*Image illustrated by Wepik digital art.*
If you are thinking of embarking on creating a project on Decentralized blockchain, then you've probably wondered how you'll make money out of it in the future. Just like everything else in the blockchain industry, the answer is 'cryptocurrency'. You're probably familiar with Bitcoin, Ethereum, Bitcoin Cash, and BNB which are mainstream cryptocurrency projects that can be bought and sold in the open crypto market. Web3 projects are decentralized, which is why it is being referred to as Decentralized Finance (Defi). This means they are fully in the control of investors without any backdoor for a project owner to take advantage of.
Everything about DeFi is done through smart contracts on the chain. A smart contract is a form of code that is written in a way that ensures it is executed when certain conditions are met. Essentially, it is written in such a way that any actions that happen within the code are transparent and cannot be changed or altered. This is why project contract codes are often subjected to proper examination by experts to find out if there is any loophole that a project owner could exploit.
One of the reasons why investors lose their funds to fraudulent project owners through a rug pull is that the contract codes of those projects have loopholes that can be exploited and no one was able to detect them. The smart contract codes are open source which allows anyone to analyze the codes. By placing smart contracts on the chain, investors are prevented from giving a project owner any control over their money investment into the project. This means the investors' funds do not go to the project owner but they are locked up in smart contracts and held in escrow by miners until the time has come to extricate the funds from the smart contract.
**Web3 Decentralized Finance (DeFi) Project's Categories**
Projects on Web3 fall into 2 categories, which are Fungible tokens and Not Fungible tokens. Fungible tokens are the various cryptocurrency assets that can be exchanged with each other and are also divisible. There are various examples of Fungible tokens on Web3 like $DAI, $UNISWAP, $CHAINLINK, $LAW, $LEO etc. These can be used as currency for payments and investment funds within the EVM chain they are hosted.
The Not Fungible token are the various NFT projects and assets that are not convertible to each other. For example, you cannot exchange a LAWPUNK with an AZUKI and vice versa. NFTs are digital assets that are unique and cannot be replicated. Each NFT is like its own individual piece, and it can be used to represent anything from digital artwork and collectibles to virtual goods and real-world assets.
Now, back to the topic of the article which is how do Defi project owners make money from their projects?
This was something that was bothering me when I started to research the smartBCH chain about a year ago for the possibility of creating a project. Even when I was offered to co-own or take over ownership of a project, I couldn't get along because I wasn't sure how someone can make money out of the project while I was still learning the ropes. It was after a seasoned project owner schooled me that I got to understand the ways to make money out of a project on the Decentralized blockchain.
Curious to find out how you can make money as a project owner in a Decentralized blockchain? Then read on!
One of the ways to make money as a project is through token allocation. Most project that creates a token whether Fungible or None Fungible tokens has a certain percentage of the token allocated to the developer's team. These tokens in most cases are all that a project owner and his team get from the project, and also they don't have to sell them because that will cause the project to fail early on. So, instead of selling these tokens, they assign them to a farming pool on dex to earn a steady income. In some cases, the reward from farming is also shared with the community of investors in the project when there's a DAO. In this sense, the reward for an owner usually comes in the long run after the project might have succeeded.
When it is an NFT project, the owner's reward is even more difficult to get in this case. A good NFT project needs a lot of funds to create use cases that will enhance the value of the NFT collection. A larger percentage of the mint revenue goes back into the project as liquidity and for developing use cases for the project. The only real reward an owner gets for creating an NFT project is the number of NFTs allocated for the developer team which they can sell at a later time.
Moreover, most project owners also invested in their own projects and hope to make a profit like everyone else. The thing is that they have to work hard to make the project successful because that's the only way they too can get the most benefit from their own project.
When you look at it in light of the above, you will agree with me that it's not every project creator that makes money directly from their project. Most of those projects you see never really make money for the owner, except if they chose to crash the project by liquidating their holdings. Investors are those who benefit more from a project, and also those who make the most project fail. A project owner, therefore, becomes a steward who watches over the welfare of others because the welfare of his project investors is also his welfare.
**Projects With A Steady Income For Owners**
There are only two types of financial projects in a decentralized chain that makes steady income for the owners. The steady income projects are the Dexs and NFT marketplace which charges a regular fee for every transaction made on their platform. This makes the Dex and NFT marketplace project a perfect choice for a project because it's the most reliable and steady way to make money on a Decentralized chain, but the cost of creating such projects is not what everyone can dabble into.
In conclusion, the best way to make money from your projects on a decentralized chain is by selling them to the community because then, you're also making a profit in the long run. Don't expect you will be a millionaire after creating a project on any Decentralized chain. Be a steward in that sense, and in the end, you will be happy and the whole community will have the best experience possible.
Posted Using [LeoFinance Alpha](https://leofinance.io/@fexonice/how-do-defi-projects-owners-make-money-from-their-projects)
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