Like other traditional companies, dApps also focus on earning high revenue to bring profit which is also an essential part of dApps.

 

 

We are all too familiar with traditional business models, including businesses or startups operating in any form, online or offline. What they all have in common is that they are built on a practice called a company and are registered with the host country. The revenue source of such companies comes from selling their products and services.

 

Currently, with the strong development of the decentralized world. The number of dApps born to tens of thousands of projects. So we always wonder if it is a decentralized application and what the motivation is for developers to develop the project. What will the revenue and how they make money? Let’s go with Omatech to learn about businesses and startups working with dApps and earning income from it.

 

First, we must understand what dApps are?

 

What qualifies a project labeled “decentralized”?

 

The decentralized application is entirely open source, operates autonomously, and no single entity controls most of the token. Decentralized application data and activity records will be stored cryptographically on public blockchains.

 

The application may adapt its protocol in response to suggested improvements and market feedback. But almost all changes must be decided by the consensus of the majority of users.

 

To put it simply, dApps are likened to decentralized companies built in decentralized countries. There are a lot of decentralized countries, e.g., Ethereum, BNB Chain, Polkadot, Cardano, etc. And the companies made in those countries will be called dApps.

 

Called decentralized, the business model and way of making money differ significantly from the traditional applications and companies people often see. Any business model needs cash to work, and decentralized or centralized projects will fall apart quickly without money.

 

How to make money from traditional Apps

 

There are many business models for traditional applications. These models help companies monetize their apps. The apps aim to focus on attracting users and monetizing them. Here are some popular ways to monetize traditional apps.

 

01. Ads in the app

 

The app will create a community in it. And show ads to users. The app will receive money from those who buy ads. Social networks do a great job at this.

02. Advanced features

 

They initially offered a few features for free to users. And to use all the advanced features, users need to buy a premium plan.

 

An excellent example of this strategy is Canva (a simple photo editing app). Canva allows users to use the free version and access more advanced features. Then users need to purchase a premium version from Canva to use it.

 

03. Affiliate Marketing

 

The monetization model introduces users to great product features and creates demand for them. The user can access the purchase link, and the marketer will receive a percentage of the commission from the product seller.

 

Like Amazon will pay you if someone buys through your affiliate link.

 

04. Register

 

They will initially open up all the features for the user to experience for a certain period. Customers must then register to continue using those features.

 

Apple Music is doing it this way by giving customers a period before they decide to buy their service.

 

Now we will come to dApps monetization methods. Because it is decentralized, the ways to raise and make money differ from many traditional companies.

 

How dApps make money

 

Because dApps and blockchains also have to be created by an organization. So who are their legal entities, and how do they have authority over dApps?

 

A nonprofit organization that manages the development of the code usually did token issuance. This nonprofit will receive no financial benefit from the software and may have the following responsibilities:

 

• Initial token issuance.

 

• Hold developer tokens.

 

• Manage bonus payments.

 

• Project development orientation.

 

Nonprofits can make fully decentralized decisions. Allows a voting mechanism by the number of tokens to determine any decision.

 

Just like traditional companies. dApps are also focused on earning high revenue. Revenue is an important part. It is a good sign to know if the project is operating effectively and can develop in the long term or not.

 

Revenues are those that are brought in from the outside into the protocol. There are many sources of money from outside to inside the protocol, but it still mainly comes from user transaction fees.

 

Some dApps also have a profit-sharing mechanism for users. For mutual benefit, it’s a pretty compelling and sustainable way. Aim to keep more people with the protocol.

 

The following are popular ways of monetizing dApps.

 

Distributing tokens to the public

 

There are many forms of token distribution to the public. In the past, ICO (Initial Coin Offering) was the popular way. Then there’s the Airdrop. Recently, projects can be sold on centralized exchanges (IEOs) or decentralized exchanges (IDOs).

 

Now more and more venture capital funds (VCs) are involved in investing in Crypto projects. And often before the retail investor in the market. More or less causing a certain “”distortion”” for “”decentralization””.

 

Transaction fee

Follow this model. Many dApps platforms charge a fee on the transaction that a user uses their service.

 

This is one of the most popular methods to monetize dApps.

 

Selling items

Many decentralized gaming platforms allow buying and selling of NFTs in their marketplace.

 

Games like Axie Infinity, Decentraland… Sell items and land in the Metaverse world to participants.

 

In addition, buyers can freely transact with each other on NFT marketplaces within dApps or large and well-known NFT marketplaces like Opensea.

 

The “play-to-earn” trend was prevalent in 2021. It has brought one of the new business models, in addition to playing games for entertainment. Players can also earn money from the items they own in the game.

 

Also, NFT collectors like Bored Ape Yacht Club sell 10,000 NFT gibbons for quite a high price. BAYC is one of the most valuable NFT collections of the Crypto market.

 

The dApps that bring in the highest revenue

 

Although the market has many areas for dApps to develop, so far, AMM DEX and NFT Marketplace are the two places that generate the most revenue.

 

And the Lending / Borrowing and derivatives array only accounts for a small part.

 

People often confuse transaction fees with revenue. Transaction fees are what users will pay when transacting on a particular blockchain, like Opensea running on Ethereum. Users who want to buy NFT must pay a transaction fee for Ethereum. This fee will go to the miners, not to Opensea. So it doesn’t count as revenue. Revenue is the amount that dApps will include in that transaction.

 

 

 

Now we will learn how to make money from some famous dApps.

 

• How to make money from Uniswap

 

Uniswap is the largest decentralized exchange (DEX). It allows users to swap tokens by using liquidity provided by other users.

 

Uniswap makes money in many distinct ways: transaction fees, fees from liquidity pools, and issuing UNI tokens.

 

The higher the trading volume, the bigger the revenue.

 

Uniswap collects a total of 0.3% on transactions. From there, give back 0.25% to the liquidity provider—0.05% of the children they put into the fund. As for what to do with the money in that fund, we have not heard Uniswap specifically announce it yet.

 

Liquidity providers enter the exchange for others to trade. They have to bear a relatively important risk from unforeseen loss (Impermanent Loss), so the reward must also be relative.

 

The total market capitalization of UNI tokens is billions of USD. And Uniswap’s team owns 21.5% of it.

 

 

Uniswap generated more than $1 billion in revenue in 2021. Most of this revenue was redistributed to liquidity providers. The company could achieve more than $40 million in sales.

 

• How to make money from Opensea

OpenSea is the largest NFT marketplace. OpenSea makes money through service fees. A 2.5% fee is collected whenever a digital item is sold on the platform.

 

The platform is also straightforward, and OpenSea fees are lower than other marketplaces.

 

Here are a few fee comparisons between NFT marketplaces. (you will pay this % fee based on the amount you sell on the market):

 

OpenSea: 2.5%

Ebay NFT: 5%

Rarrible: 2.5%

SuperRare: 15%

Nifty Gateway: 20%

Foundation: 15%

Binance NFT: 1%

 

As reported by dappradar on-chain data research. They are bringing in approximately $326.4 million in revenue in 2021. (these numbers are 3rd party analyses and not confirmation from OpenSea).

 

*OpenSea has released no official revenue figures for the company’s operations for 2021.

 

The second source of OpenSea’s revenue comes from the merger and acquisition (M&A) business model.

 

OpenSea is privately held and has no plans for a wide release yet. Hitherto. OpenSea’s funding comes from VCs and angel investors’ funding rounds.

 

Curve Finance’s way of making money

Curve Finance is a decentralized exchange (DEX) AMM like Uniswap but focuses on stablecoins. Curve Finance charges a 0.04% fee based on swap volume.

 

50% split among the liquidity providers.

 

The remaining 50% to buy bought 3CRV tokens to divide among CRC holders.

 

How to make money from Axie Infinity

Sky Mavis attracts revenue from Axie Infinity players by charging 4.25% when they trade Axies on Axie Infinity’s marketplace.

 

The merchant pays the fee itself after the transaction is made. Players can buy and sell Axies, lands, items…

 

Sky Mavis, the unit behind Axie Infinity, is currently valued at $3 billion after raising $152 million in a Series B round in October 2021.

 

Because Sky Mavis is still privately owned, there is no obligation to disclose revenue figures to the public. However, blockchain tracker Token Terminal estimates that Axie Infinity-generated $364 million in revenue in August 2021 alone. This is an 85% increase from the July figure. Of that, the company-generated 196 million dollars.

 

Conclusion

A good business model allows people to take part in the project as token purchasers. Project contributors or network resource providers receive rewards for their efforts. All this group of people can earn the price benefit of the project token increasing in the long term. It benefits all parties.

 

A successful project brings value to the market. Regardless if it is decentralized or centralized. If the project’s value is more important, there will be more users. Generating revenue and cash flow for the project to continue to develop in the future.

 

It’s not natural that we have an entire Bitcoin mining industry. As long as it’s profitable, people will keep doing it.