Etherscan's business experience: How to make a profit of tens of millions of dollars?
Compilation of the original text: Deep Tide TechFlow
Compilation of the original text: Deep Tide TechFlow
Etherscan, a tool that helps users navigate the Ethereum blockchain, more commonly known as a blockchain explorer, has 80 million monthly visits. Etherscan has long been one of the most popular and widely used tools in the cryptocurrency space.
With Etherscan, users can easily analyze block transactions on the Ethereum blockchain. Through the platform, one of the core principles of blockchain technology can be enjoyed by all: transparency. From sleuths investigating suspicious “Rug” behavior on-chain to traders monitoring large-scale fund movements, Etherscan gives us the tools necessary to better understand what’s going on behind the scenes of a block.
Etherscan has no tokens. While it operates at the heart of the crypto Web 3.0 ecosystem, Etherscan is considered more of a "traditional SaaS business" and not quite a native blockchain application. It simply provides users with the tools to better understand blockchain transactions.
Since its inception in 2015, Etherscan has become the blockchain explorer of choice. Etherscan has expanded to more than 18 blockchains by 2023.
How does Etherscan make money?
Etherscan, like many other software companies, generates revenue by providing services. Although Etherscan also provides some B2B products, it is mainly a B2C business. Advertising, however, becomes an important factor in Etherscan's revenue generation.
At a high level, Etherscan generates revenue from:
SaaS: Etherscan provides SaaS services mainly for B2B, such as building a block explorer as a service (they call it EaaS).
API Plans: Etherscan offers API plans to access its data, ranging in price from free to $399 per month, with undisclosed enterprise pricing.
Advertisements: Etherscan has 5 types of advertisements. It will be described in detail below.
On-chain services: We found that one of Etherscan's products, BSCscan, provides delegation services, and Etherscan is developing other on-chain tools, including wallet-to-wallet messaging, token authorization revocation tools, and more.
Donate: It's easy. The platform allows users to make donations to support its development and maintenance.
Let's do some income estimation.
Newsletter: $120,000 to $300,000 per year
If Etherscan had 1 million subscribers, they could charge between $20,000 and $50,000 per newsletter, depending on the CPM. Since this newsletter is not a "core" business and we are not discussing open rates, a 50% price discount is assumed.
Etherscan can charge between $10,000 and $25,000 per newsletter (issued monthly). Overall, they can earn between $10,000 and $25,000 per month from newsletters.
Website advertising: $3.2 million to $8.64 million per year
There are four types of website advertisements, including homepage banner ads, banner ads, header text ads, and button ads.
To be honest, this income is very dependent on how Etherscan decides to monetize. As the examples below show, it depends on the industry sector, the monetization method, and the state of the industry.
Estimating ad revenue based on website traffic is tricky because it varies widely by industry, domain, and geography. As a background, it can range from $0.10 to $50 per 1000 views.
A super common formula is: Monthly flow / 1000 * RPM.
RPMs can vary from about $15 per 1000 impressions to $100 in certain areas such as real estate insurance. Let's assume the cryptocurrency RPM is between $30-50.
Using an extremely rough estimate, I predict that Etherscan's capabilities will be commercialized, and that there are 4 different ad placements and higher RPM rates for cryptocurrencies will bring to Etherscan:
80 million page views per month. According to Playwire, 10 million page views should net you at least $25,000 per month. At this rate, Etherscan should net $200,000 per month.
8 million unique visitors per month. According to the aforementioned Quora source, 500,000 unique views in the gaming space could net you $45,000 per month. At this rate, Etherscan should net $720,000 per month (assuming RPM in the crypto and gaming space).
API programs, on-chain services, and SaaS: $2.91 million to $12.55 million per year.
If we assume that Etherscan is able to convert the following percentage of unique visitors (8 million) into buyers at the lowest price ($199/month):
0.1% → 8000 customers paying $199/month → $1.91M per year.
0.5% → 40000 customers paying $199/month → $9.55M per year.
As for Etherscan's Explorer-as-a-Service (EaaS), it's more of a one-off transaction (perhaps with some margin fees). Most of the on-chain services listed on the site, token delegation and block scanning chat are still in beta.
Therefore, we estimate that this will generate annual revenue in the low seven figure range ($1 million to $3 million).
Number of people and expenses
According to LinkedIn, Etherscan has 29 employees. LinkedIn categorizes the top 5 "sectors" as follows:
Engineering - 12 people
Business Development - 8 people
Operations - 4 people
Community and Social Services - 3 people
Information Technology - 2 people
Let's create a scenario to estimate how much Etherscan would need to spend on the 5 sectors above:
Engineering: In the $100,000 to $200,000 range, Etherscan pays $1.2 million to $2.4 million per year.
Business Development: In the $80,000 to $120,000 range, Etherscan pays $640,000 to $960,000 per year.
Operations: In the $70,000 to $100,000 range, Etherscan pays $280,000 to $400,000 per year.
Community and social services: In the range of $60,000 to $90,000, Etherscan pays $180,000 to $270,000 per year.
Information Technology: In the $100,000 to $150,000 range, Etherscan pays $200,000 to $300,000 per year.
In total, Etherscan costs between $2.5 million and $4.33 million per year for the five sectors above.
However, it is important to note that Etherscan is operating in Malaysia - which will significantly reduce payroll expenses. A more realistic assumption is to halve the cost of the annual head count expenditure, or $1.25 million to $2.15 million per year.
As usual, this figure is only a head count spending assessment. It does not include other operating costs such as third-party suppliers, office space, etc.
income
Our estimates yield the following results:
Etherscan revenue: $6.23 million to $21.49 million per year.
Newsletters → $120,000 to $300,000 per year;
Website advertising → $3.2 million to $8.64 million per year;
API programs, on-chain services, and B2B SaaS → $2.91 million to $12.55 million per year;
Etherscan spending: $1.25 million to $4.33 million per year.
Our rough estimates are:
Minimum gross profit of $1.9 million ($6.23 million-$4.33 million);
The highest gross profit was $20.24 million ($21.49 million-$1.25 million).
What's next?
For Etherscan, business insight is a very logical choice.
They have all the blockchain data and can launch products like Dune's control panel or Nansen's wallet token. This appears to be a way for Etherscan to expand vertically with relative ease, without committing excessive resources.
The fact that Etherscan did not capitalize on this trend shows that they are already very profitable in the domain they conquered (raw blockchain data) and brand (website traffic/advertising revenue).
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