Governance tokens have gained prominence with the rise of DeFi, granting holders decision-making power over projects. While active participation can drive project success and token appreciation, current governance engagement remains low. For instance, Compound—managing billions in assets—sees fewer than 20 addresses voting on key proposals (e.g., Proposals 101–104).
Token holders often anticipate dividends, though regulatory constraints initially limit this. Revenue distribution varies across protocols:
- MakerDAO uses profits to buy back and burn MKR.
- Synthetix distributes stablecoins directly to SNX stakers.
- Uniswap allocates fees entirely to liquidity providers.
This article explores top DeFi protocols’ revenue streams, sources, and allocation models.
Uniswap: Dominating 70% DEX Market Share Without UNI Value Capture
As a leading DEX, Uniswap generates ~$9.69M weekly revenue from trading fees (0.3% in V2; customizable in V3). Ethereum-based V3 contributes ~$1.1M daily, followed by V2 at ~$200K.
Key Issues:
- Centralization concerns due to Uniswap Labs’ influence.
- UNI tokens capture no protocol value—fees go entirely to LPs.
- Proposals like activating a "fee switch" for treasury funds remain under discussion.
Core Keywords: Uniswap, DEX, liquidity providers, fee switch
Convex Finance: 6% Revenue Shared with Locked CVX Holders
A yield aggregator dominating Curve Finance pools, Convex boasts $4.35B TVL versus Yearn’s $530M. Its $5.5M weekly revenue stems from mining rewards.
Revenue Allocation:
- 10% to cvxCRV stakers.
- 5% to CVX stakers/lockers.
- 1% operational fee.
Summary: 6% of income benefits CVX stakeholders.
Core Keywords: Convex Finance, yield aggregation, Curve, CVX
Lido Finance: 5% Revenue to DAO Treasury
The largest liquid staking protocol ($5.36B TVL), Lido earns $3.8M weekly from staking rewards.
Distribution:
- 90% to users.
- 5% to node operators.
- 5% to Lido DAO.
Core Keywords: Lido, liquid staking, Ethereum, DAO
dYdX: Zero Revenue Sharing (For Now)
This perpetual contracts platform earns $3.6M weekly (~$822M daily volume). While 50% of DYDX tokens are community-allocated, all fees currently go to centralized entities. Plans to decentralize fee distribution await v4.
Core Keywords: dYdX, perpetual contracts, decentralization
Synthetix: 100% Revenue to SNX Stakers
Generating $2.68M weekly from synthetic asset fees, Synthetix distributes all income as sUSD to stakers—plus SNX inflation rewards (locked for 1 year).
Core Keywords: Synthetix, synthetic assets, SNX, sUSD
ENS: No User Profit Sharing
Ethereum Name Service’s $2.23M weekly revenue comes from domain registrations/renewals ($5/year). Despite DAO treasury funding, ENS shares no profits with token holders.
Core Keywords: ENS, Ethereum domains, DAO
Conclusion
DeFi protocols fall into two categories:
- Middlemen Services (e.g., Uniswap, Aave): Revenue primarily goes to users (LPs/stakers).
- Full-Service Providers (e.g., Synthetix, dYdX): Can fully capture value but vary in profit-sharing based on decentralization levels.
👉 Dive deeper into DeFi governance trends
FAQ
Q: Why doesn’t Uniswap share fees with UNI holders?
A: Governance decisions prioritize LP incentives; proposals to shift this are pending.
Q: How does Convex outperform Yearn?
A: Higher CRV rewards and additional CVX emissions attract more capital.
Q: When will dYdX decentralize fee distribution?
A: Targeted for v4, but no confirmed timeline exists.
Q: What’s the risk in Synthetix’s model?
A: SNX stakers bear synthetic asset collateral risks but earn all fees.