Both products and users are indispensable for the success of a product. But which one goes first for Web3 projects? We’ve seen quite a few answers stating that product development is a top priority. With decent product quality and user experience, products can attract and retain users easily. But is this really the case?

 

According to DeFiLlama, the TVL on Ethereum grew rapidly in 2021, which is called “the year of DeFi”. But 2022 marked a bear market, as the price of ETH fell below $1,000, and the TVL volume also plummeted, falling from the peak of $182.31 billion to just over 44 billion.

 

According to NFTGo, since the bear market in 2022, the number of NFT transactions has gradually decreased from 60K+, with a lowest of 12K+. Holding, instead of trading, has become mainstream for NFT holders.

 

According to Dune, the number of new wallets in GameFi is far below 10, and the daily loss of existing users is even higher than the new ones.

Obviously, the impact of the market on user growth is enormous. By trying to do well in product development first and then starting to acquire customers, you won’t survive market fluctuations, just like those new projects that became famous on hackathons and then quickly disappeared.

However, putting the same focus on product development and user growth requires a high capital investment and adequate professional experience.

According to statistics, only 18 out of 39 projects that are shortlisted for the contest in the Ethereum Community Conference 2023 have disclosed their social media accounts to the public, among which 8 projects have an official account. The followers of these accounts range from 7.3K to 2. At the same time, the Web3 market is facing problems like a lack of users, fierce competition, and low user engagement.

 

As the largest Web3 ecosystem, the Ethereum browser shows that the current independent addresses on the chain have exceeded 224 million, and the average daily growth is only about 70K-80K, which is far from enough to support the continuously emerging and developing projects.

In addition, with the development of Web3, more problems in user growth are continuously exposed as shown in the below table:

 

It can be said that the entire life cycle of Web3 is full of loopholes almost everywhere because of the wild growth mode in the early stage. The vigorous vitality in Web3 is more supported by the expectations brought by BTC, ETH, and other mainstream coins. Therefore, we may need to analyze traditional strategies for customer acquisition in the Internet industry.

Strategy Analysis

 

According to the AARRR funnel model, one of the best-recognized customer acquisition strategies, we can tell that every phase from acquisition to referral and revenue is a funnel, which means a loss of users in the conversion process from one phase to another. Reports on the traditional internet industry in previous years show that the conversion rate between each phase is about 10%, and the conversion rate of monetization will be even lower.

 

We may draw a conclusion that only if your growth is large enough, refined enough, and efficient enough, can you solve the problem of customer acquisition growth, improve the conversion of each phase of the funnel, and finally achieve positive development. Therefore, Web3 projects need to solve the “5W” (Why, When, What, Who, Where) questions of customer acquisition as follows:

• Why: Why acquire users？

The word “network effect" in the internet industry means that the more users there are in a network, the greater the value it will generate, because the huge number of users and the usage not only bring huge value to the project but also attract more equity from the outside world.

 

For example, the zkrollup project Scroll recently raised $50 million. One of the most important reasons is that its pre-alpha test network has more than 1 million independent addresses and a total of 16 million transactions. After its alpha test network launched on Ethereum Goerli, more than 180K independent wallet addresses participated in the test and generated a total of 665,000 transactions.

• When: When is the right time? 

In Web2, when the product is completed by 40%, the product can be launched for use and attract customers. Based on this, further development and iteration can be carried out through early user feedback, that is, internal testing and public testing. The same can happen for the Web3 product. Moreover, early adopters are easy to become loyal users and can assist the project in managing the community and advertising.

However, the Web3 project team needs to consider how to balance the accuracy and increment of users - precise screening, a small number of users; a large number of users, and insufficient user engagement and retention.

• What: What to do to attract users?

The most-used method of attracting users for Web3 is airdrop where users complete a series of tasks, obtain the pass for airdrop, and then receive rewards after the event. The category of the reward is particularly important.

 

A poll on the Twitter of TaskOn, a task platform for user growth, shows that about 77.1% of users are more willing to participate in activities that reward tokens.

At the same time, the type of events, the form of reward distribution, etc., are also elements that attract users. For example, new users are more likely to do social media tasks, while experienced users are willing to complete transaction tasks.

• Who: Who do you want to attract?

The most important reason for low user engagement and high churn rate is that the persona of users attracted through events does not match the product. For example, among the users participating in the airdrop, some of them are Wool-Pulling Party, and some of them immediately cash out as soon as they get the airdrop.

 

Less than half a month after the OP airdrop, the price fell to 0.5U.

To avoid that, some projects will set an unlock period, and some will choose to delay the reward distribution. To determine which way is the right for you, you need to have a close look at the product attributes, such as TO B-end or TO C-end; DeFi, NFT, or Game; high-net-worth users or Web3 newcomers, etc.

• Where: Where to reach out to users?

Generally speaking, wallets, exchanges, and NFTs will require more new users of Web2, so both media channels and event tools need to connect with Web2. Among that, there will be problems such as insufficient user education and low user retention.

Other business fields, especially DeFi, an industry with extremely high professional requirements, need to reach existing users from within the Web3 market. Vertical media and tools will be more accurate in attracting target users. And again, they may face an insufficiency of reached users.

Based on the above analysis and possible problems, how can the Web3 project achieve efficient and low-cost attraction of users?

Actions and Tools

 

The most common way to attract users in Web3 is events with incentives, whether self-initiating airdrops, giveaways by cooperating with KOLs, or events published through task-based platforms. These events are always the first choice for Web3 projects to seek rapid growth in the short term.

 

In general, tasks are following social media accounts and joining communities, while application-oriented dApps will add requirements on usage, such as registration or transactions. Usually, before or when the event starts, the organizer or platform will post on Twitter to remind the audience to reach more potential users.

In this article, the author uses giveaway as the keyword to search in nearly an hour of tweets. The result of different types of events is as follows:

 

The result of events published by different task-based platforms:

 

*Above data is real-time.

The main reasons why task tools represented by Gleam, Galxe, and TaskOn will replace other approaches to help Web3 projects grow are as follows:

• Low cost to acquire users

The project needs to pay for cooperation with KOLs or tools like Gleam.

 

Gleam’s full-featured version requires $97/month, and the minimum price for KOL advertising is 100U (50U for rewards, 50U for labor costs). In Web3, all task-based platforms are free at present. Projects only need to provide rewards, including tokens, NFT, and WL at a lower cost.

• Automated templates to create events

Task creation will user automation templates including regular Twitter follow&retweet&like, joining the community, and even API tasks and verification, allowing projects to focus on planning efficient activities.

 

In particular, automated API verification and on-chain tasks perfectly match the needs of Web3 projects to increase the number of users as well as product usage, which is one of the reasons why the field of Web3 task tools has steadily grown in the past two years. At the same time, through various combinations of templates, it can meet the needs of projects at different growth stages, as listed in the following table:

 

• Increasing source of user growth

In essence, the task platform aggregates projects and incentive activities by providing task tools, making it easier to gather Web3 users. Take monthly active users as an example:

 

At the same time, each platform connects to multiple chains to reach more users:

 

Therefore, projects can choose to publish multiple events on multiple platforms, and attract more users to achieve growth through multiple chains. However, the authenticity of users and the repetition of users attracted from each platform will be problems. The author posted the same event on the following platforms, and found the following outcomes:

 

• Holding joint events

The joint event has the same logic as the multi-chain event, that is, to achieve the integration of ecology between multiple projects through the event. By cooperating with each other, projects can grow users faster. Important joint events on major Web3 platforms have been carried out one after another.

 

Selection of Tools

 

As mentioned above, if the budget is sufficient, the project can broaden its user growth source by using multiple task platforms and participating in joint events.

But if the budget is limited, you can make a comprehensive judgment from multiple dimensions. We have the following findings to help decide from the data point of view:

 

At the same time, it is also important to match the differentiated functions of the product, such as using automated API verification to improve DeFi's TVL and DEX/CEX transaction volume.

In addition, the data tracking function is also a very important criterion for selection, because data tracking is a prerequisite for recognizing user persona and increasing retention and conversion. 

In addition to seeking user growth, you also need to consider retention and conversion, such as:

• User Retention

First, the screening during the early stage of growth can touch more ideal target users, such as those from different regions and have different preferences;

Second, combinations of task templates can help with user education, cultivating loyalty, and providing various incentives to improve user retention;

Furthermore, creating a series of activities on the platform can encourage users to continue to participate and thus increase product usage.

• User conversion

Supporting templates for transaction and asset tasks is the most basic requirement for conversion. Of course, anti-bot measures are also very important, because only real users can bring subsequent conversions.

Besides, some manual supports, including API docking, such as customized task modules, also need to be taken into consideration, because the task platform only has the basic task and API docking. Manual support will help tasks designed for user conversion run more effectively.

A Future of Product Development plus User Growth

 

With the help of the above task growth tools, Web3 projects may achieve market growth, user retention, and cashability. They only need one or two team members who understand market growth to plan and take use of task-based platforms to execute tasks automatically. 

Task-based tools help Web3 projects save manpower, material resources, and time costs, so they will have more energy to complete higher-level development, bring better products to users, and realize a positive cycle between product and market.