“State of DeFi” Report – DL News

Decentralized Autonomous Organizations, or DAOs, have become quieter and less decentralized in 2025.

This is according to “State of DeFi,” a new report from DL News and its sister companies DL Research and DefiLlama.

DAOs are crypto cooperatives that manage some of the largest and most successful blockchain-based applications, such as Aave and Uniswap.

The previous year had been a turning point for the governance of the DAO, according to the report. This year, however, the number of proposals and the number of people voting on those proposals have declined sharply in several major DAOs.

This drop is a worrying sign for crypto purists, who envision a future financial system without intermediaries, where business decisions are made not by decree from a small group of leaders, but democratically, by thousands or even millions of user-owners.

The report analyzed the DAOs that govern Aave, Lido, Uniswap, Arbitrum, Balancer and Frax.

In all six cases, the number of proposals declined by at least 60% and as much as 90% year over year, according to the report.

Median voter turnout also decreased for all protocols except Lido, which saw an increase in turnout after new rules were implemented.

The DAO’s apathy is no secret: cooperatives have been trying to increase token holder participation for years.

While the number of voters declined, the number of votes cast increased in all six DAOs, according to the report, suggesting that an increasing number of voters are lending their tokens to delegates – actors similar to elected representatives within cooperatives.

“This trend confirms a structural shift in DeFi governance, moving from broad retail-style token participation to a model dominated by a relatively small group of professional delegates, large liquidity providers, protocol-aligned funds, and long-term strategic token holders,” the report notes.

“From an institutional perspective, this transition improves governance predictability and operational consistency, but it also raises lingering questions regarding risk capture and the relevance of minority token holders.”

Here are some other trends emerging in 2025, according to the report.

Diversification, but slowly

In decentralized finance, revenue has long been concentrated among a small group of hyper-profitable companies. In 2025, crypto wealth began to spread – but just a little.

“Revenue grew in nearly every major industry, but the distribution of this growth revealed a clear structural pattern: a small group of protocols continues to dominate fee capture while a new wave of entrants reshapes competition in key verticals,” the report said.

This year, the top 10 protocols collected 60% of all fees, according to the report. The top 20 captured a whopping 80%.

But this is actually an improvement from 2024, when the top six protocols captured 70% of all fees.

Stablecoin issuers Tether and Circle remain in a class of their own, capturing 54% and 18% of all fees, respectively.

Behind them, perpetual exchanges such as Hyperliquid have become one of the most lucrative businesses in DeFi.

Four perpetual exchanges accounted for 7.5% of all fees collected by DeFi protocols in 2025. Most remarkably, their revenues remained stable regardless of the direction of the broader crypto markets, according to the report.

Decentralized exchanges, on the other hand, have seen their fortunes tied to the volatility of broader crypto, according to the report.

Buyback boom

Governance tokens were caught in a tough spot last year: they let users participate in DAO decision-making, but no one really wanted to delve into the weeds of protocol management.

This raised an uncomfortable question for investors who had purchased these tokens: what were they actually worth?

This began to change in 2025. This year, the share of protocols that distribute revenue among token holders tripled, from 5% to 15%, according to the report.

Major protocols like Aave and Lido have approved buyback programs this year.

“As competition intensifies and tokens increasingly resemble traditional financial assets, more protocols are expected to adopt similar approaches,” the report states.

One reason: The world’s largest economy has become more of a friend than a foe, according to the report.

Under former President Joe Biden, top U.S. financial regulators seemed to think that almost all crypto assets were unregistered securities. And making a token more secure by incorporating a dividend-style income distribution would only have invited scrutiny, crypto lawyers say.

Under Biden’s successor, American policy has taken a 180-degree turn. Open investigations have been shelved as lawmakers debate a bill that could classify most tokens as commodities, subject to less onerous regulations.

But there is another reason for this change, according to the report.

Cheap channels

Blockchains have become cheaper to use. Nowhere is the change more radical than in Ethereum, which has maintained its lead as the home of decentralized finance.

The average cost of transactions on Ethereum has fallen 86% since 2021 even as the number of transactions has almost tripled, according to the report.

In 2021, blockchains captured 54% of all usage fees, while apps captured only 34%, according to the report. By 2024, applications have outpaced the platforms they are built on, capturing 47% of all fees compared to 42% for blockchains.

By 2025, requests dominate fee generation: they capture 66% of all fees. Blockchains, for their part, only captured 19%.

“Competition played a central role in reducing costs,” the report said. “The rise of Solana in 2021 set a clear precedent in demonstrating that high throughput and low fees were achievable, pushing Ethereum and other ecosystems to accelerate their scaling roadmaps.”

This shift has left many protocols rich in liquidity, allowing them to innovate and direct a portion of their revenue to token holders.

Aleks Gilbert is DL News’ DeFi correspondent based in New York. You can reach him at aleks@dlnews.com.