How do ventures make money? — How do ventures make money?

What is a crypto venture and why monetization matters

Quick definition, crypto venture

A crypto venture is a startup that builds products or protocols where blockchain-native tokens or on-chain rules affect funding, incentives, or revenue. In practice, that means a project can earn money the same ways a normal startup does, like subscriptions or transaction fees, and it can also use token sales and protocol mechanics to raise funds or capture value.

Founders should separate product-level revenue from on-chain token events because those two streams behave differently for operations and investor returns. Planning runway from an initial token sale is different from planning recurring cash flow from user fees, and unit economics for each model vary in timing and predictability, as business literature on model choice explains Harvard Business Review.

How monetization shapes strategy and investor expectations

How a venture expects to make money drives hiring, product priorities, and what investors will expect in terms of milestones. For web2 startups, investors often look for signs of product-market fit and improving customer lifetime value before rewarding growth; those same decision factors apply to many crypto ventures but with extra on-chain complexity McKinsey.

Crypto-specific mechanisms like tokenomics, protocol fees, and a project treasury add design choices that change when value is usable for operating expenses or investor exits. That is why founders should plan both initial funding and sustainable revenue paths, and why the distinction matters when you compare a crypto startup to a traditional technology company Messari research.

Core revenue models founders use (web2 baseline)

Product sales and subscriptions

Most startups start with a simple question: who pays and how often. Product sales, whether one-time purchases or recurring subscriptions, are the straightforward route to collect cash in exchange for a product or service. Subscriptions tend to create predictable revenue, which helps with planning and valuation if retention and unit economics look sustainable Harvard Business Review.

Customer lifetime value and unit economics guide whether a startup invests more in customer acquisition or in product improvements. If each new customer delivers long-term revenue above onboarding cost, a subscription model often makes sense; if sales are one-off, the business needs repeat buyers or supplemental revenue streams to scale McKinsey.

Transaction fees, licensing and exits

Transaction fees are another common model: platforms take a cut of each sale or exchange. Licensing charges let other firms use a technology for a fee, and exits like acquisition or IPO convert investor value into liquidity. These models rely on volume, fees, and predictable margins to be reliable, and investors often discount early token-like liquidity events in favor of recurring revenue when valuing predictability Harvard Business Review.

Revenue timelines for web2 startups typically show limited income until product-market fit is reached, which is why founders and investors focus on retention, engagement, and expansion revenue as signals that a model will scale McKinsey.

How crypto-specific monetization works: tokens, protocol fees, and staking

Token sales and vesting mechanics

Crypto ventures add token events to the mix. Token sales such as ICOs, IEOs, or structured agreements can provide significant early-stage funding, but these proceeds are not the same as recurring business revenue. Token sale economics are affected by vesting schedules, market liquidity, and how tokens are allocated between founders, investors, and a treasury CoinDesk explainer.

Vesting delays when token holders can sell, which can protect networks from immediate dumping but also postpone when founders or early investors can convert token allocations into fungible capital. That timing difference matters for runway and for how investors forecast returns, so treat token raises as funding events rather than an operating revenue substitute ConsenSys report.

Protocol fees, on-chain services, and staking rewards

Some projects capture fees at the protocol level. For example, a decentralized exchange or a lending protocol can route a portion of transaction fees to a treasury, creating a measurable stream of protocol revenue that grows with usage. Tracking and reporting of such revenue categories have become more common in industry research Messari research.

Recurring protocol revenue versus one-off token raises: trade-offs and timelines

Why recurring fees matter for long-term operations

Fees tied to real utility, such as swaps on an exchange or interest on a lending platform, are more likely to produce durable revenue that teams can use to fund development and operations. Protocol revenue tends to be easier to model as usage scales because it is directly tied to measurable on-chain activity Messari research.

Because recurring fees are aligned with network usage, they can reduce reliance on fresh capital raises. For founders, predictable fee income supports hiring and product investment in ways that one-time token sales do not, and investors often treat such patterns as closer to web2 recurring revenue models when assessing sustainability McKinsey.

When token raises help and when they fall short

Token raises help by supplying early runway and aligning incentives, but they fall short as a long-term operating source when vesting or market liquidity prevents conversion to operating cash. Treat initial token proceeds as runway that must be paired with a path to recurring income or a credible exit plan CoinDesk explainer.

Comparing timelines, web2 startups often show low revenue until product-market fit, while crypto ventures can face longer lags because tokenomics and liquidity dynamics delay when on-chain value becomes usable for operations or distributions, a distinction founders should model explicitly CB Insights.

Practical scenarios: three example monetization roadmaps for a crypto venture

Scenario A: Protocol-first, fee-capture focus

Imagine a project that launches a decentralized exchange designed to capture a small fee on each swap. The roadmap focuses on bootstrapping liquidity, improving the trading experience, and slowly growing fees that flow to a treasury. As usage grows, protocol revenue can fund continued development without repeated token sales, assuming the project captures a useful share of market activity Messari research.

In this scenario, runway must cover the early period when fees are low. Founders often rely on initial grants, small token allocations, or private funding to bridge to meaningful fee levels, and they track metrics like fee per user and total value locked as proxies for future protocol revenue ConsenSys report.

Scenario B: Token-funded product build then pivot to fees

Here a team raises funds through a token sale to build product and attract users. Once the product has traction, the plan is to introduce fee capture to create sustainable revenue. The risk is timing: if the market does not support secondary liquidity or if vesting restricts token availability, founders may still need outside capital to maintain operations until fees scale CoinDesk explainer.

Scenario B can work when teams model vesting schedules, expected fee uptake, and contingency financing. Without that modeling, teams may misinterpret token proceeds as operating income and run short of cash before fee capture ramps CB Insights.

Scenario C: Hybrid model with subscriptions and token utility

A hybrid approach adds web2-style subscriptions for premium features while using tokens for governance or discounts. Subscriptions provide a baseline of recurring fiat revenue and reduce pressure on token liquidity, while token utility can drive engagement and optional monetization pathways.

Hybrid models give teams flexibility: subscriptions anchor predictable cash flow, and token mechanics can scale with network effects. Founders still need to model how subscription retention, token incentives, and secondary markets interact to avoid mismatched expectations between users and investors Messari research.

Common mistakes and pitfalls to avoid when modeling crypto monetization

Treating token raises as the same as recurring revenue

Founders should model token vesting, expected liquid markets, and the timeline for converting token allocations to operating cash before using those proceeds to justify ongoing spending ConsenSys report.

Ignoring vesting, liquidity, and dilution

Not modeling how vesting schedules, secondary-market demand, and future token issuance dilute value is another frequent pitfall. Liquidity can change returns and affect whether founders, employees, or early investors actually realize expected gains CoinDesk explainer.

Teams should simulate a range of market outcomes and maintain conservative plans for runway and hiring until fee capture or other reliable income appears CB Insights.

Underestimating fee capture design and regulation

Designing how fees are collected and routed to a treasury is a technical and legal exercise. Different choices affect which entity receives revenue, how it is reported, and how regulators may view the mechanism. Founders should assess regulatory constraints early when planning fee capture features ConsenSys report.

Ignoring this risk can lead to redesigns that delay revenue recognition or create compliance costs, so include legal and treasury management considerations in early monetization models Messari research.

How to choose a monetization approach: decision criteria and checklist for founders

Key decision factors to model

Compare options across unit economics, expected user activity, predictability of fee income, capital needs, and regulatory constraints. These factors determine whether a fee-first, token-first, or hybrid approach fits your product and market Harvard Business Review.

Modeling should include timelines for runway, treasury growth, and investor liquidity events so stakeholders understand when value becomes fungible and how dilution or vesting affect outcomes CB Insights.

A simple checklist to compare options

Use a short scoring checklist that ranks recurring-fee-first, token-first, and hybrid designs on predictable revenue, alignment with user behavior, capital intensity, and regulatory risk. The checklist helps prioritize designs and identify where contingency plans are needed McKinsey.

Summary and next steps: what founders and readers should do after reading

Key takeaways

Token sales provide early funding but are not a substitute for recurring revenue. Protocol fees and treasury-managed revenue are the on-chain levers that more closely resemble sustainable business income when they capture real utility from users Messari research.

Founders should prioritize modelling unit economics, vesting schedules, and liquidity outcomes, and plan for regulatory review of fee mechanisms as part of any monetization choice CB Insights.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.