Why Account Factories Will Create the First Profitable Web3 Apps

Account factories commoditize user onboarding. They transform the expensive, one-time user acquisition cost into a predictable, low-fee infrastructure service, enabling applications to scale users without scaling costs.

Profitable apps require recurring revenue. Web3's reliance on one-off gas sponsorship or token incentives is a broken model; ERC-4337 account abstraction enables subscription fees and service bundling directly from smart accounts.

The first profitable apps will be B2B2C. Protocols like Starknet's Account Abstraction SDK and Safe{Wallet} are building the rails for apps to offer managed accounts, creating a new SaaS-like revenue layer.

Evidence: Coinbase's Smart Wallet eliminated seed phrases and gas fees for users, demonstrating that abstracting complexity drives adoption and creates a monetizable service layer.

Onboarding is a cost center for every Web3 app today. Protocols spend on marketing, faucets, and gas subsidies to acquire users who generate no direct revenue.

Account factories flip this model by making onboarding a revenue-generating transaction. The factory contract earns a fee for every new smart account it deploys.

This creates a B2B2C flywheel. Apps like Uniswap or Aave pay for seamless user onboarding via ERC-4337 bundlers, turning a cost into a service they buy.

Evidence: Coinbase's Smart Wallet and Safe{Core} account kits are early factories. Their revenue scales with user count, not speculative tokenomics.

Customer Acquisition Cost (CAC) is non-recoverable. Every dollar spent on marketing, airdrops, or referral programs to onboard a user is a direct expense. This model fails because the user's identity and data remain siloed within the acquiring application, creating zero downstream value for the protocol.

Web2 platforms monetize user data; Web3 protocols discard it. Facebook's $50 CAC is profitable because it captures user graphs and behavior. A dapp's $50 CAC is a loss because the wallet address and transaction history are portable, not ownable assets. The protocol pays for a user it cannot monetize beyond initial engagement.

Account abstraction inverts this model. ERC-4337 and smart account factories (like those from Safe, ZeroDev, Biconomy) transform user acquisition into an asset creation event. The factory that deploys a user's smart account captures a persistent economic relationship, enabling recurring revenue from gas sponsorship, bundling, and cross-app session keys.

Evidence: The average cost to acquire a DeFi user exceeds $300. In contrast, the gas cost to deploy a smart account via a factory on Polygon is under $0.01, creating a profitable, ownable user primitive for the first time in Web3.

Factory revenue is protocol revenue. A factory contract collects a fee on every account it deploys. This creates a direct, recurring monetization layer for gas abstraction services that users already require. Unlike dApps that monetize via speculative tokenomics, this is a fee-for-service model with clear unit economics.

The business is infrastructure, not speculation. Profitability stems from operational leverage, not token price appreciation. A factory like those built with ERC-4337 or Safe{Core} turns a one-time deployment cost into a perpetual revenue stream, scaling with user adoption without proportional cost increases.

Revenue compounds via ecosystem capture. The factory becomes the default entry point for a user's entire on-chain journey. This position allows it to capture value from downstream transactions, similar to how Coinbase's Base or Polygon's AggLayer monetize ecosystem activity, not just their own core operations.

Evidence: ZeroDev's Kernel factory demonstrates the model, where bundlers pay the factory a fee for each smart account deployment, creating a predictable SaaS-like revenue stream directly on-chain.

Middleware is a cost center. Protocols like The Graph or Pyth charge fees for data, but their revenue is a tax on other applications. They are infrastructure, not the primary business.

Account factories are the product. A factory like ZeroDev's Kernel or Biconomy's Smart Accounts becomes the user's permanent on-chain identity. Every subsequent interaction, from a Uniswap swap to an Aave deposit, flows through this owned relationship.

This captures lifetime value. Unlike a bridge fee from LayerZero or Wormhole, the factory monetizes the entire user journey. The business model shifts from transaction tax to SaaS-style subscription or revenue share on all spawned account activity.

Evidence: Stripe built a $100B company on payment abstraction. Account factories apply this to blockchain identity, turning a technical primitive into a recurring revenue asset.

Account factories invert the acquisition model. Traditional apps spend heavily to acquire users who then generate data and fees for the platform. ERC-4337 account factories enable apps to sponsor and own the initial deployment of a user's smart account, capturing its lifetime value from the first transaction. This turns user onboarding from a cost center into a direct asset.

The defensible moat is user context. A factory-minted account is a persistent, programmable identity. Apps like Kresus or Instadapp that deploy these accounts create a sticky, data-rich relationship impossible with ephemeral EOAs. This context enables personalized services and cross-selling that MetaMask's generic wallet cannot match.

Revenue shifts from speculation to utility. Today's dApp revenue relies on token speculation and swap fees. Factory-based apps will monetize recurring access to bundled services, like Gelato's automated task subscriptions or Safe{Wallet}'s multi-chain fee abstraction, creating predictable SaaS-like revenue streams.

Evidence: The bundling precedent is clear. In DeFi, UniswapX and CowSwap bundle solvers and fillers into a single intent. Account factories extend this to the entire user session, bundling wallet creation, gas sponsorship, and initial interactions into one atomic, app-owned flow.