How do Web3 projects generate revenue?

This blog post has been written by the person who has mapped the Web3 market in a clean and beautiful presentation

Web3 projects in 2025 generate revenue through seven primary models, with transaction-based fees and tokenomics-driven incentives leading profitability across exchanges, staking protocols, and NFT marketplaces.

The most successful projects combine scalable fee engines with strong network effects and aligned stakeholder incentives, creating sustainable revenue streams that can withstand market volatility. Centralized and decentralized exchanges dominate with billions in monthly fees, while liquid staking protocols like Lido capture significant revenue through validator reward commissions.

And if you need to understand this market in 30 minutes with the latest information, you can download our quick market pitch.

How do Web3 projects make money today and what are the core revenue models they rely on?

Web3 projects in 2025 operate on seven fundamental revenue models that have proven sustainable and scalable across different market conditions.

Transaction fees represent the backbone of Web3 revenue, with decentralized exchanges charging 0.01-0.3% per trade and centralized exchanges adding spreads plus withdrawal fees. This model works because it scales directly with platform usage and provides predictable revenue streams. Lending and borrowing platforms generate revenue through interest spreads, taking a cut between what borrowers pay and what lenders receive.

Protocol and stability fees create additional revenue layers beyond basic transactions. MakerDAO's stability fee on DAI loans exemplifies this approach, generating percentage-based revenue for protocol sustainability. Smart contract middleware, particularly compliance layers, charge around 0.25% per verified transaction, providing essential services while capturing value.

Tokenomics-driven models include token sales through ICOs, IDOs, and IEOs, which presale tokens at discounts to bootstrap treasury funds. Airdrops serve dual purposes: rewarding early adopters and stimulating secondary market activity. Staking and yield farming mechanisms reward network participation while protocols retain commissions—Lido retains approximately 10% of staking yields as protocol revenue.

The most sophisticated projects combine multiple revenue streams, creating resilient business models that can weather market volatility while scaling with network growth.

Which business models are the most popular and profitable in 2025, and why do they work better than others?

Exchanges dominate Web3 profitability in 2025, with Coinbase generating $5 billion in trailing twelve-month revenue at 86% gross margins, while decentralized exchanges capture billions in monthly on-chain fees.

Liquid staking protocols represent the second most profitable category, with Lido alone capturing $103 million in trailing twelve-month revenue through its 10% protocol fee on ETH staking yields. These models succeed because they provide essential infrastructure services while benefiting from Ethereum's transition to proof-of-stake consensus.

Layer-1 networks generate massive revenue by "selling block space" to users and applications. They capture the majority of on-chain revenue through gas fees, with successful networks earning hundreds of millions annually during peak usage periods. NFT marketplaces like OpenSea have generated approximately $1.8 billion in six-month revenue periods, benefiting from both primary sales commissions and ongoing royalty streams.

GameFi titles represent an emerging profit center, with leading play-to-earn games capturing billions through asset sales and marketplace commissions. These models work because they create sustainable economies where players generate value through gameplay while platforms capture transaction fees.

Looking for the latest market trends? We break them down in sharp, digestible presentations you can skim or share.

If you want to build on this market, you can download our latest market pitch deck here

What are the primary categories of Web3 projects and how does each one generate revenue?

Web3 projects fall into seven primary categories, each with distinct revenue generation mechanisms tailored to their specific use cases and user bases.

How do transaction fees and protocol fees work as a source of income in Web3?

Transaction fees and protocol fees operate as the primary revenue engines for most Web3 projects, with distinct mechanisms and revenue distribution models.

Transaction fees are charged per swap, trade, or loan and typically split between liquidity providers and protocol treasuries. Uniswap charges 0.3% per swap, with most going to liquidity providers and a smaller portion flowing to the protocol treasury. This model scales directly with trading volume and provides predictable revenue streams during high-activity periods.

Protocol fees represent additional levies beyond basic transaction costs, used specifically for governance, reserves, and protocol growth. MakerDAO's stability fee exemplifies this approach, charging borrowers a percentage rate on outstanding DAI loans. These fees provide sustainable funding for protocol development and can be adjusted through governance votes based on market conditions.

Smart contract middleware charges protocol fees for specialized services like compliance verification, typically around 0.25% per verified transaction. This model works because it provides essential services that projects require for regulatory compliance while capturing value from every transaction processed.

The most successful protocols design fee structures that balance user incentives with protocol sustainability, often implementing dynamic fee adjustments based on network congestion and market conditions.

What role do tokenomics and token launches play in generating early or ongoing revenue?

Tokenomics serves as the fundamental framework for aligning incentives and generating revenue throughout a Web3 project's lifecycle, with token launches providing crucial early capital and ongoing engagement mechanisms.

Token launches through ICOs, IEOs, and IDOs typically involve selling 20-30% of total token supply during presale phases, generating upfront capital for development and operations. These launches provide immediate treasury funding while distributing tokens to early supporters who become invested in the project's success. The remaining token allocation usually splits between team members, investors, and community incentives.

Emissions schedules create ongoing engagement by funding liquidity mining and yield farming programs. Projects distribute tokens to users who provide valuable services like liquidity provision or network validation. This approach bootstraps network activity while creating sustainable user incentives, though it requires careful balance to avoid excessive inflation.

Deflationary mechanisms like token burns support price stability and long-term value accrual. Successful projects implement buy-and-burn programs using protocol revenue, creating positive feedback loops between usage and token value. Governance tokens grant voting power over protocol decisions, with initial allocations creating stakeholder alignment between teams, investors, and community members.

Airdrops generate significant user acquisition and secondary market activity by distributing tokens to specific user groups. Well-executed airdrops can create millions in secondary market value while building engaged communities around new projects.

How do staking, yield farming, and liquidity provision generate returns for both users and project teams?

Staking, yield farming, and liquidity provision create dual-sided revenue models where users earn rewards for providing valuable services while protocols capture fees and commissions.

Staking mechanisms allow users to lock tokens for network security in proof-of-stake systems, earning protocol rewards based on their stake size and duration. Protocols typically retain 5-10% of staking rewards as commission for providing infrastructure and services. Lido demonstrates this model effectively, taking 10% of validator rewards while providing liquid staking tokens that users can trade or use in DeFi applications.

Yield farming enables users to deposit assets in liquidity pools and earn dual reward streams: trading fees from transactions and token incentives from protocol emissions. Liquidity providers earn proportional shares of swap fees while protocols capture trailing fees for treasury operations. This model scales with trading volume and provides sustainable returns for both parties.

Liquidity provision on decentralized exchanges generates revenue through transaction fees split between liquidity providers and protocol treasuries. Active liquidity management strategies allow sophisticated users to maximize returns while protocols benefit from deeper liquidity and higher trading volumes.

The most successful projects design these mechanisms to create positive feedback loops where increased user participation leads to better services and higher rewards, driving further adoption and protocol revenue growth.

If you want actionable data about this market, you can download our latest market pitch deck here

How are subscription-based or SaaS-style models being adapted to decentralized apps or infrastructure protocols?

Web3 infrastructure providers increasingly adopt subscription and pay-as-you-go models, blending traditional SaaS approaches with on-chain billing and decentralized service delivery.

Node and API services lead this trend with metered billing for RPC calls and tiered subscription plans based on usage volume. Projects like Infura and Alchemy charge developers for blockchain data access through monthly subscriptions or per-call pricing, generating predictable recurring revenue while scaling with customer growth.

Data and analytics platforms implement subscription models for on-chain analytics, charging monthly fees for query volumes, dashboard access, and advanced features. These services provide essential market intelligence that trading firms and institutional investors require, creating sustainable revenue streams independent of market volatility.

Oracle services adopt tiered pricing based on data frequency, accuracy requirements, and coverage scope. Chainlink and similar protocols charge subscription fees for premium data feeds while offering basic services through pay-per-call models. This approach ensures reliable revenue while incentivizing high-quality data provision.

Decentralized identity and compliance services implement subscription models for KYC/AML verification, charging monthly fees based on verification volume and complexity. These services become increasingly valuable as regulatory requirements expand across different jurisdictions.

Curious about how money is made in this sector? Explore the most profitable business models in our sleek decks.

Which Web3 companies or startups have become profitable and what exactly is their revenue model?

Several Web3 companies achieved profitability in 2025 through diverse revenue models that demonstrate the sector's maturation and sustainability potential.

How are NFTs being monetized beyond simple one-time sales, especially in art, music, or gaming?

NFT monetization has evolved beyond initial sales to include sophisticated revenue models that generate ongoing income for creators and platforms.

Dynamic royalty systems allow creators to earn percentage-based income from every secondary sale, with smart contracts automatically enforcing 2.5-10% royalty rates. These systems create sustainable income streams for artists and musicians while incentivizing continued creation and community building. Some platforms implement adjustable royalty rates that decrease over time, balancing creator income with market liquidity.

Subscription NFTs provide time-based access to exclusive content, communities, or gaming features. Music artists sell subscription NFTs that grant access to unreleased tracks, virtual concerts, or exclusive merchandise. This model creates predictable recurring revenue while building deeper fan relationships.

Fractionalized NFTs enable shared ownership of high-value assets, with secondary markets generating trading fees and management commissions. This approach increases liquidity for expensive NFTs while creating new revenue streams through fractional trading and governance services.

Gaming NFTs generate revenue through rental markets where players can lease powerful items or characters to other players. Play-to-earn games implement revenue-sharing models where a percentage of in-game earnings flows to NFT holders, creating passive income opportunities for investors.

Utility-driven NFTs provide access to services, tools, or experiences that generate ongoing value beyond speculation. These might include membership to exclusive DAOs, access to premium software features, or priority booking for events and experiences.

If you need to-the-point data on this market, you can download our latest market pitch deck here

How do Web3 games and metaverse projects generate sustainable income through assets, in-game economies, or user-generated content?

Web3 games and metaverse projects create sustainable revenue through multi-layered economic models that capitalize on digital asset ownership and user participation.

Asset sales and rentals form the foundation of gaming revenue, with virtual land, items, and characters sold as NFTs through marketplace transactions. Players can rent high-value assets to others, creating passive income streams while game operators capture marketplace fees. Virtual real estate in popular metaverses can generate significant rental income, with prime locations commanding premium rates.

Play-to-earn mechanics distribute token rewards for gameplay activities while protocols retain portions for ecosystem funding and development. Games balance token emissions to reward players without creating unsustainable inflation, often implementing burning mechanisms through in-game purchases and upgrades.

User-generated content marketplaces enable players to create and sell custom items, with revenue-sharing models benefiting both creators and platform operators. Successful games provide robust creation tools and fair revenue splits, encouraging active creator ecosystems that drive engagement and retention.

In-game economies generate revenue through transaction fees, auction house commissions, and premium services. Games implement complex economic systems with multiple currencies, crafting mechanics, and trading opportunities that create sustainable economic activity.

Governance tokens allow players to vote on game development decisions while capturing value from game success. Token holders benefit from increased usage and revenue sharing, aligning player interests with long-term game sustainability.

Which business models are expected to dominate or emerge in 2026 as the space matures and regulations evolve?

Three emerging business models are positioned to dominate Web3 in 2026 as regulatory frameworks solidify and institutional adoption accelerates.

Regulated tokenized securities represent the most significant opportunity, with institutional-grade real-world asset platforms generating revenue through compliance fees, asset management charges, and trading commissions. These platforms must navigate complex regulatory requirements but benefit from accessing traditional financial markets with blockchain efficiency and transparency.

Decentralized identity subscriptions will emerge as essential infrastructure as KYC/AML requirements expand across jurisdictions. Identity-as-a-service providers will charge subscription fees for verification services, regulatory compliance monitoring, and privacy-preserving credential management. This model scales with regulation expansion and provides recurring revenue independent of market volatility.

AI-driven on-chain agents represent a revolutionary model where autonomous bots charge fees for decision-making services, portfolio management, and automated trading strategies. These agents operate independently while generating revenue through performance fees and subscription charges, creating new categories of decentralized financial services.

Cross-chain infrastructure will command premium pricing as multichain ecosystems mature. Bridge protocols, interoperability services, and chain abstraction layers will generate substantial fees by enabling seamless asset movement and application deployment across different networks.

Need to pitch or understand this niche fast? Grab our ready-to-use presentations that explain the essentials in minutes.

As an investor or entrepreneur entering Web3, what are the key risks or revenue traps to avoid when choosing a model or project type?

Four critical revenue traps can destroy Web3 projects despite initial success, requiring careful evaluation of business model sustainability and regulatory compliance.

Unsustainable emissions represent the most common failure mode, where excessive token rewards create short-term growth but long-term value destruction. Projects offering unrealistic yields above 100% APY typically rely on new user deposits to pay existing users, creating ponzi-like dynamics that inevitably collapse. Sustainable projects maintain yields below 20% and implement clear burning mechanisms to offset emissions.

Regulatory uncertainty poses existential risks for projects that fail to consider token classification as securities. Revenue models dependent on token appreciation or governance features may face regulatory challenges that eliminate profitability overnight. Successful projects design utility-focused tokens with clear use cases beyond speculation.

Protocol fee volatility creates unpredictable revenue streams tied to market cycles, with bear markets potentially reducing fee income by 90% or more. Diversified revenue models with subscription components provide more stability than pure transaction-based fees. Projects should maintain 12-18 months of operating expenses in stable assets.

Smart contract exploits and security vulnerabilities can eliminate years of accumulated treasury value instantly. Projects must invest heavily in security audits, bug bounties, and insurance coverage while maintaining emergency pause mechanisms for critical vulnerabilities.

The most resilient projects combine multiple revenue streams, maintain conservative treasury management, prioritize regulatory compliance, and invest heavily in security infrastructure from day one.

Conclusion

Sources

1. DeFi Guides - How DeFi Platforms Make Money
2. Gate.io - How DeFi Protocols Generate Revenue
3. Block Telegraph - Web3 Business Models with Long-term Potential
4. TDE.fi - Core Components of Sustainable Web3 Business Models
5. Blockchain Techs - Top Web3 Business Ideas 2025
6. Webcom Systems - Most Profitable Play-to-Earn Games 2025
7. Tom Tunguz - Revenue in Web3
8. The Block Beats - Web3 Revenue Analysis
9. Blockchain Founders - Web3 Business Models and Metrics
10. Haven1 - How DeFi Protocols Make Money
11. Future Market Insights - Web3 Gaming Market Report
12. Venionaire - Web3 Outlook 2025