Token holder returns reach $1.9B in Q3 after cuts – 1kx
1kx reports net value returned to token holders hit $1.9 billion in Q3 2025 after applications cut token incentive programs.
Venture firm 1kx found net value distributions to token holders – buybacks, burns and accruals minus emissions such as validator rewards – reached $1.9 billion in Q3 2025. The firm derived the figure from an analysis of more than 1,200 protocols covering 2020 through Q3 2025 and says the level is roughly on par with the fee-driven peak of the second half of 2021.
The report attributed the surge mainly to application-layer protocols sharply reducing token incentive programs. The report wrote that "Applications drive most of the distributed value, driven by incentive reductions," and noted top applications cut token incentives from $2.8 billion in H2 2023 to less than $0.1 billion in H1 2025, increasing net returns to holders.
The change is uneven across the ecosystem. Many newer networks, including several layer-1 blockchains, continue to emit more in token incentives than they return, producing net-zero distributions for holders. The report highlighted LooksRare as an example: the exchange generated substantial early fees while simultaneously issuing equivalent token rewards, and volumes declined after incentive programs ended.
1kx estimated the broader crypto economy at about $56 billion for the first half of 2025. Users paid roughly $9.7 billion in onchain fees over that period, a 41% year-over-year increase. Offchain exchange and service fees were about $23.5 billion, and other income, which includes block rewards and stablecoin issuer yield, contributed about $23.1 billion.
Fee generation has concentrated around applications rather than base chains. DeFi and finance protocols accounted for the majority of onchain fee income in H1 2025, and 1kx reported that 71 protocols have exceeded $100 million in onchain annual recurring revenue, with 32 reaching that level within a year of launch.
The report projected that as application incentive spending falls and onchain infrastructure costs remain lower, application fee income and value distributions to token holders are likely to continue increasing, while some newer protocols will need to adjust incentives and revenue models before they return net value.
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