Web3 Product Growth 101: Essential Metrics for Acquisition, Engagement, and Beyond

Imagine you just launched your new Web3 app. You’re excited, the community on Discord is buzzing, and folks are connecting their wallets—but how do you know if your project is truly succeeding? In traditional Web2 startups, you might track daily active users (DAUs), conversion rates, and user retention. While that still matters in Web3, you also have on-chain activities, wallet connections, token transactions, and many more elements that reflect a decentralized world.

This is where Web3 product growth metrics come into play. They help you see what’s working, what needs fixing, and where your biggest opportunities lie. In this blog post, we’ll walk you through these metrics step by step—from the simplest concepts (wallet connections, transaction frequency) to more advanced ones (customer lifetime value, total value locked). By the end, you’ll have a solid grasp on how to measure your Web3 app’s success and keep those users coming back for more.

Key Insights into Web3 Metrics

1. Wallet-Centric: Instead of focusing solely on sign-ups, Web3 metrics revolve around wallets (e.g., MetaMask, Coinbase Wallet).
2. On-Chain Transparency: With public blockchains, you can see exactly what’s happening—transactions, staking, token distribution, and more.
3. Community & Ecosystem Health: Web3 isn’t just about user numbers; it’s also about how vibrant your broader community is, from governance participation to NFT minting events.
4. Beyond Just Clicks: Web3 growth metrics also track how much value gets locked in your protocol, how often people stake tokens, and how engaged they are with decentralized governance.

In Web1, everything was “read-only.” People passively consumed content, and engagement metrics barely existed. Then came Web2, which introduced “read-and-write.” Users could sign up, create profiles, and share content, giving rise to metrics such as sign-ups, click-through rates, and user retention.

Web3 expands upon these ideas by adding “ownership.” Now, users can truly own digital assets, participate in protocol governance, and earn rewards for their engagement. This evolution means new metrics—like the number of activated wallets performing meaningful on-chain actions or the total value locked (TVL) in a protocol’s smart contracts—become key indicators of success.

The Basics of Web3 Product Growth Metrics

Acquisition Metrics

Acquisition is about getting users interested enough to show up and connect their wallet. But in Web3, it’s not just about how many people see your landing page; it’s about how many are willing to link their crypto wallet to explore or use your dApp.

Wallet Connections

• What It Is: The number of unique wallets connecting to your dApp.
• Why It Matters: Similar to Web2 “sign-ups,” each wallet represents a potentially active user.
• How to Improve: Offer seamless onboarding with clear prompts, multi-wallet support, and tutorials.

Cost Per Wallet (CPW)

• What It Is: How much it costs you, on average, to get a single new wallet to connect.
• Why It Matters: A vital measure of marketing efficiency in Web3.
• How to Improve: Identify your most cost-effective marketing channels (e.g., social media, referrals, airdrops).

Conversion Rate

• What It Is: The percentage of visitors who end up connecting their wallet or signing up for your service.
• Why It Matters: A high conversion rate means your onboarding is smooth and your value proposition is clear.
• How to Improve: Reduce friction with simple user flows; offer easy tutorials or tooltips that guide new users.

Activation Metrics

Activation is when someone who connected their wallet actually starts using the features you built. This could mean minting an NFT, staking tokens, or swapping assets.

Activated Wallets

• What It Is: Wallets that complete a key action such as buying a token, staking assets, or minting an NFT.
• Why It Matters: It shows how many people are diving past “just looking around” and really using your product.
• How to Improve: Introduce small incentives—like a starter NFT or a low-fee swap—to encourage that first interaction.

Activation Rate

• What It Is: The percentage of new wallets that actually perform your defined “key action.”
• Why It Matters: Reflects how intuitive or appealing your app’s main feature is.
• How to Improve: If your activation rate is low, re-check your UI/UX design. Maybe you need simpler steps or clearer instructions.

Time-to-First Transaction

• What It Is: The average time from wallet connection to the first meaningful transaction.
• Why It Matters: The quicker someone completes a transaction, the better your initial experience (and the higher the chance they’ll come back).
• How to Improve: Provide immediate “quick start” guides or in-app “tutorial tasks” that lead the user to a transaction ASAP.

Engagement Metrics

Engagement is all about how often and how deeply people use your product. In Web3, it’s not just the frequency of logins but the actual on-chain interactions and total user involvement.

Active Wallets (DAW/WAW/MAW)

• What It Is: Daily, Weekly, or Monthly Active Wallets.
• Why It Matters: A core health indicator. If daily active wallets are steadily growing, you’re likely doing something right.
• How to Improve: Offer weekly incentives or monthly challenges (like gaming missions or DeFi yield events).

Unique Active Users (DAU/WAU/MAU)

• What It Is: The actual number of individuals active in a period (not just wallets, if your project can map multiple wallets to the same user).
• Why It Matters: Avoids data skew from “whales” or power users repeatedly transacting.
• How to Improve: Encourage a broad range of users to take part, perhaps by lowering transaction fees or adding social features.

Transaction Frequency

• What It Is: The average number of transactions per active user over a specific time.
• Why It Matters: High transaction frequency typically indicates your product is sticky and offers ongoing value.
• How to Improve: Could you gamify actions? Offer “daily quests” or “weekly goals,” especially if your dApp is a game, NFT marketplace, or DeFi platform.

Intensity of Use

• What It Is: A deeper metric focusing on how “heavy” or “deep” users go. Are they staking large amounts? Voting in governance? Buying multiple NFTs?
• Why It Matters: Helps identify if your top users are truly invested, not just casual dabblers.
• How to Improve: Offer advanced features (like complex DeFi strategies or governance roles) for highly engaged folks.

Customer Engagement Score (CES)

• What It Is: A single number that sums up various user actions—transactions, votes, NFT mints, etc.—to show overall engagement.
• Why It Matters: Gives you a quick snapshot of who your true “super fans” are.
• How to Improve: If certain actions score big on CES, lean into them. Create special tiers or achievements for heavy contributors.

Retention Metrics

Retention determines how many users stick around after their first experience—and keep coming back.

Retention Rate

• What It Is: The percentage of wallets that remain active over a certain period (daily, weekly, or monthly).
• Why It Matters: High retention means users find ongoing value in your dApp.
• How to Improve: Roll out updates or improvements regularly, run loyalty programs, or integrate user feedback quickly.

At-Risk Users

• What It Is: Wallets that have been inactive for a certain period (e.g., 30 days).
• Why It Matters: Early detection of potential churn. If you don’t re-engage them, they might leave for good.
• How to Improve: Send push notifications, emails, or social media updates to remind them of new features or improvements.

Saved Users

• What It Is: At-risk users who come back and become active again.
• Why It Matters: Shows the effectiveness of your re-engagement campaigns or new feature launches.
• How to Improve: Analyze what brought them back—was it a special update, a bug fix, or a well-timed marketing push?

Transaction & Revenue Metrics

Finally, transaction and revenue metrics help you see how your Web3 project is doing financially and how much value is flowing through your protocol.

Transaction Value per User

• What It Is: The average monetary value each user’s transactions carry.
• Why It Matters: Shows how comfortable users are transacting sizable amounts in your ecosystem.
• How to Improve: Build trust. Showcase security features or audits that confirm your smart contracts are secure.

Total Value Locked (TVL)

• What It Is: The sum of assets locked in your protocol’s smart contracts (e.g., in DeFi projects).
• Why It Matters: Indicates confidence in your platform. The higher the TVL, the more trust people place in it.
• How to Improve: Offer competitive yields or incentives for locking up tokens, and regularly publish security audits to build credibility.

Average Revenue per User (ARU)

• What It Is: Measures how much revenue you earn per active user.
• Why It Matters: Reflects how well you’re monetizing your user base.
• How to Improve: Adjust fees or explore alternative revenue streams (like subscription NFTs, premium features, or integrated marketplaces).

User Lifetime Value (ULV)

• What It Is: The estimated total revenue a single user generates over their entire relationship with your platform.
• Why It Matters: Helps predict long-term profitability and justifies your marketing spend.
• How to Improve: High ULV often means strong community stickiness, consistent updates, and meaningful governance or ownership perks.

User Fee Contribution

• What It Is: How much revenue each user contributes via protocol fees.
• Why It Matters: If fees are your main revenue source, you need to see if they’re set at the sweet spot—high enough to sustain the project but not so high that users leave.
• How to Improve: Adjust fee structures, possibly tier them for casual vs. heavy users to keep everyone happy.

Tools for Tracking Web3 Metrics (Mentioned Once, No Repeats)

• Formo Analytics: A Web3-focused solution that offers real-time tracking of user actions, transactions, and key performance indicators.
• Dune Analytics: A platform ( dune.com ) for pulling on-chain data and creating custom dashboards.
• Google Analytics: While more Web2-oriented, it can still help track website conversions before users connect wallets.
• Blockchain Explorers: Tools like Etherscan or BscScan let you see on-chain transactions for deep-dive data.
• Rock’n’Block: A Web3 development company that can build custom blockchain solutions to ensure your product meets KPI goals.

Examples For Tracking Web3 Product Growth Metrics

Example 1: A DeFi Staking dApp

• Focus Metric: Time-to-First Transaction—You want users to stake tokens quickly after connecting their wallet.
• Tip: Offer a tutorial pop-up explaining in simple steps how to stake, accompanied by a small reward for first-time stakers.

Example 2: An NFT Minting Platform

• Focus Metric: Activated Wallets—Count how many wallets actually go beyond just browsing and mint their first NFT.
• Tip: Have a step-by-step “How to Mint” guide and consider a minted certificate (NFT badge) for first-time users.

Example 3: A DAO Governance App

• Focus Metric: Intensity of Use—Look at how often members vote, propose changes, or discuss ideas.
• Tip: Use gamification (e.g., “governance tokens” or “reputation points”) to recognize community leaders.

Choosing the Right KPIs for Your Web3 Project

1. Identify Core Goals: Are you building a DeFi platform? An NFT marketplace? A DAO? Each has different “key actions” for activation.
2. Map the User Journey: Outline each stage: discovery → wallet connection → first transaction → repeat usage → community participation.
3. Pick Actionable Metrics: For instance, if “at-risk users” is a KPI, have a plan for how you’ll try to re-engage them (e.g., email campaigns, Discord announcements).
4. Use a Mix of Short-Term & Long-Term Metrics: DAW/MAW for short-term engagement, ULV/TVL for long-term success.
5. Keep It Manageable: Aim for around 10-15 key metrics total, so your team doesn’t get overwhelmed.
6. Test & Iterate: Track your metrics, see what’s working, and pivot quickly if you notice user drop-offs or low transaction frequency.

Conclusion

Tracking Web3 product growth metrics is your compass in a rapidly evolving landscape. They tell you if users are just connecting their wallets out of curiosity or truly investing their time and capital in your product. Whether you’re zeroing in on wallet connections, activation rates, or total value locked, the end goal is the same: build a project people find valuable, meaningful, and worth sticking around for.

Remember that metrics are only as good as what you do with them. Spot a high churn rate? Tweak your UI or launch a re-engagement campaign. Notice a low average revenue per user (ARU)? Experiment with new features or more attractive fee structures. It’s all about using data to craft a better user experience—one that benefits your project, your community, and the entire Web3 ecosystem.