Revenue Sharing is Part of Web3’s DNA – Here’s How Platforms Are Harnessing It

Revenue sharing has long been a cornerstone in traditional business models, fostering stakeholder collaboration and mutual growth. In the evolving landscape of Web3, this concept has been revitalized, offering innovative pathways for decentralized platforms to align incentives and promote ecosystem sustainability. By distributing revenues among participants, these models not only reward individual contributions but also support the collective prosperity of the community.

Revenue Sharing is in Web3’s DNA

Thus, revenue-sharing models are the bedrock of cryptocurrencies and blockchain technology. Under the Proof of Work (PoW) consensus mechanism, bitcoins are awarded to miners on the basis of transaction fees and newly minted bitcoins from validating transactions and securing the network; this process has been going on seamlessly since 2009. Apart from that, it found inducement for individuals to earn and at the same time decentralized nature of such networks.

With the evolution of blockchain as a platform, consensus methods and incentive models have also matured. Proof of Stake (PoS) emerged as a method that involves lesser power consumption by allowing the stakeholders with their own tokens to validate transactions in exchange for earning transactions fees and part of a fortune in return. This shift democratized further the argument of participations and aligned the interests with network security.

It was through platforms like Uniswap that Decentralized Finance (DeFi) took the building stones and further progressed the concept. In what is currently a common model for automated market maker decentralized exchanges (AMM DEX), liquidity providers put assets into their liquidity pools and share some pool trading fees; thus, open and fair revenue distribution model has been created for platform operators.

Now, Web3 platforms are exploring creative means to realize revenue-sharing models that can benefit the largest communities of users and supporters.

Collaborative Liquidity in DeFi

THENA is a DeFi platform that illustrates sustainability and attractiveness with its revenue-sharing model. THENA is a community-run decentralized exchange built on the BNB Chain that utilizes a self-optimizing ve3,3 model for the different contributors: sustainably rewarding all contributing participants. This innovative approach developed by DeFi pioneer Andre Cronje makes sure the interests of liquidity providers, traders, and that of the protocol itself are all aligned and that incentives will be distributed appropriately to keep encouraging a strong, resilient ecosystem.

The THENA model rewards liquidity providers with a share of the transaction fees according to their contributions to the liquidity pools. This encourages liquidity provisioning and improves the trading efficiency of the platform. THENA is an excellent example of how aligning stakeholder incentives in a revenue-sharing model can ensure growth in the DeFi ecosystem.

NFT Marketplaces & Creator Royalties

NFT platforms have made royalty payments automated and thus have revolutionized the creator economy. A portion of the proceeds from the resale of an NFT gets sent back to the original creator, enabling him to share in the long-term value appreciation of his work. This model answers the maladies of the traditional art and content industries, where creators very much get no share in secondary sales-and lose one. 

Zora is an NFT marketplace that allows for creator royalties and equitable revenue sharing practices. Zora, by allowing royalty mechanisms to be embedded in smart contracts, makes sure artists earn their fair share every time their work gets resold. This kind of ecosystem is a big push toward empowering digital creators and makes NFT marketplaces a salient example of how blockchain can sustain revenue-sharing models.

Distributing Social Revenues Back to Users

Beyond DeFi, revenue-sharing models have found fertile ground in Social Finance (SocialFi), where social media converges with the principles of decentralized finance. Creator revenue-sharing programs for Web2 social platforms are a notoriously poor generator of income for influencers. In contrast, SocialFi platforms utilize blockchain technology to empower content creators and users, enabling them to monetize their contributions directly. This shift addresses the traditional model where centralized platforms reap the majority of advertising revenues, often at the expense of user privacy and control.

For instance, platforms like Lens Protocol enable creators to monetize their content directly, while users have complete control over their feed and social experience, meaning their attention isn’t being covertly monetized by advertisers. By leveraging blockchain’s traceability, SocialFi platforms can distribute revenues in a manner that reflects each participant’s value addition, fostering a more equitable digital economy.

Transforming Monetization through Player-Centric Gaming

The gaming industry, particularly within the Web3 segment, has also embraced revenue-sharing models to revolutionize monetization strategies. Traditional gaming often relies on upfront sales or microtransactions, which can lead to imbalances in value distribution. Web3 gaming platforms, however, are adopting new models that share revenues more equitably among developers, players, and other stakeholders.

Whereas play-to-earn was arguably the first twist on the GameFi concept, but new innovations quickly emerged. Stepn pioneered step-to-earn, incentivizing people to get moving in the real world, while the now-defunct Notcoin spawned a whole new genre when it debuted the tap-to-earn concept. 

The Broader Impact of Revenue Sharing in Web3

It shows that the revenue sharing models between various sectors of Web3 are now a catalyst for a transformation into decentralized and fairer digital ecosystems. They align the incentives of all parties involved in promoting their active participation in fostering community development and the health and sustainability of the platform. 

Revenue-sharing continues to be a very effective value addition to the Web3 landscape for further growth. Already visible in the emerging models from platforms like THENA or Zora and other Web3 social and gaming applications, these ecosystems have proven that it is possible to build profitable yet achievable and sustainable ones through revenue sharing according to user contributions. As Web3 develops, such schemes are likely to be adopted further and in even more novel ways, driving innovation and further inclusion in digital economies.