The Search for Crypto-Native Business Models

Key Insights

• While Web2 platforms have been successful in developing revenue-generating enterprises, crypto applications are still seeking to combine shared compute and user layers into sustainable business models.
• The shift towards crypto-native IP is evolving the traditional, centralized model of IP creation and distribution. IP marketplaces like Storyverse provide IP holders, content creators, and consumers with a novel means of coordination. Tightly coupling IP distribution with revenue disbursement and attribution is a key constraint in these marketplaces.
• Crypto-economic models like DePIN are enabling a symbiotic relationship between applications and technical infrastructure. This opens up new revenue streams for applications and flexible business models, but it also requires significant domain expertise and capital.
• Uniswap V4 is leveraging a hooks model to shift from being a standalone application to a platform protocol. The hooks model, or platform model, creates robust network effects. As platform network effects have proven to be powerful and create defensible products, more applications will likely aim to position themselves in a similar manner.

Strange as it may seem, companies don’t necessarily make significant money from their products, even if those products gain widespread usage. Rather, the value they capture is largely determined by how defensible the product is and how the pricing model is structured, otherwise known as the business model.

Email is a prime Web1 example of a widely used product that fails to capture value. SMTP — the underlying open, permissionless protocol — is the standard protocol for email providers to leverage. STMP’s open nature cuts both ways, though, resulting in companies building highly competitive products with little-to-no means of commanding user payments.