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Most of us think how to make money from crypto, but have you ever wondered how the project itself makes a profit to survive and thrive in this environment? Here are some ways that projects have been applying in the market to make money (there may be other options but less popular).
This is the most common way to talk about monetization of projects. Specifically, the token launch includes token allocation. This allocation divides the total amount of tokens into different amounts such as: fundraising, team and founder… It is this fundraising part that is the most visible factor in the process of making money for the project to maintain operations. .
There are also other allocations that are not obvious at first glance, but play a major role in feeding the project. These are Ecosystem Growth (ecosystem development), Community (community), Marketing…
In theory, these funds serve different purposes, but in essence, they are both a source of money to help the project grow.
Call for capital
It is also correct to consider the fundraising as a separate branch of the above token issuance, because this is the purpose of the token number in the fundraising section (used for sale in Seed, Private …). In addition to helping the project have money to build products, fundraising activities also help the project connect with investors investment funds (VC) – people with experience in the market.
Expanding the definition, raising funds does not necessarily require a token sale. Some companies use shares to raise capital, or others can use future revenue to pay back (loans).
The common point of the above cases is that in the end, investors all aim for direct profits (token, shares, loan interest). However, there is another type of “funding” where the profits “investors” receive are not as conspicuous as above, which is ecosystem grants.
Take for example Optimism and the OP Stimpack grant with an amount of OP tokens used to fund projects in the Optimism ecosystem. Of course, in the end, Optimism will not receive money, or more OPs than they initially spent, but they get a bigger benefit: not only the project but also the ecosystem will grow.
Establishment of investment branches
The project not only makes money directly through product sales, sometimes they also set up an investment fund. The purpose of these funds is similar to that of VCs: it is to invest to bring in profits.
A prime example is Uniswap with Uniswap Labs Ventures. This investment arm of Uniswap will invest in projects with the ultimate aim of earning profits.
Compared to VCs, project funds have the strength that they possess practical knowledge in building products. Funds like Multicoin, Hashed… no matter how big they are, they can only help the project in sub-sections such as networking, market research, etc. Meanwhile, for those who build products, they have experience. Experience in the field you are working on to help with new projects.
Another example can be mentioned is Stani Kulechov – founder of Aave. He is a longtime “player” in crypto so his network of connections and experience in the market are undisputed. It is not clear whether the investment and profit he brought back to develop Aave or not, but it can be seen that investment is no longer a “piece of cake” for investment funds, but now projects are also available. can jump in.
Due to the specificity of each project, this is not the way to be applied by many parties. Paid subscriptions are often used in informational projects, such as The Block, Nansen… or TradingView – commonly used tools by traders.
These parties will offer exclusive privileges to those who pay higher fees. Therefore, they have to make users realize the value of these service packages.
Parties like The Block, Messari often put some of their articles on social networks for free as a form of “decoy”. Or with Nansen, they are famous for having a reputable on-chain analysis team that uses their own tools to make market judgments, such as Alameda and FTX’s activities during the event. FTX collapsed.
Since these projects have revenue, it is not necessary to issue tokens. Moreover, if they want to raise capital, borrowing may be the easiest option.
Directly generate revenue from products
Like a normal company, if a project wants to develop on its own, it can’t just rely on the capital they call for, but they have to generate revenue by themselves.
The figure below is the monthly revenue report of MakerDAO – a large project in the lending field in particular and crypto in general. The table below shows that each month they earn several million USD, this is equivalent to Seed, Private funding rounds of new projects.
Gemini offers to put its GUSD into MakerDAO’s PSM, in return MakerDAO will receive a profit of 1.25%/year. With Coinbase, MakerDAO will deposit USDC into Coinbase Prime to receive 1.5% annual return.
The project does not use individual profit making methods, but they can combine many methods. Usually, the following forms will be applied depending on the period: when launching, calling for capital, issuing tokens; After sustainable development, add the fee collection feature…
But no matter which method is used, in the end, projects need to operate sustainably, thereby attracting a large number of users and building a reputation for implementing the above activities.
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