Massacre! Out of 17,000 tokens, only 50 can make money, institutions are using our infrastructure, abandoning our assets.

The start of the crypto market in 2026 is difficult. Most asset prices are declining, and $BTC has been continuously retracing since reaching a historic high six months ago. The market lacks positive news, ETF funds are flowing out, venture capital is becoming cautious, and related companies are shutting down. Opportunities seem exhausted.

However, a major turning point is happening: tokens unrelated to protocol revenue will plummet sharply, and projects without income support will struggle to survive. This land is shifting from a “gambling casino” to a “value investment land.” The October liquidation event and subsequent macro changes, such as gold outperforming $BTC, are prompting a reevaluation of the investment value of crypto assets.

The crypto space has gone through several phases: early technological exploration, ICO frenzy, regulatory vacuum, the collapse of $LUNA and FTX, and now the era of institutional gradual entry. For a long time, the market followed a “extractive logic,” with speculation being the norm. The success of one-click token issuance products like pumpdotfun confirms the speculative bubble nature driven by new users chasing quick riches.

Extractive operations can be divided into three categories: low-investment, low-yield Memecoins; high-investment, high-fraud, and gradual Rug Pulls; and low-investment, high-yield celebrity tokens. Memecoin issuance has extremely low barriers; its profit core is “selling and leaving before others.” On the other end are projects that overpromise and then commit fraud. Most token generation events last year ended with significant losses for holders, due to issues like flawed tokenomics and overestimated issuance valuations.

In the past, crypto projects focused on building cutting-edge technology but neglected product-market fit. But in 2026, as institutions migrate on-chain, the extractive logic begins to recede. Institutions want to leverage the infrastructure we build, but with a key premise: they have no intention of engaging with tokens issued solely for building these technologies. They prefer the code and infrastructure itself.

The New York Stock Exchange announced plans to support 24/7 trading using blockchain. Robinhood is testing a Layer 2 built on Arbitrum technology stack, aiming to tokenize stocks and ETFs. BlackRock’s BUIDL and Franklin D. Roosevelt’s Benji are high-quality on-chain RWA products. These developments address the limitations of traditional market trading hours and enable real-time settlement.

RWA (Real-World Asset) scale is expected to reach trillions of dollars in the coming years. Private credit, public stocks, and short-term US Treasury tokenization products are continuously growing on-chain. Users can leverage platforms like Hyperliquid and Ostium to trade commodities and stocks with leverage. All parties are converging on the chain because this trajectory can push finance to new heights.

As institutions and retail users operate on the same track, the dream of fully decentralized finance is becoming reality, bringing increased transparency, faster settlement, zero latency, and stronger capital control. Applications with a solid foundation will continue to thrive. Lending protocols like Morpho and Aave have gained advantages by weathering severe retracements. Protocols like Hyperliquid are becoming some of the deepest sources of on-chain liquidity.

Oracle networks, cross-chain interoperability stacks, L2/L1 scaling solutions, and token standards are the keys to the future. When institutions fully commit to on-chain, there are no foolproof assets, but protocols with a solid track record will not disappear and will find pathways for both institutional and retail investors.

CoinGecko lists over 17,000 tokens. DeFiLlama tracks about 5,700 protocols; if filtering for those with over $100k in revenue in the past 30 days, only about 200 remain, accounting for 3.5%. The pool of investable assets in crypto is much smaller than generally expected.

Focusing on holder income—that is, any form of returns distributed to holders—paints an even more severe picture. In the past 30 days, only about 50 protocols had holder income exceeding $100k, less than 1% of all protocols tracked by DeFiLlama. Even raising the threshold to $100k per month is reasonable, given that most tokens have market caps of hundreds of millions or even billions of dollars.

The root cause of low holder income is misaligned incentives and tokenomics issues. Projects involve both labs and DAO/token holders. Labs raise funds through equity sales and token issuance. Tokens do not legally represent the business nor grant holders actual rights to company profits. Over the past year, this situation has begun to change, with the market reducing bets on speculation and focusing more on actual revenue-generating capacity.

When analyzing tokens, several key indicators should be considered. We examined protocols with the highest revenue in the past 30 days, including $HYPE, $PUMP, $TRON, $SKY, $JUP, $AAVE, and $AERO.

The price-to-sales ratio (market cap divided by annualized revenue) measures how much the market pays for each dollar of revenue. Using the US top public stocks as a reference, we set a high valuation threshold at 20. Aside from $TRON, which is far above others, most protocols are at or below this threshold. Another consideration is revenue level: top protocols have an average annualized revenue of about $250 million. Only $PUMP, $HYPE, and $TRON exceed this threshold, collectively accounting for about 80% of the total revenue of these protocols.

Token holder income depends on protocol revenue and the share actually returned to holders via buybacks, token burns, and staking rewards. This metric is more important than protocol revenue itself because it determines token value accumulation. Data shows most protocols allocate most or all revenue toward token value accumulation.

To understand value accumulation, we compared the relative performance of these tokens since the October liquidation event. $TRON and $HYPE, especially $SKY, showed abnormal volatility. $TRON moved sideways, while $HYPE diverged in late January. This indicates that buybacks alone are insufficient to support token value; overall market retracements, unlock schedules, sector narratives, and overall market sentiment also play roles.

Comparing $PUMP and $HYPE: during periods of active buybacks (annualized holder income of about $6.6 billion for $HYPE and $3.8 billion for $PUMP), $HYPE performed better, influenced by overall protocol sentiment and market pricing based on future supply shocks and unlock expectations.

Tokenomics design determines recent supply pressure and value accumulation methods. We analyzed a set of fixed-supply tokens’ unlock rates. $PUMP unlocks the fastest, $HYPE the slowest. Slower unlock schedules are generally preferable, reducing sudden supply shocks. Most tokens like $AAVE and $SKY have largely unlocked supplies; $JUP’s long-term unlock schedule is governed by DAO governance. Unlocked tokens can be divided into investor, team, and community portions, each requiring individual analysis to understand selling pressure.

The “Lindy Effect” states that the longer something exists, the more likely it is to continue existing. Last year, crypto protocols generated about $16 billion in revenue, with a significant concentration at the top. The top ten protocols account for 80% of net revenue, with the top three accounting for 64%, and Tether alone accounting for 44%. Not all protocols issue tokens; for example, the second-largest revenue belongs to Circle, which is listed on the NYSE. Among the top ten, only three have tokens.

In most crypto subfields, the top two protocols dominate market share. In stablecoins, Tether (USDT) and Circle (USDC) together hold 84% of the market. In lending, the top two protocols by TVL ($AAVE and Morpho) account for 64%. Similar patterns are seen in prediction markets, yield, and liquidity staking.

Another reason for the Lindy Effect’s importance is the frequency of industry hacking incidents. This year alone, losses from smart contract exploits have exceeded $130 million. Over time, trusting new protocols and entrusting funds becomes increasingly difficult. The duration of contracts and the history of protocol existence are crucial, as systems that have stood the test of time are more trustworthy. Even if a system doesn’t perform as expected, such as recent $AAVE’s CAPO oracle false alarm, users are often refunded because the protocol’s treasury has sufficient capacity.

Conversely, innovation is equally vital. Market leaders continue to innovate—for example, Morpho guides institutions into on-chain finance through its vault architecture, $AAVE introduces Spokes in its v4 upgrade to achieve similar functions, and Horizon instances enable institutions to borrow against tokenized RWAs. The next wave in crypto will be driven by institutions and proxy finance; protocols that excel in both will see the greatest growth.

Some envision a future where machine-to-machine commerce targets a 2-3% fee rate on bank card transactions. agents are seeking faster, cheaper alternatives, mostly using $SOL or Ethereum L2 with stablecoins. This marks the beginning of proxy finance and broader blockchain adoption.

Many protocols are integrating AI agents to streamline user workflows and eliminate UX bottlenecks. These efforts fall under the convergence of decentralized finance and artificial intelligence. By 2028, most crypto transactions may be executed by agents, who seek optimal yields based on user risk preferences. For non-crypto agents, blockchain’s low cost, high efficiency, and verifiability make it the preferred platform for executing trades.

Block space costs decrease over time, and transaction fees are significantly reduced. Crypto becomes less complex. You can instruct AI agents and fund them to seek the best returns. Crypto and blockchain will become mainstream and widely adopted. To improve overall capital efficiency, agents will concentrate funds in a few venues capable of delivering the best yields. Most public chains and protocols will be phased out due to lack of usage.

The value of tokens you hold may decline sharply. Only a few tokens that truly generate revenue and continuously accumulate value through income will rise against the trend. All other tokens’ values will rotate among a handful of high-performing, practically useful tokens. The total market cap of crypto may increase, but most tokens will not benefit from institutional adoption and proxy finance growth. The crypto dream can be realized, but the token-related part of that dream may not unfold as most expect.

Regardless of whether the above visions come true, protocols with positive cash flow will endure, and their tokens will prosper. For years, crypto protocols have focused on technical challenges, never truly on product-market fit—that’s the greatest pricing risk the market faces over time. With most tokens declining year after year, their all-time highs are long gone, and the era of transformation is becoming increasingly clear.

The rise of certain tokens in 2026 reflects the importance of revenue data and token-first thinking, as investors shift from speculation to value investing. Bad actors in crypto have always benefited from the narrative of extraction, while most participants exit with negative returns—this is unhealthy. As institutions pour in, this understanding deepens, because they are less interested in our assets and more focused on the infrastructure we’ve built and tested over the years. As institutional and AI-powered crypto infrastructure further develops, these trends are likely to strengthen.

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