# 7. Revenue Model & Sustainability

## Revenue Model & Sustainability

### What to Evaluate

Does the project generate **actual revenue** or depend purely on token inflation?\
Sustainable crypto projects should be able to monetize usage, not just attract attention through emissions and airdrops.

This section focuses on:

* Whether there’s **real economic value** being captured
* How the project plans to **sustain itself post-incentives**

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#### 💸 Real Revenue Sources

* Does the project earn fees from protocol usage (swaps, staking, lending, etc)?
* Are those fees **retained by the protocol**, sent to a treasury, or used for buybacks?
* Is there a viable “business model” that isn't dependent on selling its own token?

> Example: Uniswap earns trading fees even without a token.\
> A weak model: high APY farming protocol that gives away tokens without real value flow.

**Scoring:**

* ✅ Projects with recurring, usage-based revenue = higher
* ❌ Projects with no real revenue or just token inflation = lower

🛠️ Tools:

* [Token Terminal](https://tokenterminal.com)
* [CryptoFees.info](https://cryptofees.info)
* Project dashboards or docs

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#### 🧮 Treasury & Runway

* Does the protocol have a treasury or fund to sustain operations?
* Is the treasury being used responsibly (dev grants, R\&D, security)?
* What’s the projected **runway** based on current expenses and assets?

**Scoring:**

* ✅ Clear, transparent treasury with multi-year runway = higher
* ❌ Tiny or mismanaged treasury with no plan = lower

> Bonus points for projects that share treasury reports or do on-chain governance.

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#### 🧑‍🌾 Incentive Structure

* Are emissions or airdrops the main driver of user growth?
* Are incentives structured to **build long-term usage**, or just to farm attention?

> Red flag: Projects offering high APRs with no revenue or usage to back it up.

**Scoring:**

* ✅ Lower, well-aligned emissions + token sinks = strong
* ❌ High emissions with no real product = weak

🛠️ Tools:

* [DeFiLlama – Yields](https://defillama.com/yields)
* Project docs or forums
* Token distribution charts

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#### 🧠 Token Burns, Buybacks, and Value Capture

* Are there mechanisms to **reduce token supply** or drive buy-side pressure?
* Does usage of the product lead to burning, locking, or redistributing tokens?

> Fee burns, treasury buys, staking lockups = all mechanisms of value capture

**Scoring:**

* ✅ Clear token-value feedback loop = higher
* ❌ Nothing links revenue to token = lower

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### Summary of Scoring

**Score higher if:**

* Project earns real revenue
* Treasury is transparent and responsibly used
* Incentives are healthy, not excessive
* Product usage directly benefits the token economy

**Score lower if:**

* No revenue or token sinks
* Entire ecosystem runs on inflationary rewards
* No sustainable business model post-launch

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