How do crypto projects make money?
⠀
Blockchain projects have become a radically new "business model" that has enormous potential to change any industry. And for the investors attracted to the projects, it is the potential that will later be realized in the form of profit that is an important factor when investing funds. The question arises: thanks to what do cryptoprojects generate income?
Mechanism for receiving and distributing blockchain funds (using Ethereum as an example):
Ethereum, like most other blockchains, consists of a network of validators, smart contracts, and users. When a user interacts with the network, they pay a transaction fee, also known as a "gas fee." A fee, a certain portion of which is "burned off" and another portion is given to the validators.
Common metrics for most projects when calculating the financial part:
Fees (gas fees): these are fees that users pay for using a protocol or network (gas fees in Ethereum, transaction fees in Uniswap, etc.). The fees are distributed as follows:
- A portion is given to validators who help run the network (validators on Ethereum, liquidity providers on Uniswap, etc.).
- Some of the money goes back to the token holders (often through token burns).
- Another type of expense is the creation of new tokens, which are created and paid to validators or miners.
But if we look at projects like CEX/DEX, the list of revenue sources can add:
- listing fees;
- withdrawal fees;
- market making possibilities.
What kind of product do blockchains create?
The product of any blockchain is the individual blocks in which transaction data is stored. If you want to complete a transaction, you need to buy space on the next block in the chain.
Let's take bitcoin as an example. Bitcoin has a memory capacity of 1 MB per block. There are 500 to 2,000 transactions per block, with a minimum storage size of 258 bytes. And in order to make a bitcoin transaction, you buy a block in its blockchain.
Ethereum, on the other hand, has smaller blocks - up to 80 KB. Depending on its complexity, its block can store from 2 to 200 transactions. Ethereum is much faster: in 10 minutes it carries out 4 MB of transactions, while Bitcoin has only 1 MB. More transactions per hour = more revenue (i.e. commissions).
In our new infographic you can see the ranking of projects by the amount of fees.
How do crypto projects make money? 💰
⠀
Blockchain projects have become a radically new "business model" that has enormous potential to change any industry. And for the investors attracted to the projects, it is the potential that will later be realized in the form of profit that is an important factor when investing funds. The question arises: thanks to what do cryptoprojects generate income?
➡️ Mechanism for receiving and distributing blockchain funds (using Ethereum as an example):
Ethereum, like most other blockchains, consists of a network of validators, smart contracts, and users. When a user interacts with the network, they pay a transaction fee, also known as a "gas fee." A fee, a certain portion of which is "burned off" and another portion is given to the validators.
➡️ Common metrics for most projects when calculating the financial part:
Fees (gas fees): these are fees that users pay for using a protocol or network (gas fees in Ethereum, transaction fees in Uniswap, etc.). The fees are distributed as follows:
- A portion is given to validators who help run the network (validators on Ethereum, liquidity providers on Uniswap, etc.).
- Some of the money goes back to the token holders (often through token burns).
- Another type of expense is the creation of new tokens, which are created and paid to validators or miners.
But if we look at projects like CEX/DEX, the list of revenue sources can add:
- listing fees;
- withdrawal fees;
- market making possibilities.
➡️ What kind of product do blockchains create?
The product of any blockchain is the individual blocks in which transaction data is stored. If you want to complete a transaction, you need to buy space on the next block in the chain.
Let's take bitcoin as an example. Bitcoin has a memory capacity of 1 MB per block. There are 500 to 2,000 transactions per block, with a minimum storage size of 258 bytes. And in order to make a bitcoin transaction, you buy a block in its blockchain.
➡️ Ethereum, on the other hand, has smaller blocks - up to 80 KB. Depending on its complexity, its block can store from 2 to 200 transactions. Ethereum is much faster: in 10 minutes it carries out 4 MB of transactions, while Bitcoin has only 1 MB. More transactions per hour = more revenue (i.e. commissions).
🟠In our new infographic you can see the ranking of projects by the amount of fees.
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