As the crypto market continues to mature, investing in a project requires increasingly careful analysis. One of the most important questions investors need to answer is how a crypto project actually makes money.
Whether it is Web2 or Web3, the underlying operating logic is the same. Projects need capital to build products, maintain teams, fund marketing, pay for audits, cover infrastructure costs, and more. If a project does not generate real revenue, it must rely on other sources of funding, often coming directly from investors without them fully realizing it.
Key Takeaways
- Revenue is a critical signal of whether a crypto project can survive long market downturns.
- Projects without real income often rely on token sales, unlocks, or fundraising, increasing investor risk.
- Crypto projects generate revenue through multiple models, including token issuance, fundraising, investments, and product fees.
- High revenue alone is not enough. Value must accrue to token holders for long-term price sustainability.
- Investors can verify revenue sources using onchain tools, dashboards, and financial reports.
1. Why Does It Matter How a Crypto Project Makes Money?
In the current cycle, the crypto market is undergoing a strong cleansing phase. Projects must prove real value if they want to attract investors, and revenue generated by the business model itself is one of the clearest forms of proof.
1.1 Revenue Determines Whether a Project Can Survive a Bear Market
Extended downtrends are where many projects disappear. If a project lacks cash flow, problems surface very quickly:
- Incentives are cut, leading users to leave
- Audit and infrastructure budgets shrink, increasing operational risk
- The team runs out of runway, freezing the roadmap
- The project becomes dependent on selling tokens to stay alive
In contrast, projects with real revenue streams such as trading fees, service fees, or DeFi fees can continue operating even during prolonged downturns.
1.2 Revenue Helps Distinguish Real Builders From Hype-Driven Projects
The crypto market is known for extreme volatility, which becomes even more pronounced when driven by trends or narratives. A new narrative can attract massive capital inflows and push token prices sharply higher, but without a real product or clear revenue, this growth is not sustainable.
In such cases, projects experience short-term hype. When the narrative fades, prices eventually revert to their fundamental value.
In short, revenue is critical for long-term investment decisions. Historically, projects without clear revenue sources often relied on selling treasury tokens, unlocking vested tokens, or raising new funding rounds. These actions create persistent sell pressure and increase risk for investors.
2. Common Ways Crypto Projects Generate Revenue
Depending on the type of project, whether it is a blockchain, DeFi protocol, application, or stablecoin, revenue models vary. However, most Web3 projects today fall into the categories below.
2.1 Token Issuance
This is the most common method people associate with crypto projects making money. Token launches involve token allocation, where total supply is distributed across categories such as fundraising sales, team allocations, and founders.
Fundraising allocations are the most visible source of capital used to sustain operations. In addition, there are allocations that may appear less obvious but play a crucial role in funding development, such as ecosystem growth, community incentives, and marketing.
In theory, each allocation serves a specific purpose. In practice, they all represent funding sources. If a project does not generate real revenue, the token itself becomes the product being sold, significantly increasing the risk of a slow rug pull.
2.2 Fundraising
Fundraising can be viewed as an extension of token issuance, as seed and private round tokens are typically sold to investors. Beyond providing capital, fundraising also connects projects with venture capital firms that bring experience and market insight.
Broadly speaking, fundraising does not always require selling tokens. Some projects raise capital through equity, while others borrow against future revenue. However, most large fundraising rounds in crypto ultimately resemble token sales to VCs, who gradually sell once tokens unlock, often under low float and high FDV structures.
In all these cases, investors expect direct returns in the form of tokens, equity, or interest. There is also another form of funding where returns are less explicit, ecosystem grants.
A clear example is Optimism and its OP Stimpack, where OP tokens are distributed to projects building within the Optimism ecosystem. Optimism does not directly receive money or additional OP in return. Instead, the value comes from ecosystem growth, which strengthens the network as a whole.
2.3 Establishing Investment Arms
Projects do not always rely solely on product revenue. Some establish investment funds, similar to venture capital firms, with the goal of generating returns.
Notable examples include Uniswap Labs Ventures, Solana Ventures, and Polygon Ventures. These investment arms deploy capital into other projects with the objective of earning profits.
Compared to traditional VCs, project-affiliated funds have a key advantage. They possess hands-on experience in building products. While large funds like Multicoin or Hashed provide network access and research, product builders offer practical, operational expertise.
Another example is Stani Kulechov, founder of Aave. As a long-time crypto OG, his network and experience are undeniable. While it is unclear how much investment profit is reinvested into Aave, it is clear that investing is no longer exclusive to VCs. Protocol teams themselves are now active participants.
2.4 Direct Revenue From Products
The most important revenue source is income generated directly from the product itself. This is the area investors should analyze most carefully when searching for high-quality projects.
Like traditional companies, projects cannot rely indefinitely on raised capital. They must eventually generate sustainable revenue.
Different products generate revenue in different ways. Onchain analytics tools such as Nansen or Bubblemaps rely primarily on subscription fees. Layer 1 and Layer 2 blockchains generate revenue from transaction fees. DeFi protocols earn through financial fees, including swap fees for DEXs, interest and liquidation fees for lending protocols, and trading and liquidation fees for derivatives and perpetual platforms.
In general, higher revenue suggests that a project is genuinely building and has stronger long-term potential.
Important note: High revenue does not automatically mean a token will increase in price. The key question is whether that revenue accrues value to token holders.
Many projects generate substantial fees, but all revenue flows to the treasury or team. Token holders receive no share, there is no burn mechanism, and no buyback to reduce supply. In such cases, even with strong cash flow, the token price can still decline.
Well-designed projects implement clear value accrual mechanisms. Examples include staking tokens to receive fee distributions, using revenue for token buybacks, burning tokens based on usage, or requiring tokens for service payments. This is what creates real value accrual, where token value grows alongside actual revenue, supporting sustainable long-term appreciation. For example, in the following image, we can see the top projects with the highest revenue in 2025. Some projects like Jupiter, Aedrome, and Sky have token increases that are not commensurate with their revenue.
3. How to Verify Where Revenue Comes From?
3.1 DeFiLlama
DeFiLlama is the most popular tool for tracking protocol fees and revenue on a daily, weekly, or monthly basis. Its strength lies in aggregating data across many protocols, allowing easy comparison within sectors such as DEXs, lending, or perps.
However, these figures should be treated as high-level overviews. Each project defines fees and revenue differently, so not all income streams are captured.
3.2 Dune Analytics
Dune is ideal for verifying which contracts generate revenue, where fees flow, and how cash flows change over time. This method involves analyzing raw onchain data, which is extremely difficult to manipulate.
The tradeoff is that it requires familiarity with dashboards or SQL queries. In practice, searching for reputable dashboards is often sufficient.
3.3 Financial and Operational Reports
For projects with offchain revenue, it is important to review published financial or operational reports. Stablecoin issuers such as Tether and Circle release reserve reports detailing income from Treasury bills and reserve assets.
Similarly, projects like Chainlink generate part of their revenue through enterprise data service contracts. These reports help clarify income sources beyond the blockchain.
3.4 Block Explorers
This method is particularly useful for Layer 1 and Layer 2 blockchains. To confirm that a project truly collects fees and to see where funds go, identify the fee collector or treasury wallet and inspect it directly on the blockchain explorer.
This approach reveals inflows and outflows, transfer frequency, and can even expose cases where projects sell tokens to fund operations at the expense of token holders.
4. Conclusion
Crypto projects rarely rely on a single revenue method. Most combine multiple approaches depending on their stage of development. Early on, projects may focus on fundraising and token issuance. As they mature, they often introduce product-based fee models.
Regardless of the method, long-term sustainability is essential. Only projects that build durable operations can attract users at scale, earn trust, and execute ambitious strategies.
Disclaimer: This content does not constitute investment, tax, legal, financial, or accounting advice. MEXC provides this information for educational purposes only. Always do your own research, understand the risks, and invest responsibly.
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