Managing your finances as a web3 is very different from managing finances as a traditional company. Web3 finance management deals with a whole suite of problems including managing different cryptocurrencies, a fiat balance, cash flow, various token exchanges and receiving revenue/paying bulls in different currencies, issues you won’t see for traditional Web2 businesses.
With companies like Starbucks, Salesforce, Nike, and JP Morgan planning to use Web3 in 2024 and the global market expecting to hit $49.1 billion by 2030, you should have been involved yesterday.
This blog will provide insight on how to use web3 finance management whether you’re a startup or already established.
The Best Financial Strategies for Web3 Startups
In pursuing optimal web3 finance management, startups should establish a steady foundation to optimize the handling of assets. Among these winning strategies are:
- Understanding blockchain economics and dynamics
- Finding a reliable provider
- Forecasting user growth
It’s paramount for web3 startups to dissect the dynamics and economics associated with blockchains, considering factors such as transaction costs/gas fees, cost basis calculations, and crypto mining rewards. Understanding the moving parts associated with blockchains offers a clear management approach for business leaders to build on.
Another vital best practice for startups implementing a winning web3 financial strategy is finding reliable fintech providers. Finding providers you can trust due to the fact most banks or fintech providers aren’t crypto-friendly is key. Providers with a proven track record who are adaptable should be web3 businesses look towards.
Startup leaders also need to forecast user growth. As web3 banking becomes more prominent and user adoption increases, financial models for web3 startups must explore various growth scenarios. When considering these scenarios, you must review their impacts on revenues and adjust accordingly.
Money Management Tips for Established Web3 Companies
There is always room for improvement in web3 banking. You’ll typically need a traditional bank or an exchange to us to on/off-ramp funds and make payments, then establish a way to send funds back and forth. Networks are continuing to grow across the web3 market, and these statistics from Zipdo give you an idea of the ways your company might have to adapt:
- Over 1.5 million Web3 dApp users (MAUs) were engaged monthly in 2021.
- Mobile wallets are preferred by about 66% of Web3 users to access dApps.
- DeFi and NFT projects hold a dominant market share of over 90% in the Web3 dApps industry.
- From 2022 to 2029, the global Web3 blockchain-as-a-service market is anticipated to expand at a CAGR of 35.2%.
As your web3 business grows, its value becomes more complex, leading to the possibility of wrangling multiple providers, trying to figure out how funds flow. This is especially the case when you send money from your bank to your exchange to buy crypto to settle a bill. With regulatory risks and price volatility also prominent in web3 finance, you should consider multiple strategies.
You’ll also want to find some good crypto accountants familiar with accounting and management to help you along the way. With an increased emphasis on crypto accounting and adopting crypto accounting tools that successfully management crypto-specific flows that Quickbooks and similar accounting software cannot, Web3 businesses can stay ahead of the game regarding the flow of funds.
Similar to startups, established web3 businesses should have traditional profit and loss statements, cash flow statements, and balance sheets considering costs unique to web3 finance. This ranges from balance sheets, including token reserves, to cash flow statements featuring cryptocurrency flows.
Being on top of these issues prevents risks for how your Web3 finances function across your expenses, financing and accounting.
Mastering Liquidity Management in Web3 Finances
Due to the volatility of digital asset pricing, Web3 organizations must comprehend and control this risk to effectively manage their expenses, financing, and accounting.
The time required to send funds from your bank account and exchange is important to realize because sometimes it will delay your funds flow for two or three days, causing inefficiencies when you realize your crypto wallet doesn’t have enough crypto to send out funds; Finding a quick and seamless solution to easily transition between fiat and crypto is necessary..
Many businesses also take advantage of on-chain yields, or use Coinbase Yield to extend runway and manage treasuries, making sure their money is working for them. Coinbase offers yield on your stablecoin for this kind of operation.
Creating a successful liquidity management strategy requires identifying revenue drivers and leveraging qualitative measurements to inform spending decisions.
Various cryptocurrency companies make money through platform fees, smart contract applications, or yield generation on decentralized finance platforms. One way to track these revenue sources is to use a blockchain analytics platform. Also, several crypto accounting software apps are available online that are specifically designed to handle such tracking, such as:
- Cryptoworth
- Bitwave
- Cryptio
- NODE40
- Legible Tax
Streamlining the reporting of complex blockchain transitions creates more efficient crypto accounting management and keeps your web3 bank account in a healthy position.
Additionally, most crypto assets don’t qualify as cash equivalents under established accounting standards like GAAP. The risks of slippage and the realities associated with foreign exchange, causing potential mismatches between assets and liabilities, make for potentially harmful cash flow issues.
Choosing the Best Web3 Finance Partner
OneSafe is your safe space to manage both your crypto and fiat. We provide a crypto-friendly global account for companies worldwide and are your gateway to accessing the web3 finance ecosystem. We also provide corporate crypto cards for all your transactions.
Make getting your web3 finance management a breeze with OneSafe today!
*OneSafe is a technology provider and not a bank
