Overview of our methodology.
Since blockchains and decentralized applications resemble traditional marketplace companies, it makes sense for us to follow the established methodology for analyzing marketplaces.

Step 1. Gross merchandise volume (GMV)

The gross merchandise volume or GMV consists of the dollar value of the transactions -- a blockchain’s transaction volume or a decentralized application’s trading (exchange) or borrowing (lending) volume -- for which a project charges a fee. This fee is also known as the take rate.

Step 2. Take rate and revenue

By multiplying the GMV with the take rate we get the revenue (total fees paid) for a project. The take rate refers to the fee charged on the GMV, either in the form of a blockchain's transaction fee or a decentralized application's trading fee (exchange) or interest rate (lending).

Step 3. Protocol revenue

The total revenue is then divided between the protocol and its tokenholders and the supply-side participants (miners/validators, liquidity providers, lenders, etc.).
Note: For early-stage projects, the revenue is often directed 100% to the supply-side participants. In the long-term, most projects should implement a revenue share so that the protocol and its owners also get their cut of the total revenue.

Example: Uniswap

Uniswap currently charges a 0.3% take rate (trading fee) on its GMV (trading volume). Currently, 100% of the revenue goes to the liquidity providers. Yet, Uniswap is likely to introduce a revenue share, where the total revenue is split 83.3% to liquidity providers and 16.7% to Uniswap (UNI tokenholders).
Last modified 1yr ago