A sustainable business model for public blockchains
Ontology is now on Google Cloud, AWS, and Azure. Driving this demand for an open-source framework, while expanding business and generating revenue, can give public chains a sustainable business model.
Many blockchain projects raised substantial amounts of funds during the ICO boom, yet are we seeing projects closing down operations, laying off staff, or even going bankrupt. Among other things, this is due to poor financial management, gambling with investors funds, and excessive spending on marketing and community events — but maybe most important is the lack of a sustainable business model. The question of how to run a sustainable business for public blockchain projects remains open and unanswered.
The industry has reached a point where public blockchains are running on MainNet with high and stable performance, many tools and resources, and several dApps in the pipeline. However, the chains remain unused by real business and do not resemble the rich ecosystems they once envisioned. In other words, the infrastructure is ready but not utilized. To reach this point has been a costly affair and maintaining it head on will incur more costs. Therefore, it is necessary to develop a sustainable business model with real projects that generate revenue. We propose the following recommendations:
Drive demand for open-source frameworks
A fundamental part of adoption is awareness and hands-on experience with the techies themselves. Therefore we recommend open-source projects to commercialize their framework with well-renowned service providers, for example, Ontology has launched its smart contract development platform on Google Cloud, AWS, and Azure. In addition to this, it can be beneficial to host offline and online events to really incentivize developers to get their hands dirty with the technology, for example, Ontology hosts frequent hackathons/workshops across the globe.
The idea is to gain attention from the developers who later will be the decision-makers in businesses — especially the young crowd e.g. universities and developer communities.
Grab the low hanging fruit, even if it does not fit into public settings (yet)
Getting traditional businesses to replace legacy infrastructure with public blockchains is a difficult mission. However, industries are exploring blockchain technology with POCs and pilots. This is an opportunity for public blockchain projects to offer their open-source framework as a solution. Ontology technology has been used by the China government, UnionPay, Everbright Securities, and many more. These examples do not use the public MainNet, but have simply used the free open-source framework and tools to build their solutions. Because they use the Ontology protocol it gives them the option to, later on, link to the public MainNet and join the ecosystem if they choose to do so.
Do not incentivize massive dApp deployment, instead find the right teams
Several public blockchain projects have launched large-scale online and offline dApp competitions in order to attract projects to build on their platform and push up the TPS. For some, this has resulted in many dApps deployed to MainNet, however, without users or transactions. At Ontology, we have a different strategy, focusing on supporting the best teams who choose our platform for the features it has. The support comes in many shapes and sizes, and can be tailored to the resources and capabilities that a given project might lack in e.g. Ontology offers incubation and VC from the ecosystem fund and OGC respectively. An example of a successful dApp project is HyperDragons Go!, which at the time of writing, ranks number 15 on DAppReview. The team has worked closely with Ontology since inception and has been supported with smart contract coding and marketing events.
Strong partnerships
Like dApps, partnerships are not a game of getting most logos on the website, they are about quality. Build strong partnerships with institutions, blockchain projects, businesses, and other organizations that go beyond signing the NDA and MoU. Ontology has a partnership with Sovrin and Evernym to collaborate on self-sovereign digital identity and public blockchain interoperability. This has evolved into discussions about a collaborative effort to identify real business projects that will generate revenue for both projects.
Focus on your core competencies
The top public projects include major players who pursue delivery of universal and industry agnostic infrastructure for the mass. They strive to do what Google, Microsoft, and Amazon are doing for cloud infrastructure. This strategy can end up with the situation where a project tries to do everything, ends up doing nothing great, and then gets stuck. Ontology’s core competencies are the enterprise-grade development components and standards which allow businesses to develop robust dApps. The cornerstone products are the decentralized identity product (ONT ID) and distributed data exchange framework (DDXF), along with a broad variety of standards e.g. the non-fungible token standard and security token offering standard. At the same time, Ontology builds new industry-specific modules as the demand comes through. For example, recently we have begun building a layer 2 for the gaming industry as per the request of people who use the Ontology framework.
Enable business with professional services
Increased awareness and demand for an open-source blockchain framework is an opportunity for the project teams to offer professional services to clients who want to explore the framework with POCs, or even build a production-ready blockchain network. After all, who’s better at implementation than the project team itself?
Conclusion
To survive and thrive, public blockchain projects need to take seriously applying a sustainable business model. By driving demand for open-source frameworks, expanding real business, and generating revenue, they can support their framework to become a mainstream technology of tomorrow.
