As part of the next generation Internet, eb3 has become a mainstream consensus. Although people are flocking to it, there are still many people who have not seen the specific value behind Web3 applications. They are not clear about their profit models and how these applications are profitable to maintain. What about self-development?
Today we will take stock of the top 10 Web3 projects with the highest capture costs, and use tangible “on-chain cash flow” to answer the above questions.
01
Ethereum
As you can see from the picture above, Ethereum has the most transaction fees on the chain. Its business model is to "sell block space", that is, block producers produce blocks and process transactions and record them on the blocks.
From a simple blockchain node to a series of functions including verification, storage, support and maintenance, the ecology of the Ethereum block is constantly developing, and the roles and tasks on the chain are also constantly enriched. This also means that the more you use the Ethereum network, the more fees you can earn.
The calculation method of Ethereum handling fees takes into account the computing power required to process transactions, that is, gas. The price of gas fees can be high or low, and is calculated according to the native Token ETH of the Ethereum network. The gas fee is directly related to the network traffic. If the user pays a higher gas fee, the block producer will prioritize the order, but the higher gas fee has an upper limit based on the size of the block.
Currently, the handling fees on the Ethereum chain include the following two aspects:
1. Token interaction gas fee: When performing Token interaction operations on Ethereum, such as Token transfer, authorization and approval, etc., you need to pay the corresponding gas fee.
2. Other gas fees (contract deployment, calling, interaction, etc.): When deploying a new smart contract on Ethereum, you need to pay contract deployment fees. (It can also be understood as block occupancy fee)
Ethereum now has an average daily handling fee of more than 9.5 million US dollars, ranking first, far behind the second place. Part of this fee is destroyed to maintain the supply and demand balance of ETH (because ETH is issued infinitely), and part of it is used as salary to be paid to block producers (verifiers) or as a reward for ETH liquidity providers.
02
Bitcoin
Compared with the many disruptive application narratives brought by Ethereum, Bitcoin’s narrative in the encryption field is very simple. In the past, block producers basically earned token interaction gas fees, and their profits were also affected by the price fluctuations of Bitcoin.
However, since the launch of the Bitcoin NFT protocol Ordinals on December 14, 2022, the Bitcoin network has generated more than 7 million NFTs in just a few months, and the number of ways to generate income in Bitcoin is increasing. This has also caused Bitcoin’s blockchain fees to surge, reaching an average of nearly 3 million per day and currently jumping to second place.
Currently, Bitcoin’s on-chain handling fees usually include the following types:
1. Token interaction gas fee: Bitcoin transactions require payment of handling fees. Currently, with the development of NFT and BRC-20, the order volume increases, and the handling fees are gradually increasing.
2. Expanded data handling fee (SegWit Fee): The Bitcoin network has introduced Segregated Witness (SegWit) technology to make the storage of order data more efficient. Therefore, when sending Bitcoin orders using a Segregated Witness address, you may need to pay additional expansion data fees.
3. Multi-Signature Fee: When using a Multi-Signature (Multi-Sig) address in a Bitcoin order, you may need to pay additional multi-signature procedures because multiple signature operations are involved. fee. Uniswap
03
Uniswap
Uniswap is a decentralized protocol, one of the earliest AMMs on the market, a pioneer in the DeFi field, and the most liquid DEX in the Ethereum ecosystem. Compared with other DEXs, it has always maintained a stable growth rate in terms of market share, locked-up volume, order volume, capital efficiency, supply-side revenue and the number of Token holders.
What makes Uniswap unique? Compared with other DEXs in the same track, Uniswap has a large leading advantage. In addition, Uniswap's lead in the market is also due to its team's continuous efforts to improve the protocol to adapt to market demand. From May 2020 to now, Uniswap has Evolving to version 3, it also has its own governance Token UNI.
As a DEX, Uniswap uses an automatic market maker (AMM) mechanism, and its liquidity mechanism allocation is 100% of revenue allocated to liquidity providers. It can be understood that the revenue of liquidity providers represents Uniswap's revenue. This means that the platform itself does not make money, and all fees are controlled and collected by users who provide liquidity.
When adding liquidity, in the Uniswap V2 version of the AMM algorithm, the handling fee that users need to pay is a fixed 0.3%, and LP token providers cannot choose the rate; now Uniswap V3 handling fees can have 3 levels to choose from : 0.05%, 0.3% and 1%.
Currently, Uniswap’s fees currently rank third behind Ethereum and Bitcoin, with average daily fees exceeding $1.3 million.
04
BNB smart Chain
In 2020, BNB smart Chain was launched, which is a further step for Binance to develop DeFi. It is an updated public chain compatible with the Ethereum Virtual Machine (EVM) and supports the deployment of smart contracts and DeFi applications.
BNB smart Chain has grown rapidly as an Ethereum competitor in 2020 due to lower fees and scalability. Currently ranked fourth, the average daily interaction cost reaches nearly 500,000 US dollars.
The mechanism of Binance Smart Chain (BSC) is also similar to Ethereum, so the types of revenue sources are also similar:
1. Token interaction gas fee: When performing Token interaction operations on BSC, such as Token transfer, authorization and approval, etc., you also need to pay the corresponding gas fee.
2. Other gas fees (contract deployment, calling, interaction, etc.): BSC uses a gas model similar to Ethereum, that is, when performing smart contract-related operations on BSC, you usually need to pay a certain handling fee to pay for network maintenance. and block producer rewards.
05
GHOST
Aave is a DeFi platform running on the Ethereum blockchain that enables users to lend and borrow various crypto assets without the need for an intermediary. Through Aave, users can access various borrowing options at any time.
The native token AAVE can be used for governance and earning passive income. By staking AAVE, token holders can earn 6-7% annual yield to help protect the protocol from any liquidity crisis.
One popular feature is its “Lightning Generation,” which allows users to borrow funds without collateral, which is a favorite among arbitrageurs and developers looking to build new DeFi applications.
Like many other DeFi protocols, Aave generates revenue through various fees charged on its platform. Currently ranked fifth, the average daily income exceeds 250,000 US dollars.
These revenues are mainly paid by users participating in borrowing activities on the Aave platform, and specifically include the following types:
1. Borrowing fee: The fee charged to borrowers who make loans on the platform, usually between 0.01% and 25%, depending on the assets borrowed, the loan-to-value ratio and the loan period. This business model generates the main revenue source.
2. Lightning generation fee: charged to users who use the platform’s “Lightning Generation” function, allowing them to borrow funds in a short period of time without collateral. The fee is typically 0.09% of the amount borrowed.
3. Fees for other functions: Aave launched Version 3 (Version 3) in January 2023. In V3, Aave provides additional fees, such as clearing, instant liquidity, portal bridge and other handling fees.
06
Decision one
Due to severe congestion on the Ethereum main network (i.e. Layer 1) and high gas costs, developers proposed Layer 2 to improve Ethereum network performance and increase order processing speed.
Arbitrum One is a Layer 2 expansion solution launched by Offchain Labs. It uses an Optimistic Rollup solution with multi-round interactive design to achieve the expansion goal of the Ethereum network.
In the past two months, it has attracted much attention in the industry due to token distribution. It is a new member who has entered the list recently. It is currently ranked 6th, with an average daily fee of more than 180,000 US dollars. Arbitrum One’s main revenue sources are:
1. Transaction fees: All users on Arbitrum One need to pay when operating on the network. Fees are divided into two parts: those used to pay Ethereum fees (L1) and those used to pay Arbitrum fees (L2). The fees paid to Arbitrum are Arbitrum One’s source of revenue.
2. Other gas fees (contract deployment, calling, interaction, etc. fees): Arbitrum One may implement a usage-based fee model, requiring dApp developers or smart contract creators to pay fees for using the Arbitrum One network.
3. Developer tool service fee: Arbitrum One may provide additional tools, services or developer support to help dApp developers deploy and use the network. These tools and services are available as paid services, generating revenue for Arbitrum One.
4. Cooperation benefits: Arbitrum One may cooperate and collaborate with other blockchain projects, dApps or service providers, including revenue sharing arrangements or other business models, to generate revenue.
07
Sushiswap
Sushiswap, also a DEX built on Ethereum, launched in 2020 with the main goal of promoting the development and growth of decentralized applications (dApps) and greater adoption in the crypto ecosystem.
Sushiswap is actually a copy of Uniswap. It is a DEX that uses the AMM model to improve liquidity. It is also very similar to Uniswap in terms of operating mode and interface. Therefore, the sources of costs are generally similar.
The slight difference is that Sushiswap does not give all the handling fees to liquidity providers like Uniswap.
Sushiswap's handling fee is 0.3%, and this 0.3% handling fee will be divided into two parts: 0.25% handling fee will be fed back to the liquidity provider, and the remaining 0.05% handling fee will be charged by the agreement. To redeem Token SUSHI and distribute it to SUSHI holders. The 1/6 fee charged by the protocol is used to purchase and destroy SUSHI, thereby reducing the token supply and maintaining the value of existing tokens.
Sushiswap currently ranks seventh, with an average daily fee of nearly $180,000.
08
GMX
GMX is a DEX running on the Layer 2 protocol Arbitrum. It was launched in September 2021. It mainly focuses on derivatives. It is in a leading position on Arbitrum in terms of TVL and market value. If it is placed in the circle, it is also a leader. It is currently ranked Eighth, the average daily cost exceeds US$130,000.
GMX is priced based on the Chainlink oracle price. You can order spot or add leverage to experience the perpetual contract. The protocol relies on various fees generated in transactions to help liquidity providers and governance token holders earn income. Leveraged trading is a special product of GMX, which allows users to obtain up to 50 times leverage, giving users an experience like a centralized trading perpetual contract.
The fees in GMX that can bring benefits to the agreement include spot handling fees, margin handling fees, clearing fees, fees for minting and destroying GLP, among which are mainly handling fees generated by margin transactions; in addition, the composability of GMX also brings benefits to it Because it is a permissionless platform, more than 35 protocols are being built on top of GMX in some form, so it is also called "DeFi composability" or "DeFi Lego bricks."
The main costs of GMX can be summarized and categorized as follows:
1. Transaction fee: When operating within the GMX platform, you need to pay GMX as a handling fee.
2.Token Mint fee: refers to the dynamic fee for GLP mint, destruction or swap execution (if a swap is required when closing a position, 0.2-0.8% of the dynamic collateral size will be charged)
3. Cooperation benefits: GMX can cooperate with other companies to provide its platforms and services, thereby obtaining cooperation benefits.
09
Optimism
Like Arbitrum, Optimism is one of the most popular Layer 2 solutions on Ethereum, bringing faster order speeds and lower fees to the Ethereum network. The goal is to make DeFi faster, cheaper, and more convenient.
As the crypto market continues to grow, more and more people are starting to take notice of Layer 2 solutions in the Ethereum ecosystem. For example, the L2 solution Base proposed by Coinbase in March uses Optimism technology.
Optimism currently ranks ninth, with average daily expenses exceeding US$120,000. Its main revenue sources are as follows:
1. Transaction fees: Similarly, when users operate on Optimism, they need to pay a certain fee, which will be collected by Optimism nodes and used to maintain and manage the entire system. Compared to Ethereum’s fees, Optimism’s fees are likely to be lower because it processes transactions more efficiently.
2. Other gas fees (contract deployment, calling, interaction, etc.): Optimism is a public blockchain that can provide infrastructure support for various decentralized finance (DeFi) applications.
3. Developer tool service fees: Optimism can also earn revenue by providing support and services to DeFi projects.
10
MakerDao
MakerDAO is a permissionless, multi-asset, over-collateralized borrowing platform, and created the first decentralized stablecoin $DAI based on the Ethereum network. It is known in the industry as the first DAO organization established on Ethereum and is also a DeFi One of the blue-chip projects in the field, the current mechanism is mature and the ecosystem is constantly expanding and improving.
Similarly, MakerDAO is also a dual-Token economic model: MKR and DAI. The native token MKR serves as a governance and utility token and can vote on platform updates and upgrades, and DAI serves as a value investment asset.
The core of MakerDAO is to maintain the 1:1 anchoring of the stablecoin DAI to the US dollar through over-collateralization. DAI is MakerDAO's stablecoin, pegged to the U.S. dollar, and is one of the largest stablecoins and cryptoassets by market value. As long as users continue to provide collateral to generate more DAI, the supply of this ERC-20 Token will be endless.
Specifically, DAI is used as collateral, because DAI is pegged to the U.S. dollar, and its community manages DAI through a decentralized autonomous organization (DAO). Users lock crypto assets in the Maker income pool at a certain forced liquidation ratio. To generate DAI, for example, a 125% liquidation ratio requires $1.25 worth of crypto assets to be collateralized for every $1 of DAI.
MakerDAO currently has an average daily fee of nearly US$60,000, ranking tenth. The protocol’s income comes from the following main sources:
1. Lending-related income: For example, the stablecoin DAI issued by MakerDao is a digital asset currency linked to the value of the U.S. dollar. Users lock crypto assets as collateral in smart contracts and then lend out the stablecoin Dai. MakerDao collects interest on the stablecoin DAI from borrowers, which is its main source of income. On May 9, MakerDAO officially announced the launch of the Spark Protocol, a borrowing protocol that will allow users to borrow DAI at an initial annual interest rate of 1.11%. The borrowing interest rate is determined by governance members through on-chain voting.
2. Stability fees, liquidation penalty fees, etc., RWA (real-life assets) liquidation income: including collateral auction income. If the value of the borrower's collateral drops, the collateral may be forced to liquidate. MakerDao will auction these collaterals and generate revenue from them.
11
summary
In terms of current income, public chains mainly charge handling fees, while DEX, expansion plans, and DAO mostly charge transaction fees or asset borrowing fees.
We can see that a small number of leading Web3 companies have developed a business model with the possibility of profitability, and at least have the ability to generate revenue. Most of these companies still focus on public chains, trading platforms and DeFi, and they are also one of the few ace projects in the encryption industry. However, the profit models of most of the remaining projects are still being further explored.