How to Design Your dApp for Effective Monetization

Not every developer builds on blockchain to make money. Some dApps are passion projects, some are proofs of concept, and some are made for the thrill of contributing to the common good.
But it’s safe to say that for most developers, one of the end goals is to earn income from their efforts. It’s unlikely even the most altruistic builder would turn down the chance to monetize their builds ethically.
If monetization is your end goal, it’s essential to design with that goal in mind. A blockchain application needs to be designed and executed correctly to support the level of success that makes monetization possible.
Avalanche is helping builders design and implement monetization models that work without sacrificing scalability, decentralization, or user experience. Here are the best practices for developing your own monetization strategy.
Choose the right monetization model
There are many different ways to monetize a dApp, but not every strategy will fit every platform or project. The right approach for your build should scale effectively, create long-term value, and align with your other goals for the dApp.
Tokenization strategies
Many dApps rely on the creation and trading of digital tokens for monetization. There are three common strategies for tokenomics:
1. Fungible tokens (utility & governance)
Many dApps introduce a native token to enable payments, staking, governance, or rewards. For example, a DeFi lending protocol might charge fees in a native token, then redistribute them to stakers and liquidity providers.
2. NFTs & digital asset ownership
Non-fungible tokens, or NFTs, allow monetization via scarcity, royalties, and in-game economies. For example, a gaming project might allow players to buy, sell and rent one-of-a-kind digital assets with minimal transaction fees.
3. Hybrid models
Some dApps blend fungible tokens and NFTs to create layered monetization. Imagine a metaverse where users need a governance token to vote on land ownership, but can also trade NFT-based assets with other players.
How Avalanche supports tokenomics
Avalanche’s native token AVAX has a well-defined tokenomic structure:
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Fixed Supply Cap: AVAX has a hard cap of 720 million tokens, with 360 million minted at genesis.
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Deflationary Models: All gas fees across Avalanche’s chains and L1s using AVAX as the gas token are burned.
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Staking Incentives: The reward system encourages longer staking periods, with validators who stake for the maximum time receiving more than those staking for the minimum.
Perhaps more importantly, Avalanche provides support for projects that want to implement their own tokenomics structure:
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Economic Modeling Support: The ecosystem includes services like 3Sigma, which provides security and economic modeling for tokenomics and protocol design, helping projects create sustainable models.
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Token Distribution Tools: Avalanche offers tools like Core’s Airdrop Tool to help projects distribute tokens and reward their communities.
And, with the Avalanche9000 upgrade, the Avalanche network went through a series of advancements to the platform, based on community-led proposals, to give developers more control over their projects, including how they’re monetized:
- Full control over gas fees and validator incentives, allowing developers to fine-tune tokenomics.
- Removing mandatory staking requirements to the Primary Network—projects can launch their own blockchains without needing to commit excessive AVAX.
- Seamless interoperability between different token standards using Avalanche Interchain Messaging (ICM).
Transaction fees and revenue sharing
Not every dApp needs its own token. Many successful projects simply charge fees (in fiat currency or in the native blockchain token) for transactions or premium services.
1. Dynamic fee structures
Depending on usage patterns, developers can implement flat, percentage-based, or tiered fees. For example, a decentralized exchange could charge fees, but charge lower fees for high-volume or long-time traders. This strategy would promote user retention.
2. Revenue sharing with validators & liquidity providers
dApp developers could opt to share transaction revenue with validators, stakers, or liquidity providers. These incentives can help solidify long term users and create greater network effects, leading to a stronger, longer-lasting community.
3. SaaS-style dApps with recurring payments
dApps can charge monthly, yearly, or usage-based fees for premium services, as with other software-based products.
4. Exclusive access & paywalls
Limiting access to features or content is common in Web2.0 applications. Smart contracts can make a gated or tiered system easier, with automatically-enforced levels of access to gated content, APIs, or exclusive features. For example, a Web3 social platform might have VIP chat rooms or live events only accessible to those holding a certain token.
How Avalanche supports subscription and stablecoin-based models
On Avalanche, you can run your own L1 with fully customizable fee models:
- Use stablecoins like USDC for gas fees to empower non-crypto-native users
- Set your own validator structure to keep costs low and incentivize community-building
- Lower costs for recurring transactions make subscriptions feasible
- Easily enforce premium access models with more flexible smart contracts
- Use integrations to offer fiat-currency-based subscriptions to crypto-hesitant users
Optimize your smart contract efficiency
A great monetization strategy can only work if your smart contracts are efficient enough to operate at scale. High gas fees, slow execution, and bloated contract logic can kill user adoption. Let’s break down how to optimize smart contracts for monetization success.
Reduce gas costs for users
Gas fees can make or break a dApp. If transactions are too expensive, users leave. When traffic to a dApp spikes, congestion can cause gas fees to rise to unsustainable levels.
On Avalanche, you can deploy your own L1 with custom fee structures to help control costs. Other best practices include:
- Use stablecoins (e.g., USDC) for gas, making fees predictable and user-friendly.
- Optimize contract execution to reduce computational overhead.
- Batch transactions: Process multiple actions in a single transaction to reduce network calls.
- Use calldata instead of storage: Storing data on-chain is costly—use calldata when possible.
- Minimize unnecessary computations: Avoid redundant loops and expensive state changes.
Leverage custom gas tokens and fee models with custom L1s
Many dApps struggle with poor UX due to users needing native tokens for gas. L1s on the Avalanche blockchain allow developers can set their own tokens (including USDC or your native assets) as gas fees. You can also control gas prices for your users with:
- Gasless transactions: dApps can subsidize transaction costs for users, improving adoption.
- Fee-sharing models: Split transaction fees between validators, token holders, or treasury reserves.
Ensure upgradeability and security
Security and upgradability are essential for long-term monetization. A vulnerable smart contract can destroy a project overnight. Promote security with these tips:
- Use modular contract designs: Break logic into smaller components that can be upgraded without affecting the entire system.
- Implement proxy contracts: Upgradable proxies allow bug fixes and feature updates without disrupting operations.
- Limit external contract calls to prevent reentrancy attacks.
- Use immutable variables for critical contract logic.
- Run audits before deploying monetization features.
Design your dApp for success
Building a dApp is not just about a successful launch; it’s about sustaining your project as it scales up over time. Without scalability and efficiency built into the design, your project could become a victim of its own success.
Avalanche is designed to help developers achieve long-term stability and success. That means giving developers power over their own projects: The ability to customize transaction fees, choose gas models, and monetize on their own terms.
Ready to build? Start your project today.