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<ul>
<li><p>Looping loans have become a core strategy in DeFi, fueling the growth of lending infrastructure platforms while phasing out protocols unable to keep pace with market trends.</p>
</li><li><p>Euler Finance has surged on both fundamentals and token price thanks to its EVK framework, which lets anyone deploy lending vaults. Looking ahead, rolling out RWA (real-world asset) lending could be another major driver.</p>
</li><li><p>Aave saw steady growth in the first half of the year, driven by the launch of USDe and PT-USDe, the activation of the Umbrella mechanism, and the cross-chain issuance of its GHO stablecoin.</p>
</li><li><p>Lido Finance’s revenue model projects strength on the surface, and the sector’s ceiling could be lifted by increasing institutional demand from Wall Street for ETH staking yields.</p>
</li><li><p>Jito began demonstrating impressive momentum in Q2 2025, leveraging its MEV infrastructure, leading position with jitoSOL, and the expected growth of restaking applications built on its platform.</p>
</li></ul>
<h2 id="h2-5YCf6LS35Y2P6K6u55qE6LS555So5p2l5rqQ77yf">How Do Lending Protocols Generate Revenue?</h2><p><img src="https://s3.ap-northeast-1.amazonaws.com/gimg.gateimg.com/learn/9921c096922eddcd73a0c56957bee39abedb007c.jpg" alt=""></p>
<p>Most lending protocol revenue comes from the total interest paid across all borrowing positions—whether open, closed, or liquidated. This interest income is divided proportionally between liquidity providers and the protocol’s DAO treasury.</p>
<p>When a borrowing position breaches its preset loan-to-value (LTV) limit, liquidators can step in to execute the liquidation. Each asset class carries a specific liquidation penalty, and the protocol acquires collateral, which is then auctioned through mechanisms like Fluid’s “liquidity liquidation.”</p>
<h2 id="h2-5LuOIEFhdmUg55qE6LSi5Yqh5oql6KGo6IO955yL5Yiw5LuA5LmI77yf">What Does Aave’s Financial Report Reveal?</h2><p><img src="https://s3.ap-northeast-1.amazonaws.com/gimg.gateimg.com/learn/8167815f7620e2b8c5da042f23fd2782c4ce5f06.jpg" alt=""></p>
<p>The <a href="https://github.com/aave" title="@aave" class="at-link">@aave</a> protocol peaked in fees and revenue at the outset of the year, followed by a gradual decline alongside broader market corrections. In my view, the rebound after May is largely attributable to the rollout of USDe and PT-USDe, which fueled this cycle’s robust looping demand, powered mainly by Pendle’s PT assets and Ethena’s stablecoin.</p>
<p>At PT-sUSDe’s debut, nearly $100 million in supply was immediately deposited into the Aave market.</p>
<p>The Umbrella mechanism, activated in June, has since attracted approximately $300 million in funds for deposit insurance. Meanwhile, Aave’s native GHO stablecoin has seen cross-chain issuance continue to rise (with ~$200 million now in circulation), and its cross-chain use cases are expanding steadily.</p>
<p>Thanks to these tailwinds, Aave achieved a major breakthrough in July:</p>
<p>- Net deposits topped $4.8 billion, ranking first across all protocols.</p>
<ul>
<li><p>June protocol net profit soared nearly fivefold month-over-month, hitting around $8 million.</p>
</li><li><p>By price-to-sales and price-to-earnings ratios, Aave is still undervalued relative to its sector peers.</p>
</li></ul>
<p>With this growth trajectory and mature product offering, Aave is poised to attract more traditional institutions as a preferred DeFi platform. Across fee revenue, TVL, and profitability, Aave is positioned to reach new highs and reinforce its leadership in the DeFi sector.</p>
<h2 id="h2-5LuOIENvbXBvdW5kIOeahOi0ouWKoeaKpeihqOiDveeci+WIsOihsOiQveeahOW+geWFhu+8nw==">Are Compound’s Financial Statements Showing Early Signs of Decline?</h2><p><a href="https://github.com/compoundfinance" title="@compoundfinance" class="at-link">@compoundfinance</a> is an established lending protocol but lacks Aave’s flexibility regarding asset support and market responsiveness. While Aave keeps up with trends by supporting various restaked and staked ETH (rETH, ETHx, cbETH), staked BTC (lBTC, tBTC), and Pendle’s PT assets, Compound does not support any of these assets.</p>
<p><img src="https://s3.ap-northeast-1.amazonaws.com/gimg.gateimg.com/learn/e9c321e9321e61fcc6c40f100a3e385cf922ca4f.jpg" alt=""></p>
<p>This limited asset support means Compound’s lending strategies are basic and lack looping and composability, resulting in lower user engagement and capital efficiency. Financially, Compound has posted ongoing losses from early 2025 to present, with net protocol earnings between –$110,000 and –$250,000, while its token price has dropped about 40%.</p>
<p>Looping strategies now underpin DeFi, with new protocols such as <a href="https://github.com/EulerFinance" title="@EulerFinance" class="at-link">@EulerFinance</a>, <a href="https://github.com/MorphoLabs" title="@MorphoLabs" class="at-link">@MorphoLabs</a>, and <a href="https://github.com/SiloFinance" title="@SiloFinance" class="at-link">@SiloFinance</a> offering sophisticated leverage and composability. Compound’s failure to address these new use cases is causing it to lose a core segment of the mainstream DeFi lending market.</p>
<p>Compound’s TVL has grown just 0.46% over six months, protocol revenue hasn’t meaningfully improved, and the gap with <a href="https://github.com/Aave" title="@Aave" class="at-link">@Aave</a> keeps widening. This trend highlights Compound’s lag in product upgrades and ecosystem integration. Without faster expansion of supported assets and features, Compound risks further marginalization in DeFi lending.</p>
<h2 id="h2-RXVsZXIg55qEIFRWTC8g5pS25YWlIC8g5biB5Lu36YO95pyJ5pi+6JGX5aKe5bmF">Euler’s TVL, Revenue, and Token Price Show Dramatic Growth</h2><p><a href="https://github.com/eulerfinance" title="@eulerfinance" class="at-link">@eulerfinance</a> stands out for letting any developer or protocol use its EVK (Euler Vault Kit) framework to create custom vaults within the Euler credit ecosystem. This fits perfectly with mainstream looping strategies, enabling lending for long-tail assets and greatly increasing project revenue potential and user engagement.</p>
<p><img src="https://s3.ap-northeast-1.amazonaws.com/gimg.gateimg.com/learn/ee858ce1544500e076a6361676004666a020f1ff.jpg" alt=""></p>
<p>After listing PT-USDe—the market’s largest looping asset—in April, Euler saw monthly protocol revenue and TVL surge about 72% and 42%, respectively.</p>
<p>For the first half of the year, Euler was among the top protocols for TVL and active lending growth, with TVL up 800% and active lending up a staggering 1,160%—a breakout performance.</p>
<p>The project has aggressively partnered with projects offering airdrops and incentive programs (for example, <a href="https://github.com/TurtleDotXYZ" title="@TurtleDotXYZ" class="at-link">@TurtleDotXYZ</a> and <a href="https://github.com/Merkl_XYZ" title="@Merkl_XYZ" class="at-link">@Merkl_XYZ</a>), riding the wave of incentive points and airdrop tokenomics to further boost deposit and borrowing through user rewards.</p>
<p>This strategy got results: protocol fees rose from $100,000 to $450,000, and the token price surged roughly 200% in the same period.</p>
<p>As a modular, composable, and permissionless credit infrastructure, EVK’s potential is only beginning to be realized. If the team can successfully bring another hot sector—real-world assets (RWA)—into the Euler lending framework, TVL growth could become exponential.</p>
<h2 id="h2-Rmx1aWQg5oqA5pyv5aOB5Z6S5bim5p2l5Z+65pys6Z2i5aKe6ZW/5LmQ6KeC">Fluid’s Technical Moat Drives Optimistic Fundamentals</h2><p><a href="https://github.com/0xFluid" title="@0xFluid</a> is a new and fast-rising lending protocol—second only to Euler in growth—with TVL up about 53% year-to-date, now nearly on par with Euler. Its rapid ascent stems from novel lending mechanisms and exceptional capital efficiency.</p>
<p><img src="https://s3.ap-northeast-1.amazonaws.com/gimg.gateimg.com/learn/f58e0f6783c135ee14507caa54fd167eeb6ea157.jpg" alt=""></p>
<p>Its biggest technical edge is “smart collateral” and “smart debt.” Users can directly collateralize LP tokens (like ETH/wstETH, USDT/USDC), and the borrowed debt is issued as a self-adjusting LP token pair rather than a single asset. After borrowing, debt is deployed to liquidity markets, where it can generate yield for users, effectively reducing borrowing costs.</p>
<p>This significantly lowers borrower interest expenses, with Fluid’s lending rates generally undercutting traditional models. Fluid’s average maximum LTV is higher than Aave’s, while its liquidation penalty is just 3% (Aave’s is 5%), offering capital efficiency similar to Aave’s e-mode.</p>
<p>Fluid also comes with “one-click looping” support built into the frontend, making it easy to use ETH as collateral, borrow stablecoins, and then re-collateralize—ideal for large depositors seeking steady returns.</p>
<p>Aave was among Fluid’s early backers, investing $4 million in FUID tokens and helping onboard Aave’s GHO stablecoin into Fluid pools—a strong vote of confidence in Fluid’s model and its competitive growth potential.</p>
<p>Protocol revenue climbed modestly from $790,000 to $930,000 in the first half of the year, reflecting healthy finances. The token price dipped, largely due to weak tokenomics and no clear buyback program, despite strong protocol performance. Enhancing value capture remains a key opportunity.</p>
<h2 id="h2-6KKr6KqJ5Li6IEVUSCBCZXRhIOeahCBMaWRvIOi0ouWKoeaKpeihqOihqOeOsOWmguS9lT8=">How Does “ETH Beta” Lido Stack Up Financially?</h2><p><a href="https://github.com/LidoFinance" title="@LidoFinance</a> currently boasts about 8.8 million ETH staked, worth roughly $33 billion—about 25% of all staked ETH and 7% of total network ETH. It’s the sector’s largest ETH “holding” protocol (with sharplink at ~440,000 ETH, bitmine at ~833,000 ETH).</p>
<p>As the “ETH staking leader,” Lido is widely seen as ETH Beta, but the project has faced a fundamental challenge since launch: in its five-year history, it has never turned a profit for the core team.</p>
<p><img src="https://s3.ap-northeast-1.amazonaws.com/gimg.gateimg.com/learn/291578d2bf43398e3b5b6640e80283728e18ebb4.jpg" alt=""></p>
<p>To understand why, we need to break down the financial details.</p>
<p>Staking rewards distributed to holders: Lido simply aggregates ETH from retail users, sets up validator nodes, and then pays out staking rewards on a pro-rata basis.</p>
<p>In short, Lido doesn’t keep much of the staking reward itself. For example, in 2024, Lido earned $1.034 billion in staking rewards, of which $931 million was paid out to stakers—matching its 90% payout to stakers, 5% to node operators, and 5% to the DAO treasury.</p>
<ul>
<li>Cost of Revenue: Node operator rewards and slashing penalties, with slashing costs covered by Lido.</li><li>Liquidity Expense: Fees paid to provide liquidity to LPs.</li><li>Operational Expense: The LEGO Grant and TRP (Token Rewards Plan) are two key funding initiatives—LEGO backs community and developer proposals, and TRP rewards core DAO contributors.</li></ul>
<p>Lido has made progress on the cost side, cutting liquidity expenses to ~$8.5 million in 2025 and trimming operating costs by about 20% annually since 2023. With revenue surging 88% in 2023 and 67% in 2024, and expenses declining, net losses fell sharply (–66%/–93%), dropping to just ~$2 million this year.</p>
<h3 id="h3-TGlkbyDnmoTmnKrmnaXotbDlir/vvJ8=">Lido’s Outlook: What’s Next?</h3><p>Calling the earnings of an “ETH staking leader” disappointing may be too harsh, but it’s clear costs are falling every year. So why the persistent losses? The 10% protocol fee is industry standard and unlikely to change.</p>
<p>The only real variable is the sector’s size—total ETH staked. The ETH staking rate remains lower compared to Solana, Sui, Avax, and ADA. The biggest potential catalyst may be institutional demand for ETH staking, with firms like BlackRock seeking to add staking functionality to their iShares ETH ETF.</p>
<p>If institutional adoption arrives, ETH staking could become a new source of revenue for these players, generating yield from their ETH holdings. If the largest platform is Lido (or potentially Coinbase, or institution-backed projects like Puffer), the sector’s growth ceiling opens further. However, as the staking rate climbs, the protocol reward rate will be squeezed.</p>
<p>Some in the DAO have proposed launching tokenholder income sharing to boost LDO’s utility and long-term value. But this would further cut protocol revenue, potentially harming future growth. A “surplus-sharing” program, as proposed by others, may be a more sustainable solution.</p>
<h2 id="h2-Sml0byDni6znibnnmoTmlLblhaXmqKHlvI8gLSBNRVYg5bCP6LS5">Jito’s Distinct Revenue Model: MEV Tips</h2><p><a href="https://github.com/jito_sol" title="@jito_sol</a> leads the SOL staking sector, with headline financials much stronger than those of Lido. jitoSOL currently stands at ~16 million SOL, about 23% of all staked SOL.</p>
<p>SOL’s staking rate is already among the highest for any Layer 1 (67.18%). Notably, since October of last year, Jito has introduced foundational liquid restaking infrastructure, which enabled the growth of new restaking services and VRT (Vault Receipt Token) providers, including <a href="https://github.com/fragmetric140" title="@fragmetric140</a> and <a href="https://github.com/RenzoProtocol" title="@RenzoProtocol</a>.</p>
<p>Liquid restaking is Jito’s core growth engine. Currently, only about 1.1 million SOL is restaked—just 6% of jitoSOL and 2% of all staked SOL. For context, ETH’s restake/stake ratio stands at 26%, so there’s plenty of room for SOL and for Jito to capture share.</p>
<p>Let’s break down Jito’s key income and expenses:</p>
<p><img src="https://s3.ap-northeast-1.amazonaws.com/gimg.gateimg.com/learn/fea608192b1a6062950bda77028e4347c60af5f9.png" alt=""></p>
<ul>
<li>Bug Bounties: Paid to white-hat hackers who find and responsibly report security vulnerabilities.</li><li>Liquidity Mining Incentives: Rewards for providing JitoSOL or VRT liquidity on DeFi platforms like Orca and Jupiter.</li><li>Restaking Grants: Funding for developers in the Node Consensus Network (NCN) ecosystem to build, deploy, and maintain restaking infrastructure.</li><li>Interceptor Fees: Anti-arbitrage mechanism freezing JitoSOL for 10 hours if held by certain external protocol users; an early withdrawal incurs a 10% fee.</li><li>JitoSOL Fees: 4% management fee on staking and MEV rewards (after validator commissions), or about 0.3% per annum on user SOL (7% APY x 4%).</li><li>Tip Routers: MEV tips accumulated each epoch are distributed via the TipRouter, with 3% of MEV transaction tips taken as protocol fees—2.7% to the DAO treasury, 0.15% to JTO stakers, and 0.15% to jitoSOL holders.</li></ul>
<h3 id="h3-5omA5Lul4oCm5ZyoIGppdG8g55qE6LSi5Yqh5oql6KGo6KeC5a+f5Yiw5Z+66YeR5Lya55qE5LuA5LmI562W55Wl77yf">What Strategies Stand Out in Jito’s Financial Statements?</h3><p>Liquidity incentives have been Jito’s biggest expense, with costs jumping in Q2 2024 and remaining at $1–$3 million per quarter since then.</p>
<p>This results mainly from JIP-2 and JIP-13, which allocate $JTO for incentives in DeFi applications (chiefly on @KaminoFinance). Since Q2 2024, jitoSOL revenues have clearly risen, likely due to improved DeFi looping—driving more demand for jitoSOL and, in turn, greater staking income.</p>
<p>From 2025, the Foundation plans to allocate another 14 million JTO (~$24 million) to support restaking and related DeFi activities, aiming to boost VRT adoption.</p>
<p>By Q3 2025, some 7.7 million JTO had been distributed as incentives. The impact is clear—quarterly income in 2025 has increased by 36%, 67%, and 23%, outpacing incentive outlays and confirming these are positive-EV investments.</p>
<p>On revenue, jitoSOL fees and Tip Router are Jito’s top sources. Since Q4 2024, propelled by a Solana meme trading frenzy, network volume has spiked and Jito has been the main beneficiary.</p>
<p>At its peak, Jito’s tips made up 41.6%–66% of Solana’s Real Economic Value (REV). Since Q2 2025, Tip Router revenue has exceeded jitoSOL fees, underscoring Jito’s MEV infrastructure moat. Solana traders and arbitrageurs are willing to pay tips for priority—an economic structure rare among public blockchains.</p>
<p>Explosive growth in Solana network activity, leading MEV infrastructure, jitoSOL’s sector dominance, and the rise of restaking applications have together fueled a 57-fold jump in net profit to ~$5 million in Q2 2025. Even without the meme hype of 2024’s “pump.fun” era, a maturing SOL restaking sector could provide Jito’s next major catalyst.</p>
<h3 id="h3-5aOw5piO77ya">Disclaimer:</h3><ol>
<li>This article is republished from [<a href="https://www.techflowpost.com/article/detail_27495.html">TechFlow</a>], copyright held by the original author [<em>chingchalong02</em>]. For republication concerns, please contact the <a href="https://www.gate.com/questionnaire/3967">Gate Learn</a> team for prompt resolution per our process.</li><li>Disclaimer: The views and opinions expressed here are solely those of the author and do not constitute investment advice.</li><li>Other language versions of this article have been translated by the Gate Learn team. Do not reproduce, distribute, or plagiarize any translated content without proper attribution to <a href="http://gate.com/">Gate</a>.</li></ol>

Intermediate

Looping loans have become a core strategy in DeFi, fueling the growth of lending infrastructure platforms while phasing out protocols unable to keep pace with market trends. Euler Finance has surged on both fundamentals and token price thanks to its EVK framework, which lets anyone deploy lending vaults. Looking ahead, rolling out RWA (real-world asset) lending could be another major driver. Aave saw steady growth in the first half of the year, driven by the launch of USDe and PT-USDe, the activation of the Umbrella mechanism, and the cross-chain issuance of its GHO stablecoin. Lido Finance’s revenue model projects strength on the surface, and the sector’s ceiling could be lifted by increasing institutional demand from Wall Street for ETH staking yields. Jito began demonstrating impressive momentum in Q2 2025, leveraging its MEV infrastructure, leading position with jitoSOL, and the expected growth of restaking applications built on its platform. How Do Lending Protocols Generate Revenue?<img src="https://s3.ap-northeast-1.amazonaws.com/gimg.gateimg.com/learn/9921c096922eddcd73a0c56957bee39abedb007c.jpg" alt=""> Most lending protocol revenue comes from the total interest paid across all borrowing positions—whether open, closed, or liquidated. This interest income is divided proportionally between liquidity providers and the protocol’s DAO treasury. When a borrowing position breaches its preset loan-to-value (LTV) limit, liquidators can step in to execute the liquidation. Each asset class carries a specific liquidation penalty, and the protocol acquires collateral, which is then auctioned through mechanisms like Fluid’s “liquidity liquidation.” What Does Aave’s Financial Report Reveal?<img src="https://s3.ap-northeast-1.amazonaws.com/gimg.gateimg.com/learn/8167815f7620e2b8c5da042f23fd2782c4ce5f06.jpg" alt=""> The @aave protocol peaked in fees and revenue at the outset of the year, followed by a gradual decline alongside broader market corrections. In my view, the rebound after May is largely attributable to the rollout of USDe and PT-USDe, which fueled this cycle’s robust looping demand, powered mainly by Pendle’s PT assets and Ethena’s stablecoin. At PT-sUSDe’s debut, nearly $100 million in supply was immediately deposited into the Aave market. The Umbrella mechanism, activated in June, has since attracted approximately $300 million in funds for deposit insurance. Meanwhile, Aave’s native GHO stablecoin has seen cross-chain issuance continue to rise (with ~$200 million now in circulation), and its cross-chain use cases are expanding steadily. Thanks to these tailwinds, Aave achieved a major breakthrough in July: - Net deposits topped $4.8 billion, ranking first across all protocols. June protocol net profit soared nearly fivefold month-over-month, hitting around $8 million. By price-to-sales and price-to-earnings ratios, Aave is still undervalued relative to its sector peers. With this growth trajectory and mature product offering, Aave is poised to attract more traditional institutions as a preferred DeFi platform. Across fee revenue, TVL, and profitability, Aave is positioned to reach new highs and reinforce its leadership in the DeFi sector. Are Compound’s Financial Statements Showing Early Signs of Decline?@compoundfinance is an established lending protocol but lacks Aave’s flexibility regarding asset support and market responsiveness. While Aave keeps up with trends by supporting various restaked and staked ETH (rETH, ETHx, cbETH), staked BTC (lBTC, tBTC), and Pendle’s PT assets, Compound does not support any of these assets. <img src="https://s3.ap-northeast-1.amazonaws.com/gimg.gateimg.com/learn/e9c321e9321e61fcc6c40f100a3e385cf922ca4f.jpg" alt=""> This limited asset support means Compound’s lending strategies are basic and lack looping and composability, resulting in lower user engagement and capital efficiency. Financially, Compound has posted ongoing losses from early 2025 to present, with net protocol earnings between –$110,000 and –$250,000, while its token price has dropped about 40%. Looping strategies now underpin DeFi, with new protocols such as @EulerFinance, @MorphoLabs, and @SiloFinance offering sophisticated leverage and composability. Compound’s failure to address these new use cases is causing it to lose a core segment of the mainstream DeFi lending market. Compound’s TVL has grown just 0.46% over six months, protocol revenue hasn’t meaningfully improved, and the gap with @Aave keeps widening. This trend highlights Compound’s lag in product upgrades and ecosystem integration. Without faster expansion of supported assets and features, Compound risks further marginalization in DeFi lending. Euler’s TVL, Revenue, and Token Price Show Dramatic Growth@eulerfinance stands out for letting any developer or protocol use its EVK (Euler Vault Kit) framework to create custom vaults within the Euler credit ecosystem. This fits perfectly with mainstream looping strategies, enabling lending for long-tail assets and greatly increasing project revenue potential and user engagement. <img src="https://s3.ap-northeast-1.amazonaws.com/gimg.gateimg.com/learn/ee858ce1544500e076a6361676004666a020f1ff.jpg" alt=""> After listing PT-USDe—the market’s largest looping asset—in April, Euler saw monthly protocol revenue and TVL surge about 72% and 42%, respectively. For the first half of the year, Euler was among the top protocols for TVL and active lending growth, with TVL up 800% and active lending up a staggering 1,160%—a breakout performance. The project has aggressively partnered with projects offering airdrops and incentive programs (for example, @TurtleDotXYZ and @Merkl_XYZ), riding the wave of incentive points and airdrop tokenomics to further boost deposit and borrowing through user rewards. This strategy got results: protocol fees rose from $100,000 to $450,000, and the token price surged roughly 200% in the same period. As a modular, composable, and permissionless credit infrastructure, EVK’s potential is only beginning to be realized. If the team can successfully bring another hot sector—real-world assets (RWA)—into the Euler lending framework, TVL growth could become exponential. Fluid’s Technical Moat Drives Optimistic Fundamentalsimg.gateimg.com/learn/f58e0f6783c135ee14507caa54fd167eeb6ea157.jpg" alt=""> Its biggest technical edge is “smart collateral” and “smart debt.” Users can directly collateralize LP tokens (like ETH/wstETH, USDT/USDC), and the borrowed debt is issued as a self-adjusting LP token pair rather than a single asset. After borrowing, debt is deployed to liquidity markets, where it can generate yield for users, effectively reducing borrowing costs. This significantly lowers borrower interest expenses, with Fluid’s lending rates generally undercutting traditional models. Fluid’s average maximum LTV is higher than Aave’s, while its liquidation penalty is just 3% (Aave’s is 5%), offering capital efficiency similar to Aave’s e-mode. Fluid also comes with “one-click looping” support built into the frontend, making it easy to use ETH as collateral, borrow stablecoins, and then re-collateralize—ideal for large depositors seeking steady returns. Aave was among Fluid’s early backers, investing $4 million in FUID tokens and helping onboard Aave’s GHO stablecoin into Fluid pools—a strong vote of confidence in Fluid’s model and its competitive growth potential. Protocol revenue climbed modestly from $790,000 to $930,000 in the first half of the year, reflecting healthy finances. The token price dipped, largely due to weak tokenomics and no clear buyback program, despite strong protocol performance. Enhancing value capture remains a key opportunity. How Does “ETH Beta” Lido Stack Up Financially?img.gateimg.com/learn/291578d2bf43398e3b5b6640e80283728e18ebb4.jpg" alt=""> To understand why, we need to break down the financial details. Staking rewards distributed to holders: Lido simply aggregates ETH from retail users, sets up validator nodes, and then pays out staking rewards on a pro-rata basis. In short, Lido doesn’t keep much of the staking reward itself. For example, in 2024, Lido earned $1.034 billion in staking rewards, of which $931 million was paid out to stakers—matching its 90% payout to stakers, 5% to node operators, and 5% to the DAO treasury. Cost of Revenue: Node operator rewards and slashing penalties, with slashing costs covered by Lido.Liquidity Expense: Fees paid to provide liquidity to LPs.Operational Expense: The LEGO Grant and TRP (Token Rewards Plan) are two key funding initiatives—LEGO backs community and developer proposals, and TRP rewards core DAO contributors. Lido has made progress on the cost side, cutting liquidity expenses to ~$8.5 million in 2025 and trimming operating costs by about 20% annually since 2023. With revenue surging 88% in 2023 and 67% in 2024, and expenses declining, net losses fell sharply (–66%/–93%), dropping to just ~$2 million this year. Lido’s Outlook: What’s Next?Calling the earnings of an “ETH staking leader” disappointing may be too harsh, but it’s clear costs are falling every year. So why the persistent losses? The 10% protocol fee is industry standard and unlikely to change. The only real variable is the sector’s size—total ETH staked. The ETH staking rate remains lower compared to Solana, Sui, Avax, and ADA. The biggest potential catalyst may be institutional demand for ETH staking, with firms like BlackRock seeking to add staking functionality to their iShares ETH ETF. If institutional adoption arrives, ETH staking could become a new source of revenue for these players, generating yield from their ETH holdings. If the largest platform is Lido (or potentially Coinbase, or institution-backed projects like Puffer), the sector’s growth ceiling opens further. However, as the staking rate climbs, the protocol reward rate will be squeezed. Some in the DAO have proposed launching tokenholder income sharing to boost LDO’s utility and long-term value. But this would further cut protocol revenue, potentially harming future growth. A “surplus-sharing” program, as proposed by others, may be a more sustainable solution. Jito’s Distinct Revenue Model: MEV Tipsimg.gateimg.com/learn/fea608192b1a6062950bda77028e4347c60af5f9.png" alt=""> Bug Bounties: Paid to white-hat hackers who find and responsibly report security vulnerabilities.Liquidity Mining Incentives: Rewards for providing JitoSOL or VRT liquidity on DeFi platforms like Orca and Jupiter.Restaking Grants: Funding for developers in the Node Consensus Network (NCN) ecosystem to build, deploy, and maintain restaking infrastructure.Interceptor Fees: Anti-arbitrage mechanism freezing JitoSOL for 10 hours if held by certain external protocol users; an early withdrawal incurs a 10% fee.JitoSOL Fees: 4% management fee on staking and MEV rewards (after validator commissions), or about 0.3% per annum on user SOL (7% APY x 4%).Tip Routers: MEV tips accumulated each epoch are distributed via the TipRouter, with 3% of MEV transaction tips taken as protocol fees—2.7% to the DAO treasury, 0.15% to JTO stakers, and 0.15% to jitoSOL holders. What Strategies Stand Out in Jito’s Financial Statements?Liquidity incentives have been Jito’s biggest expense, with costs jumping in Q2 2024 and remaining at $1–$3 million per quarter since then. This results mainly from JIP-2 and JIP-13, which allocate $JTO for incentives in DeFi applications (chiefly on @KaminoFinance). Since Q2 2024, jitoSOL revenues have clearly risen, likely due to improved DeFi looping—driving more demand for jitoSOL and, in turn, greater staking income. From 2025, the Foundation plans to allocate another 14 million JTO (~$24 million) to support restaking and related DeFi activities, aiming to boost VRT adoption. By Q3 2025, some 7.7 million JTO had been distributed as incentives. The impact is clear—quarterly income in 2025 has increased by 36%, 67%, and 23%, outpacing incentive outlays and confirming these are positive-EV investments. On revenue, jitoSOL fees and Tip Router are Jito’s top sources. Since Q4 2024, propelled by a Solana meme trading frenzy, network volume has spiked and Jito has been the main beneficiary. At its peak, Jito’s tips made up 41.6%–66% of Solana’s Real Economic Value (REV). Since Q2 2025, Tip Router revenue has exceeded jitoSOL fees, underscoring Jito’s MEV infrastructure moat. Solana traders and arbitrageurs are willing to pay tips for priority—an economic structure rare among public blockchains. Explosive growth in Solana network activity, leading MEV infrastructure, jitoSOL’s sector dominance, and the rise of restaking applications have together fueled a 57-fold jump in net profit to ~$5 million in Q2 2025. Even without the meme hype of 2024’s “pump.fun” era, a maturing SOL restaking sector could provide Jito’s next major catalyst. Disclaimer: This article is republished from [TechFlow], copyright held by the original author [chingchalong02]. For republication concerns, please contact the Gate Learn team for prompt resolution per our process.Disclaimer: The views and opinions expressed here are solely those of the author and do not constitute investment advice.Other language versions of this article have been translated by the Gate Learn team. Do not reproduce, distribute, or plagiarize any translated content without proper attribution to Gate.

8/12/2025, 10:17:39 AM

<p>More than a decade after crypto’s meteoric rise, Bitcoin’s quadrennial halving-driven gold rush has faded. Now, intermittent liquidity injections from U.S. equities, the dollar, and Treasuries drive the market. Each cycle links together distinct hotspots, much like Pendle’s evolution from fixed income and LST, through BTCFi, to Ethena and Boros.</p>
<p>Creating new wealth is harder than managing old money.</p>
<p>As custodians put it: money flows to those who already have it.</p>
<p>In crypto, true whales come in three types: individual giants (early BTC miners, early ETH investors, DeFi Summer OGs); on-chain institutions (crypto-native VCs, centralized exchanges and public blockchains, and a handful of project teams); and long-standing or new titans backed by Wall Street.</p>
<p><img src="https://s3.ap-northeast-1.amazonaws.com/gimg.gateimg.com/learn/9ed6c1c583d01f3ccbdb76a46511deac93a9d4fc.png" alt=""><br>Image Description: Custodian Funding Boom<br>Image Source: <a href="https://github.com/zuoyeweb3" title="@zuoyeweb3" class="at-link">@zuoyeweb3</a></p>
<p>Custody providers have since specialized further. After $3 billion in funding in 2021 and the FTX–Celsius and 3AC–Luna–UST collapses in 2022, the crypto custody space crystallized into the following segments:</p>
<ul>
<li>• Copper/Ceffu/Cobo: On-chain project support</li><li>• Coinbase: ETF custody</li><li>• BNY Mellon: Banking-grade custody</li><li>• Fireblock: Exchange custody solutions</li></ul>
<p>Coinbase, in particular, has captured nearly the entire ETF custody market: over 80% of BTC and ETH ETF issuers now partner with Coinbase. In corporate treasury management, MSTR also prefers Coinbase as its BTC custodian.</p>
<h2 id="h2-5Li65pWj5oi35Lqk5piT5pe25Luj57uT5p2f77yM5Li65py65p6E55CG6LSi5pe25Luj5Yiw5p2l">The Era of Retail Trading Is Over: Institutions Take the Lead in Crypto Wealth Management</h2><p>The ways to profit in crypto evolve with the times. With capital scale effects at play, whoever controls the most assets secures the greatest profits. Miners, exchanges, and market makers have each had their day; next up are custodians. As traditional finance capital moves on-chain, these funds will rarely go straight to public chains or exchanges—instead, they’ll flow through custodians.</p>
<p>Ethereum’s daily transactions have surged past the DeFi Summer peak, hitting 1.74 million. Yet, this growth isn’t driven by memes or trading, but by stablecoin looping and borrowing, prompted by Aave and Ethena.</p>
<p>Similarly, Aave and Plasma are partnering to bring a TradFi-focused stablecoin on-chain. The Genius Act prohibits payment stablecoins from paying user interest, turning deposited funds into liabilities with nowhere to go—dead weight for issuers.</p>
<p>At the same time, as CEX trading volume shrinks, custodial, staking, and yield products are becoming new business targets for traditional banks, especially as rate cuts loom. The challenge now is how to attract liquidity from 401(k)s and corporate treasury strategies to on-chain products—a new business frontier.</p>
<p>The centralized exchange cycle is at its end, squeezed by both on-chain models and IPO ambitions. Hyperliquid is threatening Binance’s dominance, while Kraken, Bullish, and others are taking aim at Coinbase’s status as the only U.S.-listed exchange.</p>
<p>Strategically, everyone is chasing post-CEX yield opportunities. For institutional capital, safety takes priority over high APRs. Tether’s physical gold vault is one approach; on-chain vaults could be equally lucrative.</p>
<p>With ETFs taking the lead, Coinbase’s dominance is hard to shake—yet the evolving market landscape still offers openings for second- and third-tier players.</p>
<p><img src="https://s3.ap-northeast-1.amazonaws.com/gimg.gateimg.com/learn/49c0f9bfe131845f1d8c6209cce74da4678a5f2a.png" alt=""><br>Image Description: TradFi & DeFi Merge<br>Image Source: <a href="https://github.com/zuoyeeb3" title="@zuoyeeb3" class="at-link">@zuoyeeb3</a></p>
<p>Compared to the sheer scale of capital pouring into the dollar, Treasuries, and U.S. equities, crypto is still just catching what it can in a small bucket. Only a big, secure “bathtub” will allow true, seamless liquidity flows.</p>
<p>Veteran players are diverging, and Anchorage Digital and Galaxy Digital now stand out as the industry’s two flagship examples.</p>
<ul>
<li>• Treasury management (DATCO): Galaxy</li><li>• Stablecoins: Anchorage</li><li>• Emerging ETF staking: Anchorage Digital & Galaxy Digital</li></ul>
<p>Apart from BTC and spot ETF businesses, both companies target the same thing—taking more market share from Coinbase. This is a logical starting point.</p>
<p>The spot ETF market now features two main trends: generalization (altcoins and meme coins, after six months of Coinbase derivatives trading, may become eligible for conversion into ETFs); and the rise of staking ETFs, which allow issuers to offer physical redemptions and tap into on-chain staking revenue.</p>
<p>Anchorage Digital, for example, is the exclusive custodian and staking partner for the REX-Osprey Solana Staking ETF—fitting both these trends. If the bull market continues, ETF custody will be a key growth engine for these firms.</p>
<p>On the traditional ETF front, Anchorage has won mandates from 21Shares and BlackRock—and is even custodian for Trump Media’s Bitcoin treasury. Anchorage’s reach now extends all the way to Mar-a-Lago.</p>
<h2 id="h2-QW5jaG9yYWdlIOaMgeeJjOmTtuihjOeahOeos+WumuW4geW4g+WxgOS4juWKoOWvhumTgemHkeW6k+S5i+aipg==">Anchorage: Licensed Banking for Stablecoins and the Pursuit of the Crypto Fort Knox</h2><p>In 2019, Anchorage began exploring partnerships with Visa, becoming Visa’s USDC settlement bank in 2021.</p>
<p>In 2021, Anchorage launched its crypto custody business at a $3 billion valuation, received a crypto bank charter from the OCC, and began providing digital asset custody for the U.S. Marshals Service (USMS).</p>
<p>In 2022, following the crypto crash, Anchorage was first choice for Aptos custody, with co-founder Diogo Mónica also an Aptos investor.</p>
<p>In Q1 2023, platform assets grew 80%, though 75 employees (20%) were laid off and the company called for stablecoin regulation.</p>
<p>In 2024, co-founder Diogo Mónica stepped away from daily operations, with Nathan McCauley assuming full responsibility.</p>
<p>By 2025, Anchorage Digital will manage Trump Media’s Bitcoin treasury and has acquired USDM issuer Mountain Protocol.</p>
<p>Here’s a formal introduction: Anchorage Digital was founded in 2017 by Nathan McCauley and Diogo Mónica, initially as a small trust in South Dakota. But in 2021, a twist of fate made Anchorage Digital the only recipient, so far, of an OCC-issued crypto bank charter in the U.S.</p>
<p>In Silicon Valley, Wall Street, or D.C., exclusive financial services are, at their core, all about relationships.</p>
<p><img src="https://s3.ap-northeast-1.amazonaws.com/gimg.gateimg.com/learn/0edcae8d144bdddd0f94aa619c23aa98be29267b.png" alt=""><br>Image Description: Anchorage Digital’s Relationship Map<br>Image Source: <a href="https://github.com/zuoyeweb3" title="@zuoyeweb3" class="at-link">@zuoyeweb3</a></p>
<p>Anchorage Digital built a full-service institutional platform—trading, derivatives, clearing, staking, custody—making it a one-stop crypto solution for institutions. Beyond traditional custody, Anchorage is betting the company’s future on stablecoins, its key difference from Galaxy.</p>
<p>This marks the beginning of their first-mover advantage, where timing proved critical.</p>
<p>In 2021, Democrat Joe Biden, a noted crypto skeptic, became president. SBF donated millions to support Biden in hopes of a “crypto spring.” Meanwhile, former Coinbase CLO Brian Brooks became Acting Comptroller of the OCC.</p>
<p>Brooks promoted a crypto-friendly stance, opened banking services to the sector, launched the “REACh” roundtable, and encouraged banks to treat crypto firms fairly.</p>
<p>Anchorage seized the opportunity, transforming from a local trust to Anchorage Digital Bank—a true national bank.</p>
<p>On January 13, 2021, Anchorage Digital Bank was qualified to accept USD deposits and custody crypto assets.</p>
<p>The next day, January 14, Brooks resigned. By a fluke of timing, Anchorage Digital became the sole licensed crypto bank in the United States.</p>
<p>Today, virtually every page of Anchorage Digital’s site touts the value of its charter—it enabled $430 million in Series C and D funding, keeping the company afloat for the 2025 stablecoin surge.</p>
<p>Anchorage boasts an impressive cap table: both crypto VCs like a16z and Wall Street giants like KKR and BlackRock have invested.</p>
<p>For context, Bitpay and Paxos also applied for a charter, but weren’t so lucky. Recently, Paxos was hit by a $26.5 million New York DFS fine for BUSD non-compliance.</p>
<p>In addition to its federal OCC crypto bank charter, Anchorage also holds a New York State BitLicense—second only to BNY in regulatory status.</p>
<p>After Brooks’s departure, Anchorage and the OCC had their disagreements, but Anchorage kept its charter—holding a unique license provides a lasting advantage.</p>
<p>Thanks to this regulatory status, Anchorage can custody everything from stablecoin reserves and crypto to NFTs. But the 2022 crypto crash disrupted the firm, with leadership clashes following soon after.</p>
<p>Ultimately, Diogo Mónica joined Hanu Ventures as a partner, remains Anchorage Digital’s executive chairman, leads hiring and strategy, and Nathan McCauley handles core operations—focusing on capturing BlackRock’s stablecoin business.</p>
<p>Anchorage is now custodian for 21Shares’ BTC and ETH spot ETFs and exclusive custodian and staking partner for the REX-Osprey Solana Staking ETF.</p>
<p>But beyond ETFs, Anchorage Digital has made major headway—especially in stablecoins: collaborating with Visa on stablecoin payments and onboarding “compliant” stablecoins like PayPal’s PYUSD for institutional investors.</p>
<p>Remarkably, Tether’s custodian and investor Cantor Fitzgerald has also teamed up with Anchorage to handle Bitcoin custody for Cantor Fitzgerald’s business.</p>
<p>That makes Anchorage the custodian to Tether’s custodian.</p>
<p>Despite its regulatory edge, Anchorage’s business was relatively quiet before 2025. Even with a $3 billion valuation and $50 billion in assets under management (AUM), it struggled to challenge Coinbase in the ETF space. Stablecoins are Anchorage Digital’s real battleground.</p>
<p>With its federal “crypto bank” charter, Anchorage Digital (through Anchorage Digital Bank NA) can accept both USD and stablecoin deposits, and provide custody services.</p>
<ul>
<li>• Off-chain: Anchorage is partnering with Ethena to scale up USDtb issuance and comply with Genius Act stablecoin requirements.</li><li>• On-chain: Anchorage is part of the USDG stablecoin alliance with Paxos and Kraken, operating the Global Dollar Network on-chain.</li></ul>
<p>In treasury strategy, Anchorage is not idle: former BlackRock exec Joseph Chalom joined ETH treasury firm Sharplink Gaming as co-CEO and drove the BlackRock–Anchorage ETF custody partnership.</p>
<p>BlackRock’s BUIDL fund is closely linked to Chalom, and Anchorage serves as custodian. The structure:</p>
<p>$BUIDL = BlackRock issuance = Securitize (tokenization tech) + Anchorage Digital (custody) + BNY (cash management)</p>
<p>There’s more: SEC Chair Paul Atkins owns at least $250,000 of Anchorage Digital shares and is also a Securitize stakeholder; Securitize is Ethena’s joint partner for Converage.</p>
<p>With Galaxy listed publicly, speculation about an Anchorage Digital IPO is growing as the stablecoin business expands—perhaps this will be the year of the first crypto bank IPO.</p>
<h2 id="h2-R2FsYXh5IERpZ2l0YWwg5Z2Q5LiK6LSi5bqT5pe25Luj55qE6ZOB546L5bqn">Galaxy Digital: Sitting Atop the Crypto Treasury Throne</h2><p>Galaxy Digital stands out even more than Anchorage. It was Goldman Sachs’s OTC crypto trading partner in 2022, a major Bitcoin whale exit hub, and is involved in BTC mining, VC investment, and AI compute. Founder Mike Novogratz’s connections are unmatched in the industry.</p>
<p>On July 25, Galaxy helped an early miner sell about 80,000 BTC ($9 billion). Although the sales were staggered, the news pushed Bitcoin down nearly 4% to below $115,000.</p>
<p>Given the sums involved, Galaxy has faced accusations of market manipulation, but as an institution, Galaxy’s incentives are for low volatility and scale—institutions want stability, not chaos.</p>
<p>However, Galaxy’s real advantage is its timing: founder Mike Novogratz—trained in traditional finance, not tech—has always approached crypto pragmatically, focusing on profitability.</p>
<p>Now, as retail exits and institutions enter, Galaxy’s next steps—especially the broadening of crypto treasury strategies—demand attention.</p>
<p>Recall that ETH treasury company Sharplink, recently led by a BlackRock executive?</p>
<p>In June 2025, Sharplink made multiple large ETH buys via Galaxy OTC, totaling at least $800 million. Galaxy is also a Sharplink investor—internal capital cycling within related entities.</p>
<p>Beyond BTC and ETFs, Galaxy has contributed to Ethena’s Stablecoinx treasury effort and built the $450 million Mill City Ventures III, Ltd. $SUI treasury.</p>
<p>Galaxy is also expanding into new OTC products, such as OTC support for LST LsETH (Liquid Collective issuance). For the SOL version (lsSOL), institutional investors are supported by Anchorage Digital.</p>
<p>It’s a tight circle at the top of crypto finance.</p>
<p>Notably, both Anchorage Digital and Galaxy Digital are now involved in GDN, proving that collaboration, not cutthroat competition, is the new norm among major custodians.</p>
<p>While Anchorage is betting its future on stablecoins (thanks to its banking charter), Galaxy focuses on treasury management, with additional non-BTC and non-ETH treasury products forthcoming.</p>
<p>With substantial capital depth, Galaxy holds $1.8 billion in BTC, recently increased its XRP holdings by $34.4 million, and in a twist, Ripple just announced a $200 million acquisition of stablecoin firm Rail (backed by Galaxy).</p>
<p>Internal capital cycling within related entities.</p>
<p>Galaxy’s filings hint at new treasury and market-making targets: $HYPE, $SOL, and $XRP. After Ripple ended its SEC litigation and soared 10% the same day, Galaxy pulled ahead of retail once more.</p>
<p><img src="https://s3.ap-northeast-1.amazonaws.com/gimg.gateimg.com/learn/537e2129a57a2a54d0b97276c3a7a0bd7e8d038c.png" alt=""><br>Image Description: Galaxy Digital Portfolio<br>Image Source: <a href="https://github.com/zuoyeweb3" title="@zuoyeweb3" class="at-link">@zuoyeweb3</a><br>Data Source: <a href="https://github.com/SECGov" title="@SECGov" class="at-link">@SECGov</a></p>
<p>Galaxy has completely exited its UNI and TIA positions. The previous leading assets have been replaced: USDG, HYPE, and XRP are the new stars—OTC desks always spot the trends first.</p>
<p>Historically, OTC desks could only passively fill whale orders, with little sway over secondary markets—unlike exchange-based market makers. However, with on-chain treasury strategies, crypto, equities, and bonds will become interconnected; who will control token pricing remains uncertain.</p>
<h2 id="h2-57uT6K+t">Conclusion</h2><p>Custodians are the new crossroads of capital in crypto. Off-chain assets demand secure on-chain entry; on-chain assets require compliant off-ramps. Treasury strategies will let custodians actively shape token prices. Crypto liquidity now defines the power structure, while the era of centralized exchanges and market makers is coming to an end.</p>
<p>BNY Mellon holds over $52 trillion in assets under custody. The entire crypto market cap is less than $4 trillion, and stablecoins + crypto ETFs + treasury firms total just $520 billion—crypto custodians’ influence will take time to mature.</p>
<p>Ultimately, capital will follow profit opportunities.</p>
<h3 id="h3-5aOw5piO77ya">Disclaimer:</h3><ol>
<li>This article is reprinted from [<a href="https://mp.weixin.qq.com/s/235iFbT1Qv0DWFjL__cS_w">Zuoye WaiBoShu</a>]. Copyright remains with the original author [<em>Zuoye WaiBoShu</em>]. If there are any objections to this reprint, please contact the <a href="https://www.gate.com/questionnaire/3967">Gate Learn</a> team, and we will address it according to our procedures.</li><li>Disclaimer: The views and opinions expressed in this article belong solely to the author and do not constitute investment advice.</li><li>Other language versions of this article were translated by Gate Learn. Unless <a href="http://gate.com/">Gate</a> is specifically referenced, translated content may not be copied, distributed, or plagiarized.</li></ol>

Intermediate

More than a decade after crypto’s meteoric rise, Bitcoin’s quadrennial halving-driven gold rush has faded. Now, intermittent liquidity injections from U.S. equities, the dollar, and Treasuries drive the market. Each cycle links together distinct hotspots, much like Pendle’s evolution from fixed income and LST, through BTCFi, to Ethena and Boros. Creating new wealth is harder than managing old money. As custodians put it: money flows to those who already have it. In crypto, true whales come in three types: individual giants (early BTC miners, early ETH investors, DeFi Summer OGs); on-chain institutions (crypto-native VCs, centralized exchanges and public blockchains, and a handful of project teams); and long-standing or new titans backed by Wall Street. <img src="https://s3.ap-northeast-1.amazonaws.com/gimg.gateimg.com/learn/9ed6c1c583d01f3ccbdb76a46511deac93a9d4fc.png" alt="">Image Description: Custodian Funding BoomImage Source: @zuoyeweb3 Custody providers have since specialized further. After $3 billion in funding in 2021 and the FTX–Celsius and 3AC–Luna–UST collapses in 2022, the crypto custody space crystallized into the following segments: • Copper/Ceffu/Cobo: On-chain project support• Coinbase: ETF custody• BNY Mellon: Banking-grade custody• Fireblock: Exchange custody solutions Coinbase, in particular, has captured nearly the entire ETF custody market: over 80% of BTC and ETH ETF issuers now partner with Coinbase. In corporate treasury management, MSTR also prefers Coinbase as its BTC custodian. The Era of Retail Trading Is Over: Institutions Take the Lead in Crypto Wealth ManagementThe ways to profit in crypto evolve with the times. With capital scale effects at play, whoever controls the most assets secures the greatest profits. Miners, exchanges, and market makers have each had their day; next up are custodians. As traditional finance capital moves on-chain, these funds will rarely go straight to public chains or exchanges—instead, they’ll flow through custodians. Ethereum’s daily transactions have surged past the DeFi Summer peak, hitting 1.74 million. Yet, this growth isn’t driven by memes or trading, but by stablecoin looping and borrowing, prompted by Aave and Ethena. Similarly, Aave and Plasma are partnering to bring a TradFi-focused stablecoin on-chain. The Genius Act prohibits payment stablecoins from paying user interest, turning deposited funds into liabilities with nowhere to go—dead weight for issuers. At the same time, as CEX trading volume shrinks, custodial, staking, and yield products are becoming new business targets for traditional banks, especially as rate cuts loom. The challenge now is how to attract liquidity from 401(k)s and corporate treasury strategies to on-chain products—a new business frontier. The centralized exchange cycle is at its end, squeezed by both on-chain models and IPO ambitions. Hyperliquid is threatening Binance’s dominance, while Kraken, Bullish, and others are taking aim at Coinbase’s status as the only U.S.-listed exchange. Strategically, everyone is chasing post-CEX yield opportunities. For institutional capital, safety takes priority over high APRs. Tether’s physical gold vault is one approach; on-chain vaults could be equally lucrative. With ETFs taking the lead, Coinbase’s dominance is hard to shake—yet the evolving market landscape still offers openings for second- and third-tier players. <img src="https://s3.ap-northeast-1.amazonaws.com/gimg.gateimg.com/learn/49c0f9bfe131845f1d8c6209cce74da4678a5f2a.png" alt="">Image Description: TradFi & DeFi MergeImage Source: @zuoyeeb3 Compared to the sheer scale of capital pouring into the dollar, Treasuries, and U.S. equities, crypto is still just catching what it can in a small bucket. Only a big, secure “bathtub” will allow true, seamless liquidity flows. Veteran players are diverging, and Anchorage Digital and Galaxy Digital now stand out as the industry’s two flagship examples. • Treasury management (DATCO): Galaxy• Stablecoins: Anchorage• Emerging ETF staking: Anchorage Digital & Galaxy Digital Apart from BTC and spot ETF businesses, both companies target the same thing—taking more market share from Coinbase. This is a logical starting point. The spot ETF market now features two main trends: generalization (altcoins and meme coins, after six months of Coinbase derivatives trading, may become eligible for conversion into ETFs); and the rise of staking ETFs, which allow issuers to offer physical redemptions and tap into on-chain staking revenue. Anchorage Digital, for example, is the exclusive custodian and staking partner for the REX-Osprey Solana Staking ETF—fitting both these trends. If the bull market continues, ETF custody will be a key growth engine for these firms. On the traditional ETF front, Anchorage has won mandates from 21Shares and BlackRock—and is even custodian for Trump Media’s Bitcoin treasury. Anchorage’s reach now extends all the way to Mar-a-Lago. Anchorage: Licensed Banking for Stablecoins and the Pursuit of the Crypto Fort KnoxIn 2019, Anchorage began exploring partnerships with Visa, becoming Visa’s USDC settlement bank in 2021. In 2021, Anchorage launched its crypto custody business at a $3 billion valuation, received a crypto bank charter from the OCC, and began providing digital asset custody for the U.S. Marshals Service (USMS). In 2022, following the crypto crash, Anchorage was first choice for Aptos custody, with co-founder Diogo Mónica also an Aptos investor. In Q1 2023, platform assets grew 80%, though 75 employees (20%) were laid off and the company called for stablecoin regulation. In 2024, co-founder Diogo Mónica stepped away from daily operations, with Nathan McCauley assuming full responsibility. By 2025, Anchorage Digital will manage Trump Media’s Bitcoin treasury and has acquired USDM issuer Mountain Protocol. Here’s a formal introduction: Anchorage Digital was founded in 2017 by Nathan McCauley and Diogo Mónica, initially as a small trust in South Dakota. But in 2021, a twist of fate made Anchorage Digital the only recipient, so far, of an OCC-issued crypto bank charter in the U.S. In Silicon Valley, Wall Street, or D.C., exclusive financial services are, at their core, all about relationships. <img src="https://s3.ap-northeast-1.amazonaws.com/gimg.gateimg.com/learn/0edcae8d144bdddd0f94aa619c23aa98be29267b.png" alt="">Image Description: Anchorage Digital’s Relationship MapImage Source: @zuoyeweb3 Anchorage Digital built a full-service institutional platform—trading, derivatives, clearing, staking, custody—making it a one-stop crypto solution for institutions. Beyond traditional custody, Anchorage is betting the company’s future on stablecoins, its key difference from Galaxy. This marks the beginning of their first-mover advantage, where timing proved critical. In 2021, Democrat Joe Biden, a noted crypto skeptic, became president. SBF donated millions to support Biden in hopes of a “crypto spring.” Meanwhile, former Coinbase CLO Brian Brooks became Acting Comptroller of the OCC. Brooks promoted a crypto-friendly stance, opened banking services to the sector, launched the “REACh” roundtable, and encouraged banks to treat crypto firms fairly. Anchorage seized the opportunity, transforming from a local trust to Anchorage Digital Bank—a true national bank. On January 13, 2021, Anchorage Digital Bank was qualified to accept USD deposits and custody crypto assets. The next day, January 14, Brooks resigned. By a fluke of timing, Anchorage Digital became the sole licensed crypto bank in the United States. Today, virtually every page of Anchorage Digital’s site touts the value of its charter—it enabled $430 million in Series C and D funding, keeping the company afloat for the 2025 stablecoin surge. Anchorage boasts an impressive cap table: both crypto VCs like a16z and Wall Street giants like KKR and BlackRock have invested. For context, Bitpay and Paxos also applied for a charter, but weren’t so lucky. Recently, Paxos was hit by a $26.5 million New York DFS fine for BUSD non-compliance. In addition to its federal OCC crypto bank charter, Anchorage also holds a New York State BitLicense—second only to BNY in regulatory status. After Brooks’s departure, Anchorage and the OCC had their disagreements, but Anchorage kept its charter—holding a unique license provides a lasting advantage. Thanks to this regulatory status, Anchorage can custody everything from stablecoin reserves and crypto to NFTs. But the 2022 crypto crash disrupted the firm, with leadership clashes following soon after. Ultimately, Diogo Mónica joined Hanu Ventures as a partner, remains Anchorage Digital’s executive chairman, leads hiring and strategy, and Nathan McCauley handles core operations—focusing on capturing BlackRock’s stablecoin business. Anchorage is now custodian for 21Shares’ BTC and ETH spot ETFs and exclusive custodian and staking partner for the REX-Osprey Solana Staking ETF. But beyond ETFs, Anchorage Digital has made major headway—especially in stablecoins: collaborating with Visa on stablecoin payments and onboarding “compliant” stablecoins like PayPal’s PYUSD for institutional investors. Remarkably, Tether’s custodian and investor Cantor Fitzgerald has also teamed up with Anchorage to handle Bitcoin custody for Cantor Fitzgerald’s business. That makes Anchorage the custodian to Tether’s custodian. Despite its regulatory edge, Anchorage’s business was relatively quiet before 2025. Even with a $3 billion valuation and $50 billion in assets under management (AUM), it struggled to challenge Coinbase in the ETF space. Stablecoins are Anchorage Digital’s real battleground. With its federal “crypto bank” charter, Anchorage Digital (through Anchorage Digital Bank NA) can accept both USD and stablecoin deposits, and provide custody services. • Off-chain: Anchorage is partnering with Ethena to scale up USDtb issuance and comply with Genius Act stablecoin requirements.• On-chain: Anchorage is part of the USDG stablecoin alliance with Paxos and Kraken, operating the Global Dollar Network on-chain. In treasury strategy, Anchorage is not idle: former BlackRock exec Joseph Chalom joined ETH treasury firm Sharplink Gaming as co-CEO and drove the BlackRock–Anchorage ETF custody partnership. BlackRock’s BUIDL fund is closely linked to Chalom, and Anchorage serves as custodian. The structure: $BUIDL = BlackRock issuance = Securitize (tokenization tech) + Anchorage Digital (custody) + BNY (cash management) There’s more: SEC Chair Paul Atkins owns at least $250,000 of Anchorage Digital shares and is also a Securitize stakeholder; Securitize is Ethena’s joint partner for Converage. With Galaxy listed publicly, speculation about an Anchorage Digital IPO is growing as the stablecoin business expands—perhaps this will be the year of the first crypto bank IPO. Galaxy Digital: Sitting Atop the Crypto Treasury ThroneGalaxy Digital stands out even more than Anchorage. It was Goldman Sachs’s OTC crypto trading partner in 2022, a major Bitcoin whale exit hub, and is involved in BTC mining, VC investment, and AI compute. Founder Mike Novogratz’s connections are unmatched in the industry. On July 25, Galaxy helped an early miner sell about 80,000 BTC ($9 billion). Although the sales were staggered, the news pushed Bitcoin down nearly 4% to below $115,000. Given the sums involved, Galaxy has faced accusations of market manipulation, but as an institution, Galaxy’s incentives are for low volatility and scale—institutions want stability, not chaos. However, Galaxy’s real advantage is its timing: founder Mike Novogratz—trained in traditional finance, not tech—has always approached crypto pragmatically, focusing on profitability. Now, as retail exits and institutions enter, Galaxy’s next steps—especially the broadening of crypto treasury strategies—demand attention. Recall that ETH treasury company Sharplink, recently led by a BlackRock executive? In June 2025, Sharplink made multiple large ETH buys via Galaxy OTC, totaling at least $800 million. Galaxy is also a Sharplink investor—internal capital cycling within related entities. Beyond BTC and ETFs, Galaxy has contributed to Ethena’s Stablecoinx treasury effort and built the $450 million Mill City Ventures III, Ltd. $SUI treasury. Galaxy is also expanding into new OTC products, such as OTC support for LST LsETH (Liquid Collective issuance). For the SOL version (lsSOL), institutional investors are supported by Anchorage Digital. It’s a tight circle at the top of crypto finance. Notably, both Anchorage Digital and Galaxy Digital are now involved in GDN, proving that collaboration, not cutthroat competition, is the new norm among major custodians. While Anchorage is betting its future on stablecoins (thanks to its banking charter), Galaxy focuses on treasury management, with additional non-BTC and non-ETH treasury products forthcoming. With substantial capital depth, Galaxy holds $1.8 billion in BTC, recently increased its XRP holdings by $34.4 million, and in a twist, Ripple just announced a $200 million acquisition of stablecoin firm Rail (backed by Galaxy). Internal capital cycling within related entities. Galaxy’s filings hint at new treasury and market-making targets: $HYPE, $SOL, and $XRP. After Ripple ended its SEC litigation and soared 10% the same day, Galaxy pulled ahead of retail once more. <img src="https://s3.ap-northeast-1.amazonaws.com/gimg.gateimg.com/learn/537e2129a57a2a54d0b97276c3a7a0bd7e8d038c.png" alt="">Image Description: Galaxy Digital PortfolioImage Source: @zuoyeweb3Data Source: @SECGov Galaxy has completely exited its UNI and TIA positions. The previous leading assets have been replaced: USDG, HYPE, and XRP are the new stars—OTC desks always spot the trends first. Historically, OTC desks could only passively fill whale orders, with little sway over secondary markets—unlike exchange-based market makers. However, with on-chain treasury strategies, crypto, equities, and bonds will become interconnected; who will control token pricing remains uncertain. ConclusionCustodians are the new crossroads of capital in crypto. Off-chain assets demand secure on-chain entry; on-chain assets require compliant off-ramps. Treasury strategies will let custodians actively shape token prices. Crypto liquidity now defines the power structure, while the era of centralized exchanges and market makers is coming to an end. BNY Mellon holds over $52 trillion in assets under custody. The entire crypto market cap is less than $4 trillion, and stablecoins + crypto ETFs + treasury firms total just $520 billion—crypto custodians’ influence will take time to mature. Ultimately, capital will follow profit opportunities. Disclaimer: This article is reprinted from [Zuoye WaiBoShu]. Copyright remains with the original author [Zuoye WaiBoShu]. If there are any objections to this reprint, please contact the Gate Learn team, and we will address it according to our procedures.Disclaimer: The views and opinions expressed in this article belong solely to the author and do not constitute investment advice.Other language versions of this article were translated by Gate Learn. Unless Gate is specifically referenced, translated content may not be copied, distributed, or plagiarized.

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