According to Woofun AI, the Monad network, developed by Jump Trading's former quantitative engineering team, is undergoing a profound transformation from a parallel EVM technology narrative to a credit economy entity.
Although it initially established recognition in the market with its high-speed matching performance, recent empirical evidence shows that the network's business model has evolved disruptively, the ecological revenue structure has completely shifted from high-frequency transactions to interest on loans, and credit has become the core engine driving the restructuring of its public chain valuation logic.
In the macro context of a cyclical contraction of the total hedged value (TVL) of decentralized finance across the network, Monad has shown strong cyclical resilience. In the 10 months to the end of September 2026, the total hedged value of DeFi protocols across the network fell from $111.4 billion to $95.5 billion, while Monad's market share jumped steadily from 0.14% to 1.09%. As of October 27, Monad's DeFi TVL has ranked 10th among all public chains. Looking back at this expansion path, the total hedging value of mainstream DeFi protocols fell from $111.4 billion on December 1, 2025 to a low of $68.2 billion on June 30, 2026, and then rebounded to $95.5 billion at the end of September. In the same period, Monad's DeFi TVL climbed sharply from $155 million to $1.04 billion, achieving an impressive increase of nearly eight times, and its share of the total network size rose from 0.14% to 1.09%.
The key inflection point in growth came in July. Aave officially launched on Monad on July 2, and 12 lending markets were opened on the first day; after three weeks, Monad officially reduced the block generation time to 300 ms. By the end of October, the network carried $985 million in DeFi TVL and $701 million in stablecoin assets, which was an explosive increase from $237 million in the first week of the mainnet launch.
This synergy between technology optimization and the deployment of leading agreements has laid the underlying foundation for the subsequent exponential expansion of credit scale.
Expense revenue restructuring: Interest on loans became the core pillar. In December 2025, 71% of the fees generated by the Monad ecosystem application came from trading processes, including spot exchange, asset launch platforms, and derivatives trading applications.
However, by September 2026, loan agreements contributed 71% of the total cost of the entire chain of apps, while transaction application fees plummeted to 16%, and revenue treasury and curator agreements contributed the remaining 9%. Under this structural transformation, the outstanding loan size of Monad's six mainstream lending platforms soared from $117 million on December 31, 2025 to $909 million on September 30, 2026. Borrowers now contribute the vast majority of Monad's on-chain app revenue.
The entire lending landscape is dominated by two leading forces. As of the end of September, credit funds from certified institutions accounted for 33% of Monad's full-chain loan balance, Aave accounted for 29%, and local agreements Morpho, Euler, and Curvance shared most of the remaining market share. Institutional credit comes at its core in terms of market share. Institutional market maker Valos opened a credit bank with an initial amount of 100 million US dollars in Monad in February, and has deployed over 1 billion US dollars in total to various market makers.
The Accumulation Network provides depositors with continuous on-chain verification of borrowers' financial status, completely changing the disadvantages of other public chain credit funds relying on low-frequency periodic reports. In July, Valos raised its bank of credit limit on Monad to $150 million. Currently, Monad carries up to $287 million in unsecured institutional loans on the chain, ranking second only to the Ethereum mainnet at $418 million in all statistics. These loans are not hard over-collateralized on-chain, but are backed by the borrower's balance sheet and off-chain statutory agreement. Market makers borrow stablecoins, carry out market making arbitrage on Monad's decentralized exchange, and continue to pay loan interest to the agreement.
Judging from the flow of funds and the mechanism of distribution, borrowers pay interest to liquid depositors through various lending applications. In the case of Aave, for example, the agreement draws reserves from interest (10% for stablecoins and up to 20% for highly volatile assets), and most of the remaining interest income goes directly to depositors. In September, Aave's depositors on Monad received an average APY of 5.8% annualized, while borrowers paid an average borrowing rate of 6.4%. Morpho, Euler, and Curvance, on the other hand, transfer almost all interest directly to depositors, and only extract a small amount of agreement management fees when community governance is clearly passed.
Every $1 TVL deposit on the Monad chain generates 89 cents of loan capital, and the utilization rate of funds far exceeds Ethereum's 42% and Base's 45%. Just 46 days after its launch, Aave's Monad Marketplace quickly jumped to become the third largest source of fee contributors to the protocol's deployment across all chains, behind the Ethereum mainnet and Arbitrum. Aave's loan balance on Monad surpassed Avalanche within two weeks of launch, and briefly surpassed Base and Arbitrum in mid-August. Its capital utilization rate remained stable at 78% in September, significantly higher than 65% of the Ethereum mainnet and 61% of Arbitrum.
According to data compiled by Woofun AI, this phenomenon of high capital utilization and low fees coexisting with low fees is extremely rare in high-performance public chains.
While the scale of credit has exploded, the scale of spot transactions on the Monad chain has continued to grow rapidly, while actual transaction costs have dropped dramatically. In the 30 days up to September 30, spot transactions on Monad paid an average of only 1.2 basis points (0.012%) of liquidity pool fees, far lower than 7.3 basis points in December 2025. Over the same period, monthly spot transactions across the network surged from $412 million to $4 billion. The combination of the two underlying mechanisms contributed to a sharp reduction in transaction costs: First, Uniswap V4 carried about half of the full chain's spot trading volume in a month up to October 26, and its Hooks mechanism allows liquidity providers to report tighter trading spreads for stablecoin trading pairs; second, market makers began to widely use internal routing algorithms to complete transaction matching between private capital pools, bypassing public AMM pools with large spreads.
MON tokens are used to pay gas fees and guarantee network consensus security through a staking mechanism. Monad deliberately maintains extremely low gas rates at the design level: in September, users across the network only paid 33,000 US dollars in gas fees, and the average gas cost per transaction was less than one-tenth of a cent. The verification node's staking income mainly comes from token inflation, and the annualized yield is about 4.2%. Since the first full trading day in November 2025, MON has cumulatively declined by 29%, while AVAX, SUI, SEI, and APT generally fell between 41% and 68% during the same period.
Based on the market value in circulation, MON's market value is only about 0.25 times its on-chain DeFi TVL, while similar competitors generally remain between 7 and 12 times; even when measured by full dilution valuation (FDV), MON's valuation is only 1.8 times its DeFi TVL, far below the median level of 9.4 times that of similar competitors. Previously, Monad launched a discounted liquidity plan for early-stage seed investors, but according to official disclosure, almost all early investors rejected discounted cashout proposals, showing long-term confidence.
Monad's current fee income base is essentially a huge stock of outstanding loans. Its annual interest income is the product of two indicators of the size of outstanding loans and the average weighted loan interest rate. As of September 30, the outstanding loan stock of the six lending platforms in the full chain was US$909 million, and the average weighted loan interest rate corresponding to actual expenses in September was 6.2%. At this rate level, borrowers pay up to $56.5 million in annualized interest to Monad's depositors and lending apps each year. At a benchmark interest rate of 6.2%, every $100 million increase in outstanding loans across the network can generate an additional $6.2 million in interest income each year. If the size of outstanding loans were doubled to about $1,818 million, annualized interest would exceed $113 million at the same interest rate; even if the overall loan size were reduced by a quarter and interest rates were reduced to 4.2%, annualized interest income could reach $29 million.
This sensitivity measurement matrix is not an empty future forecast, and the data growth logic shown above is highly compatible with many of the current heavy deployments: including the launch of Aave V4, InfiniFi Prime's introduction of private credit for fintech current accounts, XSGD and XUSD stablecoins that StraitsX plans to issue on Monad in early 2027, and a private settlement domain tailored for institutional investors by Category Labs. In its first year of operation on the main network, Monad successfully built the financial and economic ecosystem initially conceived by its founding team, and credit is the core engine of the entire ecosystem.
Top quantitative trading institutions borrow large sums of money from verifiable vaults, and Aave borrowers pay a capital premium higher than Base or Arbitrum, and each credit transaction is finally settled within 600 ms. In a major cycle of general contraction in the overall scale of the DeFi industry, Monad relied on decentralized networks protected by MON stakers to achieve an explosive growth of nearly eight times in the scale of outstanding loans. This indicates that the valuation anchor of high-performance public chains is shifting from simple TPS competition to deep ability to capture credit liquidity.