Emerging Business Models for Blockchain-based Ventures

Over the Block
Over the Block
Published in
7 min readOct 1, 2019


Watch Enrico Ferro’s interview with David Orban in which they talk about the highlights of the study.

As the amount of financial resources invested by venture capitalists in blockchain ventures exceeds the three billion dollars [1], it becomes paramount to gain a crisp understanding of which business models may be leveraged to deliver on the promises to build a new breed of solutions harnessing the potential of the Internet of value.

The exploratory study presented below sheds lights on the business models adopted by blockchain native ventures leveraging public blockchain infrastructures. More specifically, the research work conducted aimed at answering the following questions:

Q1: Along which dimensions can the blockchain ecosystem be mapped?

Q2: What are the key archetypal actors and their strategic positioning?

Q3: What emerging business models are enabled by blockchain?

To answer the above questions, thirty-two ventures leveraging public blockchains were analysed, resulting into twenty business models identified. In the remainder of the post, the highlights of the study will be summarized while additional information about the results obtained is available through the slide deck and the multimedia content.

A number of notable attempts have been made so far to map the blockchain ecosystems (e.g., Lange and Nussbaum, to name a few). Nevertheless, despite being commendable efforts, most of these early outputs suffered from a number of methodological shortcomings having to do with lack of exhaustivity as well as lack of homogeneity in the categories used. We are thus proposing a “blockchain value ecosystem framework” (Figure 1) as a first step toward overcoming the issues listed above. The framework identifies four technological layers clarifying the primary ingredients that comprise a blockchain-based solution. It consists in a simple yet clear representation that may help companies in understanding what DLT (Distributed Ledger Technologies) may offer and how to approach them.

Figure 1. Blockchain value ecosystem framework

In the picture below (Figure 2), a few real life actors have been mapped against the framework to exemplify how it may be used to understand the different levels of vertical integration that any given company may decide to adopt with respect to blockchain absorption. It goes without saying that the higher the level of integration the higher the requirements in terms of technological skills and financial resources necessary for developing and adopting a blockchain-based solution.

Figure 2. Map of real life actors

For the classification of the key archetypal actors and their strategic positioning with respect to the different blockchains available on the market, the framework was complemented with an additional dimension considering whether the company analysed was operating on a single blockchain or on multiple blockchains. This resulted in a two by two ecosystem matrix answering Q1 and identifying four strategic positions, one for each quadrant (Figure 3):

  1. Decentralized-application Providers
  2. Protocol Providers
  3. Financial Platform Providers
  4. Protocol Innovators
Figure 3. Four strategic positions

By placing the ventures analysed in the different quadrants, it was subsequently possible to cluster them into eleven archetypal actors (Q2): five of which positioned in the distributed-applications providers quadrant and two situated in each of the other quadrants (Figure 4). In this respect, it is important to note that while DLTs are still in an “infrastructural phase”, that is to say a phase in which enabling infrastructures are still being developed, a dominant design has not emerged yet and most of the value generated is captured by the lower layers of the technological stack [2]. Moreover, the upper left quadrant — where distributed applications (DApp) are designed — represents a very fruitful business model innovation sandbox for devising approaches that have the potential to disrupt large rent-seeking incumbents across many different industries in the long-term.

Figure 4. Eleven archetypal actors

From the analysis of the real life actors, it was subsequently possible to single out one or more business models that could be associated to each archetypal actor (Figure 5). To exemplify, among the mining companies examined, four business models were identified: (1) solo mining in which the mining activity is conducted by a single company fully shouldering the infrastructural costs and the risks associated with the mining activity; (2) pool mining in which companies are sharing their infrastructure and the risk associated to mining; (3) cloud mining in which the company is renting its computing infrastructure to third parties thus shifting the risk associated with mining on the clients; and (4) mining marketplaces that are acting as brokers between infrastructure owners and buyers of mining services.

Due to length constraints, it is not possible to discuss in-depth all the business models identified. Nevertheless, for each of them a Business Model Canvas explaining the underlying value logic has been inserted in the appendix of the presentation linked at the bottom of the post.

Figure 5. Twenty emerging business models

Finally, the analysis of the thirty-two ventures brings to the fore dissimilar maturity levels in terms of business model robustness for the various quadrants (Figure 6). More specifically, the quadrants of protocol providers (lower-left) and that of financial platform providers (upper-right) show a higher level of maturity in terms of presence of a wide user base, identification of a clear value proposition and tested value appropriation mechanisms. For what concerns the other two quadrants instead, the situation is diversified among the actors operating in the distributed applications quadrants (upper-left) while a low level of maturity is present in the protocol innovators quadrant (lower-right), which is made up of companies that are still exploring possible business models for solving technical scalability issues.

Figure 6. Business models maturity

To conclude this post, we would like to share a number of reflections on the relationship between blockchain and business strategy spurred by the analyses conducted during the exploratory study.

First, a clear understanding of the ingredients composing a full stack blockchain-based solution needs to be acquired by CEOs willing to leverage blockchain in their core business activity. In this respect, the blockchain value ecosystem framework provides an accurate yet intuitive instrument for choosing the appropriate level of vertical integration in the adoption and development of blockchain-based solutions.

Second, four strategic positions were identified with significant differences in terms of capital intensity, technical proficiency required and depth of understanding of the overall blockchain ecosystem. In order to choose the right position, a venture requires a careful analysis of the presence, possibility to access and ability to manage the above aspects.

Third, twenty business models were mapped with different levels of maturity with respects to their ability to clearly identify their value proposition and the mechanisms for capturing part of the value created. In this respect, the availability of significant financial resources for startups at a very early stage of development, combined with the presence of seigniorage economic benefits coming from the possibility to mint tokens, in many instances has reduced the pressure on cash flows thus allowing companies to focus more on technical challenges. While this in the short-term this may help raising the level of technological excellence of the blockchain ecosystem, in the long-run it could pose serious sustainability challenges.

Finally, from a business model perspective, the emergence of blockchain technologies seems to have generated three types of innovations: (1) the birth of business models for blockchain-specific activities such as mining; (2) the possibility to combine into a single business model activities previously conducted by different players (e.g., payments & reputation, chat & payments); (3) the emergence of light intermediation opportunities in which the middleman may adopt revenue-sharing mechanisms that promote a fairer redistributions of the overall value generated by all the engaged stakeholders.

Presentation of the study at the Blockchain Challenge Conference (in Italian)
Blockchain-enabled emerging business models (full deck)

[1] Coindesk, 2018, “State of Blockchain Q3 2018” Retrievable at link

[2] Pantera Capital, 2017, “VC’s Missing 97% of the Trade” Retrievable at link

Please cite as:

Ferro E. and Osella M. (2019),Emerging Business Models for Blockchain-based Ventures”, OverTheBlock Innovation Observatory, retrievable at link

OverTheBlock is a LINKS Foundation’s initiative carried out by a team of innovation researchers under the directorship of Enrico Ferro. The aim is to promote a broader awareness of the opportunities offered by the advent of exponential technologies in reshaping the way we conduct business and govern society.

We are chain agnostic, value-oriented, and open to discussion.

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