Crypto Revenue Generating Models
Few of various ways that crypto projects models generate revenue:
👉Blockchain’s transaction fees : This is the fee paid as reward to miners/validators who process the transactions. Without fees there are no miners & without miners there is no blockchain.
e.g. Bitcoin fees is measured in satoshis— the smallest divisible unit of bitcoin. A satoshi (sat) is 100 millionth of a bitcoin shown as 0.00000001 BTC. If a transaction is 400 bytes, and the average transaction fee is 80 satoshis per byte, you would pay 32,000 satoshis (or 0.00032 BTC) to have your transaction added to the next block.
Ethereum fees are based on the computational power it takes to validate the transaction AKA called “gas” Stated in gwei which stands for giga-wei (wei being the smallest denomination of ETH), gas fees are made up of two things, the gas limit— the maximum amount of gas that you’re willing to pay to run a transaction; and the gas price— the amount you want to pay per unit of gas.
👉 NFT marketplaces transaction fees: A fee of 2% is charged at the marketplace for all NFT transactions.
DEX Trading fees : Decentralized exchanges are built on top of leading blockchains that support smart contracts. They are built on top of layer-one protocols, meaning that they are built directly on the blockchain. The most popular DEXs are built on the Ethereum blockchain. Every trade incurs a transaction fee along with the trading fee.
👉 Lending Interest & Origination fees: Many crypto platforms allow you to earn interest on your digital assets when you lend them to institutional/retail borrowers, this generates yield for the lender and liquidity for the borrower.
The interest on your loan is a fee that’s paid to a lender in return for borrowing money. The interest rate on a loan is typically expressed as an annual percentage rate, or APR.
A loan origination fee is a fee that’s charged by a lender in return for evaluating and processing a loan application.
👉 Staking : Block rewards & transaction fees : With ETH moving to PoS consensus mechanism from PoW, Staking will become more rewarding. Staking is a form of passive income earned by utilizing crypto funds as below:
- Staking crypto assets to secure the blockchain network itself
- Staking to provide liquidity on decentralized exchanges and
- Staking to provide liquidity on lending platforms.
👉 Indices: management fees: Cryptocurrency index funds are an interesting investment opportunity, its a financial vehicle that invests in a group of cryptocurrencies and gives investors access to a diversified basket of digital currency assets. And as with any index fund, investors have to pay management fee. Few S&P Cryptocurrency Indices as below:
S&P Bitcoin Index: Ticker : SPBTC
S&P Ethereum Index: Ticker : SPETH
S&P Cryptocurrency MegaCap Index: Ticker : SPCMC
S&P Cryptocurrency Broad Digital Market Index: Ticker : SPCBDM
Source: Internet
