When giants harvest downward, DeFi can only break through horizontally.

Written by: Thejaswini M A

Translated by: Saoirse, Foresight News

In "Goodfellas," Ray Liotta has a line: "Less talk, give money." This line tears apart the romantic filter that glorifies the morality of the mafia in works like "The Godfather," starkly exposing the cold, parasitic, profit-driven nature of organized crime. Next, I will discuss large tech companies using a similar logic.

To control value, you must control profit. To achieve this, you don't even need to build a public chain protocol or a project. This is a profit battle without rules. But we cannot blame Coinbase, Stripe, or Kraken for making such choices.

From the most fundamental business logic standpoint, their operations resemble a savvy real estate strategy: seizing traffic distribution channels ahead of time. Now they hold the power of channel discourse and pose the question from a superior position: "Who actually has the bargaining power?"

Coinbase built its own blockchain; Stripe spent $1.1 billion to acquire infrastructure, an asset it could have rented; Kraken spent $1.5 billion to purchase a derivatives trading platform; Apple created the App Store. The logic of this strategy is: let others develop the market and bear the early risks, and when the racing track's profit potential becomes substantial, then bring the underlying infrastructure into the fold. The core question discussed in this article is: when traffic distribution channels no longer hold core value, where will the industry head?

Coinbase has 110 million verified users. Over the years, its lending products aimed at users have relied on the open-source protocol Morpho, with all protocol fees going to Morpho. Later, Coinbase launched its own Layer 2 blockchain, Base. Morpho chose to deploy on Base simply because Coinbase's massive user base generates transaction volume. Now, all sorting fees generated from each transaction on Base flow directly into Coinbase's pockets, not Morpho's.

Base generated $76 million in net sorting fee revenue in 2024 and $74 million in 2025. Before February 2026, according to the authorized agreement, Coinbase needs to share a portion of the profits with Optimism. However, Coinbase eventually cut off the cooperation and switched to its self-developed underlying architecture, keeping $64 million in revenue entirely to itself. At the same time, Morpho remains rooted in Base, developing well, with protocol locked assets reaching $2.5 billion. However, every transaction facilitated by Morpho must share profits with Coinbase.

Monthly sorting fee revenue of Base, data source DeFiLlama

Leveraging Morpho's underlying architecture, Coinbase launched a $300 million Bitcoin collateral lending product. The issued wrapped Bitcoin cbBTC is Morpho's largest collateral asset, accounting for 38% of the protocol’s total locked assets. This forms a mutually constraining pattern: Morpho holds the underlying core capability of Coinbase’s lending products, while Coinbase can extract profit shares from all of Morpho’s business, making it difficult for either party to easily sever ties.

Looking at the case of Stripe: In early 2025, it spent $1.1 billion to acquire Bridge. Before that, Stripe's stablecoin business relied on Circle's infrastructure. Circle holds the rights to issue stablecoins and earns interest from the collateral reserve assets. At that time, all the revenue from Stripe's hundreds of billions in stablecoin transactions flowed to Circle. Acquiring Bridge completely turned this situation around. Bridge issues its own stablecoin USDB, secured by a BlackRock money market fund. After switching to USDB, all the substantial reserve earnings remain within the Stripe ecosystem. Stripe's annual payment transaction volume reaches $14 trillion, with a loss of hundreds of millions in annual profits from continuously renting competitors' underlying revenues.

Patrick Collison once called stablecoins "room temperature superconductors of the financial industry." Spending $1.1 billion to fully acquire this underlying tool is far more cost-effective than continuously paying tolls to competitors.

Purely spot exchanges face a natural growth ceiling, with users only able to trade a few hundred tokens. However, Kraken aims to attract institutional investors and professional retail investors, who primarily trade through futures and clearing derivatives. Operating a derivatives business requires registrations with the U.S. Commodity Futures Trading Commission, membership in the National Futures Association, and brokerage dealer licenses, and building the entire compliance system takes years; even if starting from scratch, regulatory bodies might reject qualification applications for various uncontrollable reasons.

This is also why Kraken has its sights set on NinjaTrader. The $1.5 billion acquisition in January 2025 not only brought 1.7 million funded trading accounts but, more critically, acquired all the broker-dealer licenses that would be difficult for Kraken to quickly develop on its own.

By acquiring ready-made compliance qualifications, Kraken has completely freed itself from reliance on external partners. Now it fully owns all technical systems and licenses, without needing to rely on others or spend years waiting for regulatory approvals.

Some might say: Big companies swallowing small protocols, isn’t that the norm in the industry? What's so new about it?

The total locked asset scale of Morpho is $6.4 billion, of which $3.308 billion is deployed on Ethereum and $2.488 billion is deployed on Base. If Coinbase decides to delist Morpho and switch to a self-developed lending protocol, Morpho would directly lose 39% of its locked assets; but it still retains 52% of its stock on Ethereum, while continuing to expand across multiple public chains such as Hyperliquid L1, Monad, and Arbitrum, with overall business remaining stable.

Distribution of locked assets across various public chains of Morpho, data source DeFiLlama

The case of Aerodrome on the Base public chain intuitively shows the industry impact brought by the public chain operator supporting its own competing products. Aerodrome is a native decentralized exchange of Base, architected specifically for Base optimization. Coinbase Ventures holds about $20 million in AERO tokens, making it its largest liquidity token investment; meanwhile, the project guides liquidity to Coinbase's products, including the cbBTC liquidity pool, by locking AERO tokens for voting. Aerodrome accounts for about 51% of Base's decentralized exchange trading volume, peaking at 77% in September 2024. Uniswap, deployed across 44 public chains, is the second-largest DEX on Base, capturing 30% of trading volume. Even when losing leading status on a single chain, Uniswap has not perished: it completed $212 billion in transaction volume on Base in 2025, with an estimated average monthly trading volume of $73 billion across the entire chain.

Trading volume share of decentralized exchanges on Base, data source DeFiLlama

This case confirms: multi-chain deployment is a natural moat for protocols. Projects deployed solely on a single public chain are entirely subject to the chain operator—who can support competitive products at any time to squeeze your survival space; whereas multi-chain deployed protocols can continue to operate normally even if they lose a market on one public chain. Morpho witnessed Uniswap's traffic being diverted by Aerodrome on Base and quickly expanded its multi-chain deployment. Large traffic platforms can penetrate downward to layout the underlying, while open-source protocols can horizontally expand across multiple public chains to disperse risk.

If you rely on underlying infrastructures that do not belong to you, you do not truly control your business. The party controlling the underlying holds the power to crush you in negotiations, define your product experience, and ultimately sway your operational stability. For businesses of this scale, such dependency diminishes profits on a daily basis. This business logic is not unique to the crypto industry: Amazon established barriers through AWS, and Apple, once shackled by Intel's chip roadmap, spent years developing custom chips to break free.

Everyone can see in real-time how much profit Coinbase earns from the sorting fees on Base, and can clearly observe Morpho’s locked asset scale across various public chains. This value extraction is fully transparent, something that traditional internet companies like Amazon cannot achieve with their internal infrastructure profits.

There is a potential direction for the industry: in the future, the market may be entirely controlled by giants like Coinbase, Stripe, Kraken, and a few banks. They connect the entire industry chain from underlying protocols to payment cards, using open-source protocols only to fill the gaps in areas where giants have not yet established a presence. This is a path of financial technology that is completely possible to realize. Open-source technology is no longer a free and vast ground for innovation; it will only become a workaround tape in the tiny gaps of giant enterprises that have not yet figured out how to monetize. As a joke goes: "Look at this quality little open-source protocol, we're just going to build a commercial system on top of it to harvest traffic."

But I tend to lean towards an optimistic judgment: Looking at recent acquisition cases, the probability of this monopolistic pattern is not as high as it appears. Underlying protocols are difficult to be exclusively dominated by giants like traffic channels. Morpho can complete the deployment of a new public chain in just a few weeks; replacing a lending protocol that has undergone real-world testing and is deeply embedded in institutional operations is extremely costly, making it hard for outsiders to perceive intuitively. Coinbase's $300 million Bitcoin lending product still relies on Morpho, as replicating Morpho’s security system from scratch would take years and introduce risks that Coinbase is unwilling to bear.

Protocols that can survive this wave of giant consolidation all meet a core requirement: they must complete multi-chain layouts before traffic giants build their ecosystems, deeply integrating into the backend systems of major enterprises, making the economic cost of replacing themselves unbearable. Even Robinhood, a traffic giant with a massive user base, chose to integrate a third-party zero-knowledge proof perpetual contract exchange, Lighter, as the trading backbone. Robinhood Ventures participated in Lighter’s $68 million financing, and founder Vlad Tenev maintains close communication with the project team.

If only traffic channels can create barriers, Robinhood could have fully developed all the underlying on its own like Coinbase. But it didn’t do that: balancing the trading speed of a centralized exchange while implementing zero-knowledge proof matching logic is an extremely challenging technical problem, which the Lighter team took over a year to solve; after calculations, Robinhood concluded that directly purchasing the usage rights of mature technology is far more cost-effective than building from scratch.

Currently, Morpho occupies this advantageous position of mutual checks and balances, while Uniswap is a pioneer on this route. The speed of institutional expansion and the horizontal multi-chain expansion speed of open-source protocols are competing with each other, and the ultimate result will determine the future industry landscape.

Giants like Stripe and Coinbase currently still rely on open-source technology for their underlying operations. In the short term, open-source protocols can still stand firm; we will re-examine how the industry landscape looks two years from now.