Thank you David Lu, Eylon Aviv, and others at Blockchain Capital for help in developing these ideas.

An uncomfortable truth many builders discover is that delivering value does not guarantee capturing it: value creation and value capture are orthogonal concepts. In crypto, teams often fixate on technical sophistication—assuming that the most advanced protocol will automatically yield a defensible, sustainable business. However, the market structure you operate in dictates how value flows, and capturing that value requires strategic positioning within it. More often than not, success favors the layer that controls distribution or leverages network effects—non-technical advantages born of smart product positioning.

To illustrate these dynamics, let’s dive into the market for onchain swaps. We’ll begin with the business theory behind the swap market structure, then turn to a case study of the Solana ecosystem. We will see that those who control distribution or settlement capture the lion’s share of value, while operators of even the most technically advanced layers struggle to retain it.

Swaps & Business Theory

At its simplest, an onchain swap is a user trading token A for token B. Recent cycles have shown that users are remarkably fee insensitive—willing to pay fees typically measured in basis points of the trade size. That fee ends up being carved out among several participants in the swap supply chain.

When a user clicks “swap” on a frontend interface (e.g. the Uniswap app), the request is routed to a DEX (e.g. AMM, order-book, or RFQ) and is ultimately settled onchain. Each layer, from the UI provider to the DEX to the settlement layer, competes for its share of the fee.

Users face a wealth of options: dozens of frontends plug into multiple execution venues and settle swaps across various blockchains. For example, one might select the Uniswap interface, which routes swaps into Uniswap’s liquidity pools on Ethereum, or opt for Jupiter, which may leverage its RFQ on Solana. Users at the front end layer are largely fee insensitive. Rather than a race to the bottom on frontend fees, competition hinges on brand recognition, user loyalty, and good UX. At the exchange layer, the contest is driven by liquidity depth, pricing efficiency, settlement speed, and security. And at the blockchain layer, success depends on network effects, cross-chain interoperability, protocol security, and brand.

What we’ll see is that the lion’s share of value accrues to the frontends and the blockchains. Frontends pursue two winning strategies: verticalization—owning the entire swap lifecycle to capture all fees—or commoditization of complements by driving external DEX fees toward zero to seize the lion’s share. Meanwhile, blockchains stick to a classic network effect playbook, leaning on interoperability to defend against both verticalization and commoditization and cement their pricing power.

Going to market with the most technically advanced DEX—with the best pricing algorithm and the most sophisticated MEV protection—might yield a fantastic product, but it still won’t make it against the commoditization pressure and distribution advantages of frontends. We’ll see that positioning, therefore, is what matters.

Early Vertical Integration

Early on, swap players leaned hard into verticalization. Frontends aimed to control the very DEX to which they were sending volume (e.g. Uniswap’s interface directs flow straight into Uniswap’s AMM). This approach offers clear benefits: controlling both the UI and the DEX secures the user relationship and taker flow. That consistent volume attracts market makers and LPs, who value a steady stream of orders. Verticalization also allows retention of every basis point that would otherwise flow to an external DEX, apart from the blockchain’s fee. By owning distribution and execution end to end, middlemen are eliminated and margins secured.

We’re now seeing teams question why they should even pay fees to an external blockchain—and some are fully vertically integrating by launching their own app chains. If you control all three layers, you eliminate outside infrastructure fee capture entirely—think Uniswap with Unichain or Hyperliquid’s bespoke chain. The trade-off is you lose the composability that comes from settling on a common chain (i.e., out-of-the-box atomic swaps).

Not owning the frontend

Owning only the DEX, or even launching your own app chain, without controlling the frontend is a dead end for value capture. DEXs rely on network effects—liquidity begets liquidity—creating a classic chicken-and-egg dilemma. Without a reliable stream of taker flow, your pools stay shallow and your network effects never kick in. It's the frontend that guarantees that flow: owning the user relationship is what turns infrastructure into a business.

On top of that, currently onchain swaps are overwhelmingly retail-driven, and market makers prefer to deploy capital where they see predictable, non-toxic order flow. Frontends that aggregate retail traffic become kingmakers for their chosen DEXs—they drive volume, attract LPs, and lock in the positive flywheel that cements network effects. Without that retail gateway, even the most technically advanced DEX can’t compete.

It should be noted that this isn’t a universal rule for all exchange models—standalone exchanges thrive in TradFi behind institutional gateways and professional routers, thanks to different regulatory frameworks and market structures.

In the onchain world though, owning the user relationship is essential to bootstrapping liquidity and capturing value on an exchange.

You don’t need to own the DEX!

Another player in the market emerged: the aggregator—a middle layer that disintermediates DEXs from users. An aggregator sits between frontends and DEXs, routing each order to the venue offering the lowest available quote. That routing pressure forces DEXs into a pure price competition: they can only charge the spread between their quote and the next best, driving margins toward zero. Meanwhile, frontends win multiple times over—they outsource all the heavy lifting of liquidity and routing, retain full control of the user experience, and pocket any remaining fee delta, as users are largely fee-insensitive.

Aggregators stand on shaky ground. They’re middleware, not distribution. And in crypto, that’s a dangerous place to live. ”Frontends aren’t loyal—today they integrate one aggregator, tomorrow they switch to another offering better rates or UX. As a thin middleware layer, any competitor can build a similar service at low cost. Even if an aggregator layers on value-added services—analytics, gas optimization, MEV protection—it still doesn’t own the user relationship or distribution channel. At the end of the day, only the platform that controls the UI can guarantee lasting order flow and capture the true upside.

Unsurprisingly, many aggregators run a vertical integration strategy, owning both the frontend and routing layers. This is a winning combination: there’s a top-of-funnel that guarantees flow to the router, and that router drives external DEX fees to zero, allowing the vertically integrated frontend to capture the entire fee spread themselves—all without ever owning liquidity.

A deeper form of vertical integration appears when an aggregator spins up its own DEX. By capturing fees at the frontend, the aggregator can run the trading venue at zero fees—undercutting other DEXs and triggering a race to the bottom. This is a textbook “commoditize your competitor” tactic.

An even murkier strategy emerges in this verticalization: an aggregator can steer trades to its own DEX—even when it isn’t offering the absolute lowest quote. While Tradfi has regulations around best price, the onchain market is immature and users won’t know the difference. Some routers arguably employ this strategy today, though many truly do deliver the best price.

Again, if a pure-play DEX came along—boasting the optimal pricing mechanism, sophisticated MEV capture, and unmatched speed—but lacked a frontend and distribution strategy, it would still struggle, even if all of its technical claims were true. Beyond the cold-start hurdle of attracting liquidity, protocols now face an upstream actor exerting relentless commoditization pressure. Without control of distribution, even the “best” product will be squeezed out by market forces.

Who captures value?

Although aggregators and exchanges enable the onchain swap, frontends and blockchains capture the lion’s share of the value.

Frontends own the user relationship and, with that distribution “ball control,” can levy a fee on every swap and ruthlessly commoditize the layers below or leverage their distribution advantage to verticalize down. Aggregators, lacking loyalty, see their take rates driven toward zero, and DEXs face the same squeeze when competing for order flow. Meanwhile, blockchains sit at the foundation, collecting fees on settlement and wielding power thanks to network effects from native interop and owning the liquidity.

Importantly, neither frontends nor blockchains achieved dominance by product quality alone. Rising to the top requires strong go-to-market strategy, branding, partnerships, growth tactics and distribution playbooks.

The Wallet’s revelation: They own the user, too!

Going deeper into the stack, wallets realized they often serve as the very first touchpoint for users—before a user ever touches a traditional frontend. Instead of handing off that valuable flow to third-party interfaces, wallets like Phantom have embedded native “swap” buttons right in the app. Under the hood, these wallet-based swaps simply route through existing aggregators or DEXs, so there’s no need to own liquidity or build an exchange. By doing this, wallets transform into the ultimate frontend layer: they claim the user relationship at the gate and divert the swap volume—and the accompanying fees—that formerly flowed downstream to traditional frontends.

An interesting wrinkle in this market structure is the rise of wallets-as-a-service and embedded wallets. These models shift where and how the wallet captures the user relationship. Exploring their impact on distribution and fee capture falls outside the scope of this article.

Solana in practice

To bring theory into focus, let’s zoom in on the Solana ecosystem.

Each frontend competes with a unique top-of-funnel play to own the user relationship.

Phantom intercepts users at the wallet layer, embedding swap functionality directly in the app and routing orders via Jupiter’s aggregator.

Pump.fun dominates the memecoin scene with a gamified, casino-style UX—its token launchpad and discovery page serve as a powerful funnel, driving volume and keeping users trading on its platform. Originally, Pump.fun operated purely as a launchpad frontend routing users to external frontends for trading.

Raydium exemplifies frontend DEX verticalization: it has a classic interface and owns the execution venue, routing trades through its own pools. Raydium initially benefited when Pump.fun seeded pools with newly launched memecoins.

Jupiter showcases frontend aggregator verticalization, combining a sleek UI with aggregation—stitching together the cheapest quotes from Meteora, Raydium, and others—while layering on DCA tools, gas optimizations, etc.

DEX Screener targets professional users with advanced analytics, sourcing execution through Jupiter to satisfy sophisticated trading demands.

Finally, every swap settles on Solana, which accrues gas fees and cements its power via native interoperability.

Who Captures Value?

Unsurprisingly, just as the theory section predicted, frontends and the chain itself capture the lion’s share of revenue. The top revenue generators on Solana are the chain itself and companies that operate DEX frontends.

Perhaps most striking in this chart is that simple Telegram bots appear among the top revenue earners—outpacing many protocols celebrated for their sophisticated features. This drives home the point that control of distribution, rather than technological complexity, is the key to value capture in the onchain swap market.

Market Evolution

Players in the Solana onchain swap market are acutely aware of these dynamics and are strategically moving to expand their reach and capture more swap-fee value through vertical integration and enhanced frontend capabilities.

Pump.fun realized it could expand its frontend capabilities by offering native swaps in the interface instead of handing off that valuable user relationship to external frontends. Moreover, after routing vast trading volume and liquidity to Raydium, Pump.fun verticalized and launched its own DEX, deploying net new bonded tokens on its exchange. By internalizing execution, Pump.fun now keeps all the swap fees on its newly deployed pools, triggering a sharp volume drop at Raydium and highlighting how vulnerable a standalone exchange is when disintermediated from users.

Jupiter singularly expanded on multiple fronts. It announced plans to launch a native wallet to capture more of the frontend layer, recognizing Phantom’s wallet-first position as a distribution advantage. It also acquired Moonshot (Pump.fun’s direct competitor) to bolster top-of-funnel reach. And it further verticalized its stack by launching an RFQ engine for blue-chip trading, capturing major-volume flow that was previously won by Raydium.

Each of these moves stems from the same insight: control of the user relationship affords the flexibility to extend vertically or commoditize complements at will. In Solana’s onchain swap market, whoever owns that gateway enjoys the greatest freedom to experiment, and the strongest claim on value.

Conclusion

Yes, your product matters—but it alone will not yield success. Success hinges on understanding distribution, customer relationships, and market positioning. The Solana case study highlights this counterintuitive truth: the technically sophisticated layers—aggregators and DEXs—generate substantial value but retain only a sliver of it, while relatively simple frontends capture the lion’s share through distribution advantages.

Appendix:

MEV Builders and Proposers

This analysis omits critical actors in the swap supply chain—proposers and builders—where fees are captured in the form of MEV.

On Solana, Jito is the core player in this space. 

MEV dynamics and builder-proposer economics deserve their own deep dive. As PFOF deals mature, I imagine frontends will be the primary beneficiaries— we're already seeing some frontends begin to monetize their order flow. Much of my previous work covers these topics; if interested, visit my website jonahburian.com.