Five Major Business Models of Blockchain: Tokens, BaaS, P2P, Node Aggregators, and Network Fee Revenue

Original Title: 《6 Amazing Blockchain business Models you must know(with examples)》

Author: Navdeep Yadav

Compiler: Deep Tide TechFlow

Before we start exploring blockchain and cryptocurrencies, let's lay a foundation and understand the network.

What is the difference between Web 2 and Web 3?

In Web 2, we build applications using backend programming languages (like Node JS or Python) and host them on servers provided by vendors like AWS, Google Cloud Platform, etc.

But in Web 3, we need to get a node from Alchemy, build smart contracts, and then deploy them on Ethereum or Polygon.

What are the different types of blockchain business models?

1. Token Economy --- Utility Token Business Model

Thus, all blockchain technologies use Distributed Ledger Technology (DLT), which requires consistency, and tokens are one of the mechanisms to reward token miners or token holders.

For example: Basic Attention Token (BAT)

The BAT token is used with the Brave browser and aims to enhance security and privacy. Basic Attention Token allows for a new advertising revenue model that no longer requires constant tracking of user behavior. Brave users can choose to view ads to earn BAT. They can then use BAT to tip content creators on their websites or Twitter.

But how do these companies issue these tokens?

These companies issue some tokens at a discounted price during their Initial Coin Offering (ICO).

These are typically purchased by early adopters who believe in these projects and aim to profit by holding them for a period.

But before purchasing any utility token, pay attention to its tokenomics.

If you closely examine Solana's tokenomics, you'll find that insiders still hold over 60% of the tokens, while the Ethereum Foundation/insiders hold only 7-8% of the tokens.

2. Blockchain as a Service Business Model (BaaS)

BaaS is about building a service ecosystem like Amazon (AWS), but it is implemented in the Web 3 space.

For example: Polygon Blockchain as a Service (BaaS).

From development to storage to deployment, AWS has over 200 services covering everything in your tech stack.

You can launch servers using Amazon EC2, manage SQL databases with Amazon RDS, and store static files in Amazon S3 buckets, etc.

Similarly, Polygon provides a range of products for the Web 3 ecosystem. So, whether you want to sell NFTs or cryptocurrencies, you can leverage their products.

3. P2P Blockchain Business Model

Peer-to-peer (P2P) blockchain enables end users to interact directly with each other without any intermediaries.

For example - IPFS.

4. Blockchain Node Aggregators

They are essentially the Amazon of blockchain, meaning you just need to make API calls to your preferred blockchain to use the service.

For example: Alchemy is a node provider for multiple blockchains, offering tools for monitoring, analytics, alerts, debugging, and logging for cryptocurrency-related software.

5. Network Fee Revenue

If the blockchain business model charges network fees for deploying certain dApps on the network.

For example, Ethereum and NEO.

These network fees are charged to developers by Ethereum and NEO to get their dApps online.