TVL | Stablecoins | Revenue | P/S ratio (12 June 2026) |
| --- | --- | --- | --- | --- |
| Ethereum | $37.5B | $158B | $118M over the past year; $5.3M in May 2026, 0.3% of its peak | 1,701x |
| Tron | $4.3B | $90.1B | $444M annualised; $30M to $75M a month for several years | 67x |
| Solana | $4.6B | $15.8B | Peaked at $121M a month in January 2025, at the height of memecoin trading | 1,078x |
| Hyperliquid | $1.5B | $6.3B | Largest of the four; peaked at $119M in August 2025, now $30M to $50M a month | 16x |

Source: Kaiko and DefiLlama data in Castle Labs and Kaiko Research, The Verticalisation Thesis (July 2026)

## Charts

- Chain fees by network, 2021 to 2025 (PDF page 11): On a log scale, Solana is the only network whose fees held up in 2025. Ethereum, Arbitrum and Avalanche all sit far below their peaks.
- Chain fees vs application fees, 30 days to June 2026 (PDF page 12): On every network shown, the apps earn far more than the chain. In 2021 it was the other way round: Ethereum's chain fees were 1.94 times its application fees.
- Hyperliquid weekly revenue (PDF page 19): Weekly revenue ranges from $10 million to $30 million. Perp fees are about 88% of gross revenue, builder-code distribution about 9% and spot fees about 2%.
- Hyperliquid revenue by source: perp DEX vs chain (PDF page 19): HyperEVM gas is a rounding error next to the exchange: 1.2% of Hyperliquid's revenue on average and about 2% at its peak.
- Hyperliquid monthly protocol fees, December 2024 to July 2026 (PDF page 24): Over $1 billion in fees in the last 12 months, which puts Hyperliquid among the largest fee earners in crypto after Tether and Circle.
- HIP-3 crude oil (xyz:CL) weekend volume (PDF page 26): Volume on TradeXYZ's crude oil perp jumped after the first strike on Iran on 28 February 2026, when Hyperliquid was the only venue trading oil with active price discovery. HIP-3 has added about $24 million to Hyperliquid's revenue.
- Arbitrum Timeboost revenue (PDF page 20): Timeboost has made about $7.5 million since April 2025, roughly half of the $13.2 million Arbitrum earned as a chain over the past year. Arbitrum's daily revenue still fell about 40% over the year.
- Monthly revenue of exchange chains (PDF page 31): Base is one of only two major chains whose revenue grew over the past year, up 26% to about $182K a day. Mantle and Ink barely register.
- Plasma TVL vs XPL price (PDF page 36): Plasma's TVL peaked at $10 billion around launch and fell to $1.78 billion as the XPL incentives lost value. The chain earned $3.7K in fees in June, 95% below its peak.
- Monthly revenue: Ethereum, Hyperliquid, Solana, Tron (PDF page 42): The four chains earned $1.64 billion in November 2021, almost all of it on Ethereum. In 2026 they average $80 million a month, and Ethereum earned $5.3 million in May 2026, 0.3% of its peak.
- TVL per chain (PDF page 44): The four chains hold $48 billion in TVL, $37.5 billion of it on Ethereum, which earned $118 million over the past year. Hyperliquid, the biggest earner, has the smallest TVL at $1.5 billion.
- Stablecoin market cap per chain (PDF page 45): The four chains hold $270 billion in stablecoins, 92% of it on Ethereum ($158B) and Tron ($90.1B). The chains that settle the most stablecoin flow earn the most: Tron's transfer fees bring in $444 million a year.
- Price-to-sales ratio per chain, 12 June 2026 (PDF page 47): Hyperliquid trades at 16x sales and Tron at 67x. Solana at 1,078x and Ethereum at 1,701x only make sense if the market prices them as money rather than as claims on cash flow.

## Questions

### What is blockchain verticalisation?

A chain growing by owning one high-value product or revenue stream instead of renting blockspace to many outside apps. A horizontal chain earns gas on whatever apps it attracts. A vertical chain is the app, or is tightly tied to one, so it keeps a much bigger share of the activity it enables. Hyperliquid, which runs its own perp DEX, is the clearest example.

### Why are blockchain fees falling?

Blockspace became a commodity. Competing L1s, L2s and blockspace providers are interchangeable for most uses, the race for cheaper transactions pushed fees down, and the Dencun upgrade in 2024 moved rollup data into near-free blob space. Ethereum's chain fees fell from $9.91 billion in 2021 to $523 million in 2025, a 94.7% drop.

### How does Hyperliquid make money?

Mostly from its own perp DEX, which earned $881 million over the past year against $10.4 million from HyperEVM gas. It also takes 50% of HIP-3 market revenue (about $24 million since launch), earns from builder codes and priority fees (about $4 million since April 2026), and receives 90% of the reserve income on USDC used on the platform, worth an extra $130 million to $150 million a year. Most fees go to HYPE buybacks.

### What is HIP-3 on Hyperliquid?

HIP-3 lets anyone deploy their own perp markets on Hyperliquid by staking at least 500,000 HYPE, in exchange for sharing 50% of the revenue with the protocol. TradeXYZ used it to list perps on the S&P 500, TSLA, NVDA and crude oil, and its markets grew to over 30% of Hyperliquid's open interest, peaking near $3 billion. HIP-4 applies the same model to outcome markets with a 1 million HYPE stake.

### What is Arbitrum Timeboost and how much has it made?

Timeboost is an auction for transaction priority that the Arbitrum DAO introduced in April 2025. It has generated about $7.5 million in fees, roughly half of the $13.2 million Arbitrum earned as a chain over the past year. Arbitrum's daily revenue still fell about 40% over the year, so we see Timeboost as a bolt-on that cannot offset cheaper blockspace on its own.

### Why do exchanges like Coinbase and Binance run their own chains?

To own onchain distribution, not to sell blockspace. A chain lets the exchange keep the DeFi revenue its users generate and settle its own balance-sheet products. Base earned $64.0 million over the past year and Coinbase keeps all of it; BSC processes 18.7 million transactions a day at about $0.002 each to keep BNB useful. Each chain's results track its parent's exchange volume.

### Are most blockchains overvalued?

On fee income, most are. As of 12 June 2026, Hyperliquid traded at 16 times sales and Tron at 67 times, while Solana traded at 1,078 times and Ethereum at 1,701 times. Those last two only make sense if the market values ETH and SOL as money rather than as claims on cash flow. Because HYPE buybacks tie the token to revenue, Hyperliquid's valuation is the most defensible of the group.

## Method

Castle and Kaiko compare chain fees, application fees, TVL, stablecoin balances and product-level revenue across established and new networks. The report uses Hyperliquid as the main verticalisation case study, then tests the thesis against exchange chains, L2s and purpose-built networks.

## Sources

- [Kaiko Research](https://www.kaiko.com/products/instantly-access-kaiko-crypto-and-blockchain-research-for-free)
- [Hyperscreener HIP-3 overview](https://hyperscreener.asxn.xyz/hip3markets/overview)
- [Hyperscreener revenue breakdown](https://hyperscreener.asxn.xyz/rev-fee-breakdown)
- [Flowscan builder-code data](https://www.flowscan.xyz/builders?range=all)
- [Arbitrum Timeboost dashboard](https://dune.com/entropy_advisors/arbitrum-timeboost)