How to determine the true source of cryptocurrency revenue before investing money

The key to distinguishing lasting gains from fragile gains

The key to distinguishing lasting gains from fragile gains is not how big the number is, but what must be maintained each week in order to continue to obtain the gain. As long as the corresponding activity continues, the revenue supported by the fees paid by actual users will continue to operate; while the revenue that relies on token subsidies will end immediately once the subsidy is reduced. The following uses specific products as examples to illustrate how to classify a given annualized rate of return into the category to which it actually belongs.

First of all, ask what the income is being paid out, not what the rate of return is.

Each income must have a source of funding. Block3 Finance's guide to evaluating cryptocurrency earnings clearly states that gains either come from real economic activities-fees paid by users, interest paid by borrowers, spreads created by trading volume-or from incentives such as token issuance and liquidity mining, which Block3 describes as transfers rather than revenue. Stripe's interpretation for companies and investors draws the same line, describing cryptocurrency gains as returns generated through pledges, loans or the provision of liquidity-each mechanism is different and the source of payment is different. The two institutions have no differences on basic division and both use it as the first screening criterion.

Four actual sources of income

Interest paid by borrowers

Stripe describes the loan income as: depositing cryptocurrency (usually a stablecoin) on the platform, which then lends it to a trader or institution willing to pay to obtain capital use rights; the lender's income is the borrower's interest payment, which is achieved through centralized platforms reviewing borrowers or decentralized protocols using smart contract pools for algorithmic matching. Jurgis Posius extended this logic to fintech companies and stablecoin issuers in a report on February 6, 2026: Banks borrow from depositors at interest rates close to 0%, and lend out at interest rates above 8%. Interest income accounts for approximately 70% of bank income, and the remaining 30% comes from non-interest income such as handling fees. Financial technology companies like Revolut, which are valued at about US$75 billion, can pass on more spreads because they have no branch network and are more streamlined operations; while stablecoin issuers are pushing this model further because their operating costs are even lower than financial technology companies.

Trading and liquidity provision fees

The second actual source of activity is fees directly attributable to transaction volume. Posius pointed out that on Jupiter, 75% of liquidity provider fees come from opening and closing positions, price effects, borrowing costs and transaction fees. This gain rises when trading activity and leverage increase and compresses when trading volume declines-it follows market activity rather than a fixed schedule.

Delta Neutral Funding Rate Strategy

The third source lies somewhere between borrowing and active transactions. Ethena's sUSDe is a synthetic stablecoin backed by a delta-neutral structure: it agrees to hold collateral such as ETH or stETH while establishing hedging short positions in the derivatives market, with the proceeds from funding rates paid on perpetual contracts rather than through a redemption mechanism through fiat reserves. Resolv Labs 'RLP token follows a similar principle-it serves as a risk buffer for Resolv stablecoin USR, absorbing losses generated by Delta-neutral hedging, and in exchange, RLP holders receive higher returns from pledge rewards and capital fees. This is the gain paid to manage basis risk and execute hedging, and the funding rate itself fluctuates greatly, increasing sensitivity.

Loans related to tax avoidance rather than transactions

The fourth source is less obvious on the surface. Gauntlet's USDC Prime vault on Base has invested $326.87 million of its $327.68 million in assets into a single cbBTC/USDC pool, providing USDC loans to Coinbase's encapsulated bitcoin products at an interest rate of approximately 4%. Posius believes that since cbBTC is Coinbase's exclusive encapsulation of bitcoin, a considerable portion of the borrowings in the pool are likely to be borrowed by holders against Bitcoin rather than sold to avoid triggering a capital gains tax event-a strategy similar to the wealthy borrowing of stocks or real estate in traditional finance. If this interpretation is correct, then the gains paid to lenders in this pool come more from the reluctance of holders to realize taxable gains than from speculative demand for leverage, a demand pattern that can persist in calm markets precisely because it is not driven by trading confidence.

Checklists for classifying specific products

Once benefits are classified into one of the categories above, Block3 Finance's framework and Stripe's own risk sections focus on the same set of subsequent questions, each of which tests whether benefits can survive under pressure, rather than just describing their plateau:

Liquidity risk

Block3 points out that this risk rarely appears in marketing materials, but instead appears as withdrawal queues or slips during periods of volatility; the real test is when you exit rather than when you enter.

Smart contract risk

Block3 believes that auditing reduces risk but cannot eliminate it because composability between protocols creates dependencies that a single audit cannot model.

Counterparty Risk

Block3 believes that DeFi does not eliminate counterparties, but adds them to layers: protocols rely on oracles, oracles rely on data providers, cross-chain bridges rely on verifiers, and failure at any link in the chain may disrupt revenue strategies faster than expected.

Volatility and Liquidation Risk

Block3 points out that earnings are usually quoted on an annualized basis, and risks emerge within the day; even if the strategy continues to produce stable returns, value may still be lost if the underlying assets fall significantly. For leveraged or collateralized positions, liquidation risk is mechanical rather than theoretical.

Excitation offset

Block3 warns that token issuance plans and governance parameters can quietly change during the period of position holding, so what appears to be stable at the beginning of the evaluation may later have a completely different risk profile without any single public event marking this change.

What is not disclosed on this page

This page cannot verify the on-chain data in relevant reports-DeFi TVL estimates, Gauntlet treasury balances or Jupiter fee breakdowns-through real-time blockchain browsers or protocol dashboards; these data are based on the release of the report on February 6, 2026, and cannot be independently confirmed here. The report does not provide an independent on-chain snapshot timestamp beyond the release date. Stripe's data that revenue-generating assets account for approximately 8%-11% of the global cryptocurrency market value is only marked as "2025", and the methodology is not explained in the materials reviewed, so readers cannot directly reproduce or verify it. Block3 Finance's risk framework is published on its own page to promote advisory services and does not cite data, audits or specific cases to support its classification-it should be regarded as a company's framework, not a verified fact. Finally, this page describes the categories of revenue sources in general terms and cannot tell readers what category the specific products they hold belong to. This requires reading the documentation of the agreement itself and, if any, its audit report.