Fees drive blockchain & app sustainability reflecting demand & funding growth. But poor incentive structure can easily inflate the quality of the fees being generated, creating significant expenses that dilute the overall token value and price. Fees signal utility and user demand as some of the outperforming tokens have showcased in this market like AAVE, AERO and HYPE but don’t always tell the full story. @aave generates $24M/month in lending fees, funding its DAO & upgrades. @AerodromeFi earns $8.1M/week in swap fees, all distributed to veAERO holders. @HyperliquidX’s $587M/yr fees from perps & spot markets fund HYPE buybacks, helping to drive value and token appreciation. But fee generation alone is not enough as incentives can be a detriment and create false sense of demand and sustainability. Celestia is a prime example of the impacts of incentives vs fee generation with over $100M in incentives this year with just $250k in fees, paired with unlocks the price has suffered dramatically. Another good example is Velodrome, although they’ve generated $6.3M in fees this year they also have payed out almost $9.0M in incentives contributing to the poor price performance. The main takeaway is that fees are a very important metric but you can’t ignore the cost of generating those fees in the form of incentives and the market prices reflect that. My current thesis is to invest in projects that are properly balancing value, fees, & incentives which I believe will lead them to out perform the rest of the market over the near and long term.