How to Make Money on Your dApp?
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How to Make Money on Your dApp?

Chirag Bhardwaj
By Chirag Bhardwaj| Friday, May 10, 2019 13:12 PM |7 min read
How to Make Money on Your dApp

For a technology that is known to free industries across the world from the perils of profit-making intermediaries, it can be a little challenging for Blockchain powered applications to make money without coming off as yet another money-making machine.
So, in a situation like this, questions like how to make money with Ethereum or any decentralized app becomes very crucial to answer.

Blockchain powered mobile apps – dApps have started a trend of their own.

The technology that was brought into existence for revolutionizing the finance domain has not just found a place in multiple industries and in partnership with a number of other technologies, but have also now started giving a plethora of use cases on the mobile landscape.

The dApp market, as we will see in a little while, has grown to such an extent that entrepreneurs from across the globe and from across a range of different industries have started crowding the space, looking to hire Blockchain dApp developers and finding answers to how much does Blockchain app development cost.

All in addition to still learning their ways around the domain and finding use cases on which way would be the most profitable and disruptive.

While you can find the answer on how to start a blockchain app business in our Guide to Blockchain development, you will have to know that it won’t stop there. There will be many things to know and to consider before you enter the decentralized space and offer your services more transparently and immutably.

The one thing to consider is to find the answer, besides how to build an app on Ethereum is how to dApps make money ~ igitur how your dApp would make money.

I was recently working on an app – Empire – a hotel booking app powered on Blockchain. At the time of the ideation of the application, I got this question thrown at me – How would my dApp make money?

Empire - a hotel booking app powered on Blockchain

Although, at the back of my understanding of the idea, I helped them with a few monetization models like – Subscription and Transaction fees, etc. I realized that there are not many people who know how their dApp can make money for them – ergo – this piece.

[In case you are interested in knowing what the Empire app entailed, follow this link – How we decentralized the Hotel Industry.]

Well, before we get to that part, let us, as promised, look at the dApps market.

Rise of dApps

Rise of dApps

Now that we have looked at how big the whole dApps ecosystem is, it is time to get back to the question ‘How do Decentralized App Make Money’. An understanding of the section would be truly helpful only if we give a picture of how non-decentralized applications make money.

Only after looking at how the traditional apps make money, you would fully be able to understand the impact of the different grounds that both app types stand on.

How Traditional Apps Make Money?

How Traditional Apps Make Money

There are multiple options open for traditional/non-decentralized mobile apps to make money, whether they are categorized in the stores as free apps or paid.

Let us quickly rewind and see what those various modes of monetization are –

1. In-App Advertisements

By offering the facility of showing ads inside the app, you not just help the associated business with a chance to get more installs but also find a reliable source of getting revenue at the back of the share that you get from the partner.

2. In-App Purchase

This model majorly works in the gaming sector where the users are pushed to buy elements to move to the next level in the game or to buy something to power up.

3. Subscriptions

The other very common mode of monetization is subscriptions. You can give the option to your users to become subscribers of your app, wherein they will have to pay a fixed amount on every fixed interval of time in return for accessing the content.

4. Affiliate Marketing

The deal with Affiliate Marketing is that you promote another app within your app and every time someone downloads the app from the link inside your app, the commission comes to you. While the monetization model is pretty straightforward, the rate of success is very limited in the model, making it one of the least chosen models.

There are many other monetization models too that we have enlisted in detail in this article here – How much money can you earn through an app along with several other aspects of app monetization.

Now that we have peeked into how the monetization model of a traditional mobile app functions, let us look into the different ways your Decentralized application can make you money.

The reason why we looked at the monetization models of a traditional app setup first was to show you that the two app types do not differ completely because of the architecture and scope but also on the basis of the ways business function and make money.

For a technology that is known to free industries across the world from the perils of profit-making intermediaries, it can be a little challenging for Blockchain powered applications to make money without coming off as yet another money-making machine.

But that doesn’t mean entrepreneurs should only enjoy the fruits of being disruptive.

Let us look at some of the ways your Blockchain focused application can make money in the market.

How do Decentralized Apps Make Money?

How do Decentralized Apps Make Money

The answer to how to monetize a dApp take entrepreneurs through many routes, let us look at what those most traveled on roads are:

1. Crowdsale and Token Launch

One of the most commonly chosen ways to monetize Ethereum application is to bootstrap a project through crowdsale and back it with a token.

If you plan on taking the route, you will have to keep following things into consideration –

  • The main functionality of your decentralized app
  • Provide access to the network
  • Distribute profit to the token holders

2. Transaction Fees

Another model that is present in almost all the guide on monetization of dApps is charging transaction fees. Charging users for availing your service can be one of the most profitable ways to earn revenue on your business.

This is how one of the most popular ways to monetize your Ethereum dApps work –

A purchases something from B on your platform

X% of the amount goes to you – the service provider

100 – X% then goes to B

The caveat here is to know what percent of transaction fees to set. If you allot a high amount, someone will eventually copy your smart contract and offer their own version with a less to zero transaction fees.

3. Premium

Taking cues from the traditional, non-decentralized gaming apps, you can too add the monetization functionality in your app to answer the investors’ persistent question on how do dApps make money.

If yours is a gaming app too, you can add the model and offer players a chance to up their game without working on the levels by buying the premium functionality using digital currency.

4. Subscription

You can easily add a membership or subscription element in the contract to ensure that the function has only called upon by subscribers or the premium members.

The time frame of this subscription can be:

Usage-based – The users would only be allowed to call function X times

Time-based – Users would be allowed to call in a function till X time passes

5. Advertisements

While still a very new/ less used monetization model, advertisements do in fact find a place in the answer to how do decentralized apps make money.

So, you should think about adding it in your list of monetization models.

6. Donations

If your dApp project is out to solve some world issue or to function around some social cause, you can put your a donate button on your application or website or can even pass its link around to social entrepreneurs to donate.

7. Create Digital Goods

One of the biggest examples of how do Ethereum developers make money using this monetization model can be seen in CryptoKitties.  

What CryptoKitties did is that they developed generation 0 kitties and them to the platform users to keep as a collectible. By making the kitties functional and unique and viral trending, they were able to attract users to put their money in the digital good.

8. Referral Marketing

There are a number of Blockchain powered platforms on the internet today that helps give a clear answer on how to make money with Ethereum. They give you a link to their website to promote and depending on the clicks or traffic you are able to send their way, you get paid by them.

So, here were the eight ways you can plan your monetization model and get back what you gave monetarily at the time of the development of your dApp.

Summary - How to Make Money on Your dApp

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Chirag Bhardwaj
About The Author

Chirag Bhardwaj, in his role as an ICO consultant, has proved himself to be someone with a wealth of knowledge and expertise in architecting and developing smart contracts (solidity), ICOs (using ethereum platform) and blockchain applications. A C++ developer with a higher appetite for innovations, he keeps himself abreast with the latest update and ways to deal with complex situations in the mobile environment. When not coding to add another wonder to the mobile world, you will find him contributing to the white paper writing and exploring Stack Overflow.

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