How do Blockchain projects make money?

Ways that Blockchain projects create huge profits for the development team.

If you used 1,000 USD to buy ETH in August 2015, you would have 2.23 million USD in your hand, a growth of 2,230 times after 6 years, according to Forbes Advisor.

If you invest in SOL you will receive 110 times growth in just 1 year, according to Nasdaq. If you buy BNB you will be able to achieve 7,000x ROI in 4 years.

A prominent figure in the Blockchain world, Vitalik Buterin - he became a billionaire at the age of 27. His business - Ethereum once had a market capitalization of up to 500 billion USD. This amount is larger than the total value of goods Vietnam creates in an entire year (GDP).

So why can Blockchain create such huge numbers? From what sources does Blockchain business generate profit? Are transaction fees the biggest source of money?

It is easy to see transaction fees as a source of revenue for Blockchain. But this has never been the main source of revenue. Each transaction on the Blockchain requires a small fee. But this fee does not "run" directly to the Blockchain business.

Instead, these fees will be received by miners.

These are people who own powerful computers (for Blockchain PoW), or stake a large amount of tokens (for Blockchain PoS) to operate the network and receive rewards. This is considered a significant income as a worker. Ethereum miners earned $217 million in transaction fees and $1.77 billion in mining rewards in November 2021.

Blockchain developers with a large amount of tokens in hand can also deduct a portion to become miners on Blockchain PoS. However, this is often not the business model that Blockchain developers pursue.

That's the interesting thing about Blockchain - decentralization. The Blockchain network can be operated by everyone and everyone deserves to receive transaction fees.

The role of a Blockchain enterprise is to create the platform and develop the internal ecosystem. That's how a Blockchain makes money.

In 2015, technology giant Microsoft cooperated with ConsenSys, a Blockchain company founded by the co-founder of Ethereum, to launch EBaaS (Ethereum Blockchain as a Service) on Microsoft Azure. This is software that allows businesses to test Blockchain applications without investing in infrastructure.

Very quickly, EBaaS attracted the attention of America's largest bank J.P. Morgan, jet engine supplier GE Aviation, Singapore Airlines, coffee brand Starbucks and Microsoft-owned game company Xbox.

Off to a good start, by 2022, ConsenSys has increased its valuation to 7 billion USD after receiving an investment of 450 million USD from Microsoft, SoftBank and Temasek.

Microsoft has cooperated with ConsenSys, launching EBaaS on Microsoft Azure. Big players in the banking and electronics industries are also starting to use services provided by Blockchain projects, or even develop their own services.

IBM introduced Ledger Connect in 2018 with the first customers being Citi and Barclays banks. Amazon also introduced Amazon Managed Blockchain, providing services to help users develop and manage their own Blockchain. The return from these efforts is huge revenue or an increase in sales.

Hundreds of other examples of using Blockchain services from traditional businesses in the world in general or in Vietnam in particular can be cited.

The need for a safe, secure, decentralized database is increasing. The profit potential from this type of BaaS business is greater.

Blockchain technology is widely applied in many fields.

Not only "collecting money" from traditional businesses, Blockchain projects can also sell solutions to other businesses in the industry.

In particular, special projects have focused on security solutions or Blockchain expansion in the last 2 years.

Optimism is one of the first Blockchain projects to see this business opportunity.

By developing OP Stack, Optimism provides infrastructure that allows businesses in the same industry to develop Blockchain Layer 2 - one of the "hottest" keywords recently.

Immediately after launch, OP Stack was used by Base, opBNB, Zora, Celo and DeBank to develop Layer 2. Some other big customers of Optimism are Coinbase, Binance, Worldcoin...

Base generates revenue of 1.5 million USD in 1 month. If unchanged, Base's annual revenue is $45 million, according to The Defi Investor. Of which, 10% of Base's revenue will be contributed to the Optimism Treasury, equivalent to 4.5 million USD, according to AmbCrypto.

This amount could exceed 20 million USD if the market goes into an upward trend. This could be a significant profit for Blockchain Optimism, just by offering the OP Stack product.

Besides Optimism, Avalanche has also developed Subnet (or Subnetwork), a scalable solution that allows anyone to create their own Layer 1 Blockchain. Products that support Blockchain development are creating great demand for businesses in the same industry.

Traditional businesses still have difficulty adopting Blockchain. Therefore, providing dApp development services, consulting, software quality testing support, legal issues or auditing is what Blockchain projects bring to the market.

In 2015, Hyperledger launched, allowing users to measure performance, use service tools, and build Blockchain business networks. Commercial technology giants such as Hitachi, IBM, Tencent, Ant Financial and Walmart quickly became Hyperledger customers and developed many Blockchain products.

After 3 years, the number of Hyperledge customers reached more than 200 businesses. According to Growjo, Hyperledger's revenue can be more than 20 million USD per year.

For customers who do not want to spend a lot of time on product research and development, or invest in equipment to enter the Blockchain market, Blockchain projects also provide "package services", building a Complete customized Blockchain products for customers.

These products can be a Blockchain, one or more dApps, or an entire ecosystem. Thanks to that, traditional businesses can easily own their own Blockchain products with only a nominal fee.

Calibraint, Visiontech, Antier... are prominent names in this field. According to RocketReach, this business model has brought in revenue of 17.4 million USD for Antier Solutions, 12 million USD for Calibraint and 7 million USD for Visiontech.

The above are just business models that bring insignificant revenue from Blockchain projects. Much of the money that developers make from Blockchain comes from what is very familiar to crypto traders. That is dApps - decentralized applications.

Blockchains are a network.

Like all networks, their value comes from their users. By building an ecosystem, or a "playground" for tokens, Blockchain projects create the need to own and exchange their tokens.

Tokens play an important role in transferring value in the Blockchain, are a means to create and execute dApps or smart contracts and are the common property of that Blockchain. Token price increases help developers receive sweet results for their efforts.

Tokens like Bitcoin and Ethereum have also attracted the attention of many giants in the financial world. This is shown by the fact that large financial institutions are continuously applying for Ethereum ETF funds such as Grayscale, Proshares, Bitwise... or applying for Bitcoin ETF such as BlackRock, Fidelity, Valkyrie...

The larger the ecosystem and the more users it has, the higher the demand for ownership and the price of that token, the more money that Blockchain can earn.

The Ethereum blockchain operates as an operating system, an enhanced version of iOS and Windows. The more applications and users there are, the higher the profits.

With more than 4,000 dApps in its ecosystem, users can use ETH for many different purposes such as staking, lending, mortgage, exchange... instead of just using it to pay gas fees.

For example, users can use ETH to provide liquidity on Uniswap, lend on Aave and MakerDAO, exchange (swap) with other tokens on Curve Finance, stake and receive rewards on Lido and Lybra Finance, or farm yield on Pendle…

The increased demand for owning ETH creates a huge flow of money pouring into the Ethereum Blockchain. Thanks to that, the price of ETH has increased 223,000% in just 6 years.

Following Bitcoin and Ethereum, many other Blockchains were born. Each Blockchain has different technological strengths and development goals. They can focus on speed, security, scalability, or on a specific branch.

The ultimate goal of all these Blockchains is to attract a huge number of users to generate revenue similar to the Ethereum and Bitcoin Blockchains.

With Blockchain, we are building the world we will live in tomorrow. And perhaps, Blockchain will not stop here, but will also go far, creating many achievements, making a greater impact on the world.

“No success comes overnight.

Luck is built continuously little by little over a long period of time.”

Changpeng Zhao's saying is not only true in the Blockchain market but also true in everyone's life. This is the guideline for those who are dreaming of starting a start-up in the Blockchain market.

All businesses pursuing this nascent technology go through trials on the long and lonely road of learning by doing, where success is very sweet but there is no shortage of failures waiting.