How to Make Money with Smart Contracts: A Complete Guide to Earning with dApps

Decentralization can seem scary – we’re notDecentralization and smart contracts can seem out of this world – we’re not used to living without a central power. However, it may just as well be our future.

Both enterprises and startups are asking how to make money with dApps and smart contracts. Considering the development and growing popularity of both, we’re not surprised here at ProCoders. The fear goes away as we see the benefits of such systems.

According to Onchainfx, over 90% of ETH transactions go through the IDEX exchange. This means there is vast potential for this business model.

ProCoders will tell you how to create a dApp and monetize it in this article. We will also examine the top 3 decentralized app ideas to make money. So if you’re looking to boost the financial potential of your smart contract project, this article is worth reading!

So, how Ethereum smart contracts could help you start earning passive income and improve transaction efficiency? Let’s see!

Introduction to Earning Passive Income with dApps and Smart Contracts

Decentralized applications (dApps) have revolutionized the way we interact with blockchain, enabling users to earn passive income through various means. At the heart of dApps are smart contracts, which automate the execution of specific rules and conditions, ensuring a secure and transparent experience. In this section, we’ll explore how they can be used to generate passive income.

Smart contracts automate agreements as self-executing contracts with the terms of the agreement directly written into code. They run on blockchain networks, such as Ethereum, and automatically enforce the rules and conditions set within them. This automation eliminates the need for intermediaries, reducing costs and increasing efficiency. By leveraging smart contracts, dApps can offer various passive income opportunities, such as earning interest, staking, and participating in liquidity pools.

One of the primary ways to earn passive income with dApps is through decentralized finance (DeFi) protocols. DeFi platforms use smart contracts to facilitate financial transactions, such as lending and borrowing, without the need for traditional banks. Users can lend their cryptocurrency assets to others and earn interest, or they can provide liquidity to decentralized exchanges and earn a share of the trading fees. These passive income opportunities are made possible by the smart contract’s execution, which ensures that all transactions are transparent and secure.

Another method how smart contracts and dApps generate passive income is through staking. Staking involves locking up a certain amount of cryptocurrency in a smart contract to start earning passive income to support the network’s operations, such as validating transactions. In return, stakers earn rewards in the form of additional cryptocurrency. This process is automated by the smart contract, which distributes rewards based on the staked amount and the duration of the staking period.

Market Size, dApps and Smart Contracts Future

The dApps market is expected to reach $368.25 billion by 2027 at a CAGR of 56.1% (Emergen Research). The main reasons for that are:

• the rising popularity of dApps and smart contracts
• the increased adoption of dApps and smart contracts as a substitute for traditional applications
• blockchain technology has become more accessible over time

A large part of this accessibility comes from smart contracts. These are programmable contracts executed on a blockchain network. They make it easier for businesses and individuals to use dApps without technical knowledge.

The other major factor contributing to the growth of this market is that there are more specialists acquiring the necessary skills and making competition to those who are already for a long time in this field. Additionally, Smart contracts could enhance digital agreements and traditional contract systems, introducing benefits such as automation and reduced reliance on intermediaries.

What are dApps and Smart Contracts in Blockchain and Decentralized Finance?

dApps software types that run on a peer-to-peer network. This means that no single entity controls the application. Instead, application users control the system through their interactions with it.

dApps are built on top of blockchain technology. It creates a decentralized database that is shared among all users on the network. This means no central server where an individual or group can manipulate data. Smart contracts work as digital contracts, breaking down their functionality to an if-then statement, using practical examples like vending machines to illustrate their self-executing nature.

Business Benefits From Concentrating on Decentralization

Here are some ways decentralization can help your business:

Security and Transparency are Smart Contracts Basics

Decentralized systems provide security and transparency of smart contracts, making them more secure than centralized ones.

Why? They allow users to verify transactions independently. This means there is no single point of failure. No central authority, no central system. This means hackers cannot access your data or money if they want to steal it from you!

Cost-Effectiveness of Smart Contracts

You don’t need expensive hardware or software to run dApps and smart contracts. All that’s needed:

• an internet connection
• a device with some computing power (e.g., a smartphone or laptop).

This makes dApps much cheaper than centralized alternatives. You don’t need a powerful server companies like Amazon Web Services or Microsoft to maintain.

Increased Flexibility of Smart Contracts

With dApps, you can change how your software works to fit your needs. For example, if one feature doesn’t work out as well as expected, you can easily remove it without starting with another developer or re-write the code yourself. This makes dApps a great tool for developing new products quickly and cheaply so your company can adapt quickly to changing market conditions.

Enhanced Privacy

Decentralized systems like smart contracts allow users more control over their data. Their sensitive information isn’t stored on a central server, which could be breached.

This builds trust. Users decide what information to share and who to share it with. This strengthens privacy and reduces the risk of data misuse.

Global Accessibility of Smart Contracts

Decentralization eliminates geographical barriers, improving the global accessibility smart contracts execute, enabling businesses to reach users and customers worldwide. It’s particularly beneficial for applications that need to scale quickly across diverse markets without relying on localized infrastructure.

Smart Contracts and dApps Encourage Innovation

Decentralized platforms foster an open environment for developers and businesses, encouraging experimentation and collaboration. This can lead to the creation of unique solutions and a more competitive edge in your industry.

Trustless Operations with Smart Contracts

With decentralization, apps operate without the need for trust in a single entity. Smart contracts automate many processes involved in financial transactions, minimizing transaction fees and investments, enhancing efficiency and reducing the need for intermediaries. For example, blockchain-based systems use them to enforce agreements automatically.

Tokenization Opportunities

Decentralized platforms often use tokens for user participation and reward contributors. This can open new revenue streams and foster loyalty within a user base. This means your decentralized platform can become more appealing.

3 Best Decentralized App Ideas to Earn Passive Income

ProCoders have gathered for you 3 best dApps to make passive income:

Decentralized App Ideas	Description	Potential Earnings
Decentralized Marketplace	A platform that allows users to buy and sell goods and services without intermediaries, utilizing blockchain technology for secure and transparent trading.	Profit from trading fees and transaction fees
Decentralized Gaming Platform	A platform that allows users to play games and earn rewards, utilizing blockchain technology for secure and transparent management of player data and rewards.	Profit from fees and a percentage of player rewards.
Decentralized Social Network	A platform that allows users to connect and interact without intermediaries, utilizing blockchain technology for secure and transparent data management.	Profit from charging fees for premium services.

How to Make dApps with Smart Contracts?

Let ProCoders help you.

You can create a dApp easily by following these steps:

It’s easier than you think! You can create a dApp easily by following these steps:

1. Define your vision. The first step, even before the development, is making sure you have a full vision of the project. What does your dApp do? What problem does it solve? This will help you create a development roadmap and determine the tech stack suitable for the product.
2. Choose a blockchain platform. Some of the platforms to choose from are:
   • Ethereum
   • EOS
   • TRONChoose a platform that fits your requirements in scalability, security, and ease of development.
3. Gather a team. To create a dApp, you will need a team of:
   • developers
   • designers
   • project managers with experience in blockchain applications.Consider outstaffing or hiring a dedicated team for building smart contracts and dApps.
4. Develop a smart contract. Smart contract code defines the rules and logic of your dApp, including”
   • management of transactions
   • token distribution
5. Build a user interface. Focus on building an easy-to-use and accessible interface. We at ProCoders recommend using React or Angular for the task.
6. Test and deploy. Ensure rigorous testing of your dApp and smart contracts to make sure it’s secure and functional. After testing, deploy your dApp to the chosen platform.
7. Launch and promote. Consider incentives such as bonuses or discounts to encourage early adopters. Continuously monitor and improve your dApp, gather feedback, and update your system regularly.

Recommended: How to Create a dApp with React?

How do dApps and Smart Contracts Make Money: Traditional Methods

Free Version with In-App Purchases (IAP)

This model offers the app for free, allowing users to download and access basic functionality at no cost. Then, users can purchase:

• additional features
• content
• virtual goods within the app.

Commonly used in gaming apps, IAP monetization attracts a large user base and generates revenue from engaged users.

Subscription Model

The subscription model charges users a recurring fee. It can be a:

• weekly payment
• monthly payment
• annual payment

This model is widely used in:

• streaming apps
• fitness platforms
• SaaS tools

It offers a steady revenue stream for you and regular updates and support to your users.

Advertising Model

Apps generate income by displaying advertisements to users, reducing dependency on transaction fees. This can include:

• banner ads
• video ads
• native ads

The effectiveness of this model increases with apps that have a large user base and high engagement.

Tip from ProCoders: To maximize revenue, incorporate targeting algorithms to display ads relevant to the user’s preferences.

Pay-to-Download

Users pay a one-time fee to download the app. This model is more common in niche markets or apps offering unique value, such as premium tools or games.

Because the payment is upfront, you have to make sure the app delivers exceptional quality and value. This minimizes negative reviews that can hurt its visibility in app stores.

Sponsorship Model

Businesses partner with you to fund the app in exchange for branding or visibility. This can work well for apps targeting specific audiences.

A great example is a fitness app partnering with health product brands. The sponsorship model often includes:

• branded content
• co-marketing campaigns

They benefit both the sponsor and the app by increasing reach and engagement.

Data Monetization

Some apps generate revenue by anonymizing and selling user data to third parties, such as marketers or researchers. Of course, within legal limits. To address privacy concerns, developers often use encryption and comply with regulations like GDPR or CCPA. Hence, users will know about data collection and sharing.

Paywall for Content

Users can access limited free content, but premium or exclusive content is locked behind a paywall. This model is common in news apps, streaming platforms, and educational apps. Developers often use a “freemium” approach, offering enough free content to attract users while showcasing the added value of paid content to encourage subscriptions.

Crowdfunding/Donations

Apps rely on users’ voluntary contributions to sustain development. You can use platforms like Patreon or Kickstarter for that.

This works well for high-quality apps with strong community support. You can provide backers with perks or exclusive content. This will create a sense of community and encourage ongoing support.

How to Make Money with dApps and Smart Contracts: Decentralized Options

When monetizing your dApps, you can use a few traditional methods. These include in-app purchases, advertising, and subscription models. However, dApps also provide unique monetization opportunities. Understanding how smart contracts work is crucial as they form the backbone of many dApp functionalities.

One such opportunity is through the use of smart contracts. They automate payments and revenue sharing. This can help you earn revenue from your dApp and avoid manual transaction management.

Another unique opportunity is using DeFi lending protocols to earn passive income. They let you earn revenue through:

• lending
• borrowing
• liquidity provision

You can also monetize your dApp by issuing your own cryptocurrency assets or native tokens. Put a smart price on it and users will purchase and use it within the dApp. This creates a whole ecosystem for functionality and profit.

How Smart Contracts Work for You with ProCoders dApp Development?

Our team can help you with thorough blockchain development, focusing on smart contract security and scalability thanks to the Discovery phase and Staff Augmentation.

The Discovery phase is the first step in the smart contract development planning. It’s about creating the roadmap, studying your project, and its features, planning the development stages, and estimating them in terms of time and costs. After that, you can hire your own in-house team or use our Staff Augmentation or Dedicated Team services to proceed with the successful work.

ProCoders have a whole base of developers and other necessary staff to help you create the best dApp. Our talents are highly experienced in developing these applications, are easy to integrate into the work.

Working with Smart Contracts and Decentralization: Conclusion

Decentralization has many benefits for businesses, leveraging smart contract capabilities for automation and efficiency, and dApps offer a variety of monetization strategies.

Our top three dApp ideas for making money are:

• a decentralized marketplace
• a gaming platform
• a social network

Creating your own dApp is easier than you think, and our team at ProCoders can help you every step of the way. Our experienced dApp developers can help you monetize your dApp through:

• smart contracts
• DeFi protocols
• issuing your own token

Let us help you make money with your project!