The blockchain industry is constantly evolving, with new trends and technologies shaping its future. One of the most significant discussions recently has been around the importance of revenue, particularly the distinction between protocol revenue and application revenue. João Mendonça, in a tweet from June 27, 2025, highlighted a critical point: "application revenue matters just as much or more than protocol revenue, and both will grow drastically in the coming years."

Understanding Protocol and Application Revenue

To grasp the significance of Mendonça's statement, let's break down the concepts of protocol and application revenue.

Protocol Revenue

Protocol revenue refers to the income generated by the blockchain itself, primarily through transaction fees and other network activities. For example, networks like Ethereum and Bitcoin earn revenue from the fees users pay to process transactions. This revenue is crucial for securing the network and rewarding validators or miners.

Application Revenue

On the other hand, application revenue comes from decentralized applications (dApps) built on top of these blockchains. These applications, such as decentralized finance (DeFi) platforms, non-fungible token (NFT) marketplaces, and gaming platforms, generate revenue through user interactions, subscriptions, or other monetization strategies. Examples include trading fees on decentralized exchanges (DEXs) or sales commissions on NFT platforms.

The Interdependence of Revenue Streams

Mendonça's tweet emphasizes that both types of revenue are interconnected and essential for the blockchain ecosystem's growth. Here's why:

No Revenue, No Usage

The tweet succinctly states, "no revenue, no usage. simple." This highlights a fundamental truth: revenue is a direct indicator of usage. If a blockchain or its applications do not generate revenue, it suggests a lack of user engagement. For instance, a DeFi platform that doesn't earn from trading fees might struggle to attract users, as it indicates low activity or value.

Driving Innovation

Application revenue, in particular, drives innovation within the blockchain space. Successful dApps that generate significant revenue often reinvest in research and development, leading to new features and improved user experiences. This innovation, in turn, attracts more users, creating a virtuous cycle of growth.

The Future Growth of Revenue

Mendonça predicts that both protocol and application revenue will "grow drastically in the coming years." This optimism is backed by several trends:

DeFi and NFTs

Decentralized finance (DeFi) and NFTs are prime examples of applications that generate substantial revenue. DeFi platforms like Uniswap and Aave have shown that user-driven revenue can be a powerful force. Similarly, NFT marketplaces like OpenSea have demonstrated the potential for application revenue through digital asset sales.

Interoperability and Scalability

As blockchain networks improve interoperability and scalability, more applications can be built and scaled, leading to increased revenue. For example, Layer 2 solutions on Ethereum reduce transaction costs, making it more feasible for applications to generate revenue without burdening users with high fees.

Enterprise Adoption

The adoption of blockchain by enterprises is another driver of revenue growth. Businesses are increasingly using blockchain for supply chain management, identity verification, and other applications, which can generate significant revenue through service fees or licensing.

Conclusion

João Mendonça's tweet underscores a critical insight for the blockchain industry: application revenue is just as important as protocol revenue, if not more so. Both are essential for driving usage, innovation, and growth. As the blockchain ecosystem continues to mature, the interplay between these revenue streams will shape its future. For practitioners and enthusiasts, understanding this dynamic is key to navigating the evolving landscape of blockchain technology.

By focusing on both protocol and application revenue, the industry can ensure sustainable growth and widespread adoption, ultimately realizing the full potential of blockchain technology.