Definition ∞ Protocol fee capture describes the mechanism by which a decentralized protocol or blockchain network generates revenue through transaction fees, staking rewards, or other economic activities occurring on its platform. These captured fees can then be distributed to token holders, used for protocol development, or burned to reduce supply. It represents the inherent value accrual method of the protocol. This is a core economic function.
Context ∞ Financial analysis of digital assets often focuses on a protocol’s ability to achieve significant fee capture, as this indicates its utility and long-term economic viability. News reports discuss various fee models and their impact on token value and network sustainability. Effective protocol fee capture is a key metric for assessing the health and success of decentralized applications and their underlying blockchains.
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