Are you new to the world of blockchain and web3 but curious to learn more about how it all works and how you can make some long-term gains out of it? Well, we are here to help you out.

DApps are an excellent gateway to decentralize finance (DeFi). But, to understand the monetization behind decentralized applications or dApps, we first need to understand what is a decentralized application, and more importantly, what is decentralization.

What is decentralization?

Yes, when building a digital product or service for a business, the choice of network architecture is important. Centralized, distributed, and decentralized are the main options to consider. Blockchain technology is often based on decentralized networks, but blockchain app development is not a decentralized application. Decentralized apps (dApps) allow businesses to manage their own digital assets and data and can be built using blockchain or other decentralized technologies.

What are decentralized applications or dApps?

Decentralized applications (dApps) are software that interacts with a blockchain network. In the context of decentralized finance (DeFi), dApps can be used to track the state of all network participants and manage financial transactions. They have a similar interface to traditional websites or mobile apps, but their core functionality is powered by smart contracts, which are self-executing contracts with the terms of the agreement written directly into code. These smart contracts are stored on the blockchain, making dApps more secure and transparent.

Many dApps require users to hold or use a specific token in order to access certain features, such as games, trading, staking, or earning interest. This token-based model can help businesses with engagement by providing a way for users to become more invested in the platform. Additionally, because dApps are built on decentralized networks, they can be accessible to businesses of any size, making them a popular trend in the blockchain industry. The use of token-based access to features and the decentralized nature of dApps make it attractive for businesses to adopt and explore potential use cases in their industry verticals.

How Do dApps Make Money?

Stated below are some unique models that enable businesses to earn revenue via dApps:

1. Crowdsale & Token Launch

One common way to generate revenue for a dApp business is through a crowdsale of an asset token that is closely tied to the functionality of the dApp. This allows businesses to raise funds for the development and launch of the dApp, while also providing a way for users to access the platform and potentially earn profits through the token.

When considering this revenue model, it’s important to keep in mind the core functionality of the dApp, as well as how access to the platform will be provided and distributed. Additionally, it’s important to consider how profits will be distributed to token holders and how the token’s value will be maintained in the long term. It’s also important to keep in mind that this method of raising funds is highly regulated, and it’s important to comply with all relevant laws and regulations.

2. Transaction Fees

Charging transaction fees is another popular way to generate revenue with dApps. This model involves charging users a small fee for every transaction made on the platform. This can be an effective way to make money with dApps, as it allows businesses to monetize the platform without having to rely on advertising or other revenue streams.

When using the transaction fees model, it’s important to consider the percentage of the fee that will be charged. Setting a high fee may deter users from using the platform, while setting a low fee may not generate enough revenue to sustain the dApp. Finding the right balance is key, and it’s important to be aware that other dApps may copy your smart contract and offer their own version with lower or no transaction fees.

It’s also important to note that this method may require additional compliance with legal regulations, and it’s important to fully understand and comply with all relevant laws and regulations.

3. Premium

Another way to generate revenue with dApps, particularly gaming dApps, is to use monetization strategies similar to those used in traditional, non-decentralized gaming apps. This can include offering in-app purchases, such as premium functionality or virtual items, that can be purchased using digital currency.

This can be an effective way to generate revenue for gaming dApps, as it allows players to enhance their gaming experience without having to work through levels. Additionally, by using digital currency, the transactions are secure and transparent, and it can also attract a different user base for the gaming dApp.

It’s important to note that this method requires additional compliance with legal regulations, and it’s important to fully understand and comply with all relevant laws and regulations. Additionally, it’s important to find the right balance of monetization, so as not to discourage players from using the platform. It’s important to offer a fair pricing and not make the monetization too intrusive or too restrictive.

4. Subscription Model

Adding a membership or subscription element to a dApp can provide an additional revenue stream by allowing users to access premium features or services. By using smart contracts, it is possible to ensure that the function is only called upon by subscribers or premium members.

There are different ways to structure the subscription, such as:

• Usage-based: Users would only be allowed to call a function a certain number of times. For example, users would be allowed to call a function 10 times per month.
• Time-based: Users would be allowed to call a function for a certain period of time. For example, users would be able to call a function for one month.

5. Advertisements

Advertising is another revenue model that can be used for dApp monetization. It is not as widely used as other models such as token sales or transaction fees, but it can still be an effective way to generate revenue for dApps. By displaying ads or sponsored content within the platform, dApps can earn revenue from advertisers looking to reach their target audience.

When considering advertising as a revenue model, it’s important to keep in mind the user experience and the potential impact of ads on the platform. It’s also important to consider how ads will be targeted and how the revenue will be shared.

6. Donations

Another way to generate revenue for dApps that are focused on solving a specific problem or addressing a social cause is through donations. This can involve adding a donate button to the dApp or website, which allows users to make a donation using digital currency. You can also pass the link around to social entrepreneurs and non-profit organizations who may be interested in supporting your cause.

7. Create Digital Goods

CryptoKitties is a good example of how Ethereum dApps can generate revenue through the use of non-fungible tokens (NFTs) as a collectible items. CryptoKitties is a game built on the Ethereum blockchain that allows users to buy, sell, and breed digital cats. Each cat is represented by a unique NFT, which is stored on the blockchain.

The CryptoKitties team created a set of “generation 0” cats, which were given to early users as a way to attract them to the platform. These cats were unique and rare, which made them valuable and desirable as collectible items. By making the cats functional and unique, CryptoKitties was able to attract users to put their money into digital goods.

This is a great example of how Ethereum dApps can generate revenue through the use of NFTs as collectibles. By creating unique and desirable digital items, dApps can attract users and generate revenue through the sale of these items. It’s also worth noting that this business model is not only limited to CryptoKitties but it can be applied to many other use cases and industry verticals, where NFTs can be utilized as a digital collectible.

8. Referral Marketing

Referral marketing is another revenue model that can be used for dApp monetization. It has proven to be a successful strategy for e-commerce apps and can also be applied to decentralized applications. With referral marketing, dApps can offer users a referral link that they can share with others. For each person that clicks on the link and signs up for the platform, the referrer will receive a commission or referral fee.

This can be an effective way to generate revenue for dApps, as it allows them to leverage their existing user base to attract new users to the platform. Additionally, referral marketing can also be used to incentivize users to promote the platform and help it to grow.

It’s worth noting that referral marketing can be an effective way to generate revenue for dApps, but it’s important to ensure that the referral program is fair and transparent.

9. Gaming dApps

One way to generate revenue for gaming dApps is by promoting or sponsoring the content of similar games. This can involve partnering with other gaming companies or developers to promote or sponsor their games on your platform. This can be an effective way to generate revenue for gaming dApps, as it allows them to leverage their existing user base to attract new users to the platform. Additionally, it can also be used to incentivize users to promote the platform and help it to grow.

10.  Decentralized Exchange Apps

Stock exchange decentralized apps (dEx) can generate revenue by charging transaction fees for trading market shares. This can involve charging a small fee for every trade made on the platform. This can be an effective way to generate revenue for stock exchange dApps, as it allows them to monetize the platform without having to rely on advertising or other revenue streams.

It’s important to consider the percentage of the fee that will be charged, as setting a high fee may deter users from using the platform, while setting a low fee may not generate enough revenue to sustain the dApp. Finding the right balance is key and it’s important to be aware that other decentralized stock exchanges may copy your smart contract and offer their own version with lower or no transaction fees.

This approach can return tremendous revenue to investors and exchange dApps businesses because stock exchange dApps have a high volume of transactions and by charging a small percentage of each transaction, it can generate a large revenue stream.

11.  Marketplace

NFTs are an important part of the blockchain ecosystem and can be used to generate revenue for dApps. NFT marketplaces allow users to buy, sell, and create unique digital assets that are stored on the blockchain. These can include things like digital art, collectible items, and in-game items.

By using the transaction fee model, dApps can generate revenue by charging a small fee for every NFT transaction made on the platform. This can be an effective way to monetize the platform, especially if the dApp is focused on NFTs and the users are trading a high volume of NFTs.

It’s important to consider the percentage of the fee that will be charged, as setting a high fee may deter users from using the platform, while setting a low fee may not generate enough revenue to sustain the dApp.

12. Payment dApps

Payment dApps can be used to facilitate real-time money transfers using Ethereum and other cryptocurrencies. These dApps allow users to send anonymous transactions and the transaction fee involved in every transfer can depend on the subscription package of the sender and the location of the receiver.

By using this model, payment dApps can generate revenue by taking a percentage of the transaction fee as a commission. Moreover, the low development cost, reliability, and high security of dApps make them a valuable business approach for future applications.