Web3 companies may seem like they’re all about decentralization and revolutionizing the world, but let’s be real – they still gotta make some dough.
And just like their traditional counterparts, they do this by charging fees on transactions.
So, if you’re using a blockchain-based system to send or receive payments, expect to cough up some cash.
But don’t worry, these fees are typically reasonable and small although traders on OpenSea won’t agree with me though, but as I mentioned earlier, they’re necessary to keep the system running smoothly.
But, if you’re totally against the idea of paying fees for these web3 companies’ “middleman” services, you can make a switch to some other companies that offer free transactions.
They’re all over the internet but in this post, we’ll be taking a look at the truth about how these web3 companies make money.
Let’s go!
How is Web3 Monetized?
In this new age, web3 technologies are monetized through token economics, decentralized applications, decentralized finance, advertising, and consulting and development services.
Although these monetization strategies are evolving every day, some businesses have taken it upon themselves to amplify the strategies and implement it in their funnels which we would be looking at in this post today.
See also: Revealed: How NFT Marketplaces Make Money
Understanding Web3 Business Models
They are mostly centered around decentralization, transparency, and community-driven decision-making.
Some common business models include token-based networks, decentralized applications, decentralized finance, e-commerce, consulting, and development services.
All these focus on creating value for users and promoting the growth of decentralized networks.
How Web3 Companies Make Money
How do web3 companies make money?
Do they also generate revenue by offering consulting or development services related to blockchain technology?
Most of these methods aren’t a secret but in this section, we’ll take a run through all the business models each web3 company in different sectors use to make money.
Transaction Fees
Web3 companies make money off transaction fees with a system called gas fees. A simple way to understand how cryptocurrency transaction fees work is to understand how the wallets work.
Consider your traditional online banking applications for example.
Imagine your banking app is the blockchain, your account number is the public key, and your online banking app login details are the private key.
Every time you make a transaction on the blockchain, the banking app charges you a fee, which varies depending on the network’s congestion and the urgency of the transaction. This fee is paid to incentivize miners to process and validate the transaction on the network.
Offering Premium Services and Benefits
Web3 companies offering services also earn money by offering premium services and features to their users on their platforms.
In most cases, they charge users a subscription fee or a one-time fee for accessing these premium services and features that aren’t on the free plans.
For example, the new Twitter verification policy being rolled out by Elon Musk since his takeover of the platform.
These packages are usually classified into four namely; Subscription model, Freemium model, Pay-per-use model, and One-time fees.
See also: Why Helix Metaverse is Referred to as the Grand Theft Auto of Web3
NFT Sales And Royalties
A lot of web3 companies have jumped on the bandwagon and begun using digital collectibles as a way to expand their revenue stream since NFTs went mainstream.
They offer NFTs as a way to indulge their users to claim ownership of certain assets like figurines, virtual real estate, and in-game items.
For instance, Otherside metaverse plans to allow gamers in its metaverse to own certain perks and powerups in the game as NFTs. The NFTs will be purchased on different marketplaces and linked with an Otherside account to complete side quests and events.
Here are other ways in which web3 companies make money with NFTs:
- Creating and selling their own NFTs: Web3 companies can create and sell their own NFTs to users, either as a standalone product or as part of a larger service. For example, a marketplace could sell NFTs with unique benefits, such as early access to new products or exclusive discounts.
- Facilitating NFT sales on their platform: Web3 companies can offer a marketplace or platform for users to buy and sell NFTs, and take a commission on each sale. This model has already been successful in the art world, with platforms like SuperRare and Nifty Gateway.
- Offering NFT royalties: Web3 companies can offer NFT creators a royalty on each subsequent sale of their NFT. This incentivizes creators to continue making valuable content and encourages buyers to hold onto NFTs as a long-term investment.
Custom Smart Contracts for Businesses or Individuals
There are some web3 companies that are deeply rooted in providing their service of smart contract implementation to private individuals.
They charge licensing fees, customization fees, consultation, support and even training services on smart contract development on a blockchain.
Chainlink offers smart contract implementation and development services to large-scale industries looking to amplify their supply chain management. Their services include smart contract development for gaming, supply chain management, DeFi, and more.
See also: Smart Contracts: Meaning, Uses, and Benefits
Selling Tokens or Cryptocurrencies
They can make money from ICOs, listing fees, and cryptocurrency wallet services. The amount of revenue they generate can vary depending on the volume of transactions, and the popularity of the cryptocurrencies.
In the case of an ICO, they assist other startups and companies who are about to launch a new cryptocurrency by offering their own cryptocurrency as a form of payment to investors.
Even some celebrities are jumping on this opportunity to earn money. In Russia, you can get a free burger from Burger King with certain crypto called Whoopercoins.
Are they legitimate? Well, considering the fact that some investors have been ripped after investing in certain ICOs, and some have also gained high ROI from their investments, i’d say ICOs aren’t that bad for a start.
Crowdfundings and Investments
Crowdfundings allow web3 companies to make money usually by ICOs but there are still other investment methods web3 companies make money with. Take, for instance, Venture Capital Funding, Angel Investors, and Token Sales to Influencers.
Web3 companies often seek investment from venture capitalists that specialize in web3 and dapps (decentralized applications). When these venture capitalists invest in a particular company, it gives them access to a particular amount of shares and allows them to participate in that company’s success.
While with Angel investors, they bring capital usually during the early development stages of a startup from their personal wallets. In exchange, these web3 companies allow them to indulge in the decision-making parts of the organization.
Keep in mind that while these angel investors might own or belong to a certain company, they do not invest in another web3 startup with the funds from the other. The investments are mostly their personal funds.
See also: How To Make Money With Web3 in 2023
How Do I Become A Web3 Investor?
Every investor would agree with me that it requires a notable amount of research and persistence in order to make informed investment decisions. I’d love to go into more details but here are some steps to get started:
Start by educating yourself about the latest in web3. Visit Dipprofit occasionally to learn about blockchain technology, cryptocurrencies, and decentralized applications (dApps).
You also need to educate yourself on blockchain technology and Web3 investment potential, do this by studying courses that teach about the potential of web3.
Select an investing strategy, investigate Web3 businesses, and join Web3 communities, don’t forget to get expert assistance before buying any stocks. Prior to making any investment decisions, always invest responsibly and investigate deeply.
See also: How To Start Investing in Web3 in 2023
Final Words
With the rise of Web3 and the increasing adoption of blockchain technology, it’s clear that crypto isn’t going anywhere anytime soon.
They are the pioneers shaping the future, combining innovation, blockchain, and a dash of crypto magic to create a feast of success.
Lastly, if you found this post helpful, do well to share it with your audience so they can see it too.
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