If blockchain technology is the infrastructure of a new digital economy, the natural next question is: how do these businesses actually make money? What’s emerging is a layered ecosystem where value is monetized at different levels of the stack and in very different ways, from the raw infrastructure that processes transactions, to the protocols that encode business logic, to the consumer-facing applications that bring millions of users onchain. We use six categories to map how value is monetized across this stack. Understanding this taxonomy matters because the margin structures, competitive dynamics, and scaling characteristics differ substantially across layers much like the differences between owning telecom infrastructure, a cloud platform, a fintech API, and a consumer app in the traditional internet economy.
1. Blockspace
At the foundation of the stack sit blockchains themselves. Their core product is blockspace: the right to have a transaction included in the shared ledger. This is the most fundamental monetization layer in the entire ecosystem, as every other category ultimately depends on it.
Revenue comes primarily from two sources. Base fees are paid by every user who submits a transaction, functioning as a usage toll for the network. Priority fees allow users to pay more to have their transactions processed faster or in a more favorable position within a block. For Layer 2 blockchains, the model works differently: a single company controls the chain and acts as a middleman, collecting fees from users and paying a smaller fee to record a compressed summary of those transactions onto an underlying Layer 1 chain. The profit is the spread between what users pay in and what it costs to settle on the Layer 1.
A closely related revenue stream is MEV, or Maximal Extractable Value, the profit that can be captured by reordering, inserting, or excluding transactions within a block. Validators and specialized actors known as searchers and block builders extract value by identifying profitable transaction sequences, such as arbitrage between exchanges.
Ethereum and Solana are the dominant Layer 1 blockchains, while Base and Arbitrum are leading Layer 2 solutions. Arbitrum has notably extended its business model beyond pure blockspace, incorporating revenue-sharing agreements with companies building on its technology stack. Robinhood, for instance, launched its own chain on Arbitrum rails.
2. Execution of business logic onchain
One layer above the blockchains sit protocols: software programs that live on blockchains and encode specific business functions through smart contracts.
What protocols sell is the execution of business logic onchain (whether trading, lending and borrowing, etc) along with access to liquidity, composability, and the trust guarantees that come from transparent, auditable, tamper-proof code. This makes the category inherently both B2B and B2C: end users interact with these protocols directly, while other protocols and applications integrate them as building blocks for their own products.
The most common monetization model is a transaction fee: a small percentage charged every time the smart contract executes. Uniswap and Hyperliquid, the two largest onchain exchanges, charge a few basis points on each trade. Aave, the largest decentralized lending platform, automatically takes a cut of the interest paid by borrowers. A variation on this model is performance-based fees, where protocols charge a percentage of the yield they generate for depositors, closer to an asset management fee than a transaction toll.
3. Asset creation
A distinct category of value creation involves the issuance of new onchain assets: stablecoins, tokenized securities, and beyond. The key insight is that creating and distributing these assets is itself a business, with economics that look more like financial product origination than software. There is an argument that asset creation is simply a form of executing business logic onchain (there is, after all, a smart contract whose function is to mint new tokens) but it deserves to be treated as a standalone category given its scale and the fact that it monetizes in a fundamentally different way.
The clearest example is the stablecoin issuer. Circle and Tether issue dollar-denominated tokens (USDC and USDT) backed by reserves held in traditional assets like US Treasuries. Their monetization is elegantly simple: they invest the customer deposits backing their stablecoins into yield-generating instruments and keep the return.
Ethena takes a different approach: its synthetic dollar USDe is backed by crypto collateral and delta-neutral hedging strategies rather than traditional reserves, monetizing through a combination of minting fees and a performance cut of the yield the strategy generates.
At the more speculative end of the spectrum, launchpad platforms like Pump.fun monetize the act of token creation itself, charging fees each time a new token is minted and traded on their platform.
4. Asset management
While asset creation monetizes the origination of new instruments, asset management monetizes the ongoing curation, optimization, and deployment of capital, a fundamentally different business with a different competitive logic. Similarly to asset creation, one could argue this is still a form of executing business logic onchain, but the economics, skill set, and competitive moat are distinct enough (and the category large enough) to warrant treating it separately. They look much more like traditional fund management than like issuing a financial product.
Gauntlet illustrates this well. The firm began as a risk management and simulation platform for DeFi protocols, and has since evolved into a major curator of modular lending vaults, actively managing over a billion dollars in capital by optimizing allocation strategies, setting risk parameters, and adjusting positions across protocols. Revenue comes primarily from performance fees on the yield generated, aligned with asset management economics rather than transaction or issuance-based models.
Some projects combine both asset issuance and ongoing management. Ondo Finance creates tokenized versions of traditional financial products such as Treasury-backed funds and manages them on an ongoing basis, earning management fees, a cut of yield generated, and redemption fees. This dual model of issuance plus management is likely to become more common as the line between DeFi and traditional asset management continues to blur. Securitize, which has partnered with BlackRock to tokenize its BUIDL money market fund, follows a similar logic: originating new onchain instruments while earning ongoing fees for administering them.
5. The user or client relationship
This category covers businesses that monetize their ownership of the user or client relationship rather than the underlying infrastructure, onchain business logic, or assets they may touch along the way. Some are consumer-facing products that use blockchain technology to deliver a better or entirely new experience to end users. Others are enterprise services that cater to blockchain-native companies offering the plumbing the onchain economy requires.
On the consumer side, Phantom is a good illustration of monetizing the end user. It has evolved into an all-in-one financial app: it routes retail transactions through blockchain protocols it didn’t build and clips fees on every transaction. It added perpetual futures, stablecoin payments, tokenized equities, and prediction markets within months, at zero marginal cost. Felix Pago is another example: a consumer app that uses stablecoin rails to let Latino migrants send money home from the United States, competing with traditional remittance providers on cost and speed without building any underlying protocol infrastructure.
On the enterprise side, this category includes B2B services that wrap blockchain infrastructure into conventional software products. Rain, for example, is an enterprise-grade, and compliant infrastructure platform that enables businesses to issue stablecoins-powered payment cards. This category also includes custody providers, regulated brokerages, and compliance platforms: the institutional utilities of the onchain economy.
What these businesses share is that their competitive moat lies in distribution, user experience, and client relationships rather than in any new onchain primitive. They are the storefronts and service providers of the onchain economy. Polymarket sits at an interesting intersection: in most respects it functions as a consumer application built on blockchain technology, but it integrates onchain settlement and transparency in ways that are fundamental to its value proposition, illustrating how the line can blur at the edges.
6. Decentralized physical and virtual infrastructure
The final category stands apart because it bridges the onchain and offchain worlds in a structurally novel way. These networks use blockchain-based token incentives to coordinate the supply of real-world infrastructure, whether physical (DePIN: decentralized physical infrastructure) or virtual (DeVIN: decentralized virtual infrastructure), and sell the resulting output to businesses as a conventional product or service.
This creates a model with no real precedent in traditional business: the supply side is decentralized and token-incentivized, while the demand side is entirely conventional. Hivemapper, for example, builds and maintains a global mapping dataset using a network of dashcam-equipped drivers who earn tokens for contributing road imagery. The mapping data itself is sold to logistics companies, insurers, and automotive firms through standard enterprise contracts. The buyer neither knows nor cares that the data was collected by a decentralized network. Helium operates similarly for wireless connectivity: a distributed network of hardware operators provides cellular coverage, and the resulting network capacity has attracted more than 1.5 million subscribers. Grass takes the same model into AI: a distributed network of users contributes bandwidth and web-scraping capacity, and the resulting datasets are sold to AI companies for model training.
What distinguishes DePIN and DeVIN from the products and services in category five is the competitive dynamic. These networks compete head-on with centralized incumbents (Google Maps, traditional telecom carriers, cloud compute providers) on output quality and price. Their margin structure and go-to-market strategy resemble those of any infrastructure business disrupting an established market, with the token incentive mechanism serving as a capital-efficient way to bootstrap supply at global scale.
For investors, the key insight is that blockchain is not a single business model. It is an ecosystem of monetization strategies, each with its own margin profile, competitive moat, and scaling characteristics.