Marketing teams are employing various methods to drive engagement and activity in their respective protocols. From running quests and distributing POAPs to awarding discord roles, community and growth teams are constantly deploying new campaigns to attract and retain users.
Despite these efforts, it’s important to ask whether these activities result in any significant increase in protocol revenue and activity. In other words, what is the ROI of marketing budgets on protocol growth?
To answer this question, we’ll delve into different protocols’ marketing strategies and analyze them with a data-driven approach. Through this blog series, we seek to provide deep insights and analysis to the web3 community.
We’ll examine the data to determine which methods are working and delivering results in terms of user engagement and revenue growth. By taking a rigorous, data-driven approach, we hope to shed light on what tactics work best and provide valuable insights to help protocols optimize their marketing budgets.
Join us as we explore the world of crypto marketing and discover the metrics that matter to your protocol success.
PoolTogether — Win by Saving
PoolTogether has emerged as a standout consumer product within the cryptocurrency community, enabling participants to win prizes by depositing their funds into yield-bearing pools alongside other participants.
By doing so, they receive recurring rewards in the form of interest payments.
With this in mind, we will delve into the protocol’s performance based on high-level metrics, analyze the impact of on-chain campaigns carried out in the past year, explore the demographics of its top users, and identify potential levers for increasing adoption and enhancing retention.
Protocol usage metrics
The bear market is hitting hard web3 usage.
- Active users are flat / decreasing (about -20% in Q1 2023 from Q4 2022)
- TVL is decreasing steeply (about -80% in Q1 2023 from Q4 2022)
Despite these challenges, there is positive news regarding wallet retention.
- Pooltogether has noticed a rather high six month retention at 46%, illustrating the high probability of users maintaining a positive balance in the platform, while on a yearly basis it goes just below 30%
- As expected, Ethereum users are much more sticky than the others — but this is hardly a leverage for more growth as interests about 1% of the total users
- Optimism retention varies widly across cohoorts. Cohoorts interested by incentives / quests have much less retention
Considering the bear market situation and some web2 benchmarks for B2C fintech, where less than 20% retain their deposits by the end of the month, the retention of Pooltogether depositors isn’t too bad. It is essential to focus on the depositors who remain loyal to the protocol.
On-chain campaigns — Quests
PoolTogether took part in two Galxe quests programs in the last year:
- The OP quest
- Polygon degens
For both of them, we can confidently say
- The retention is close to 0
- The impact on TVL is non existent — the share of TVL by wallets holding Galxe credentials was higher before the OP quest started
- Significant overlap in users among the two quests — which also explains a tangible reduced impact of the second Polygon degens quest
Like in other analysis we performed, we find that quest marketplaces have an adverse selection problem, attracting the most bargain hunter users and sybil.
In that regard, we suggest quests to be seen not as an acquisition tool, but more as an onboarding / retention tool.
POAPs and community calls
Pooltogether community makes ample uses of community calls and POAP. But are users in the call actually using the protocol?
We found minimal impact (and high correlation with other credential programs), taking into account 26 POAPs.
Token Holders
Have token holders really skin in the game?
Yes — but their contribution is much more on TVL than in active users.
Top users demographics
We conducted a thorough analysis of the on-chain behavior of the top 300 wallets with the highest balances to identify the key characteristics of the most significant users. These users possess highly sophisticated DeFi wallets, and more than 80% of them use various other DeFi applications.
In terms of popular dApps, Aave v3 is the most favored after Pooltogether, with around 25% of wallets using the platform. This finding aligns with their similarities in functions but with minimal variance. Aura Finance ranks second, with about 10%, followed by Compound at a little less than 10%.
Based on the ERC20 holdings, the audience’s preference leans towards $ETH, as the bulk of the value held falls within $ETH or a similar category.
Recap and ideas to move forward
- The protocol is hit by the bear market and the drying of ecosystem-level incentives (in particular on $OP). However the retention is decent.
- Quests have failed to attract new users, and post-quest retention rates are negligible. To improve the effectiveness of quests, we recommend using a targeted approach to tackle sybils (as we do at Tide), as well as leveraging on-chain actions to encourage on-chain interactions.
- Although POAP community calls may be effective in driving engagement during calls, they have little impact on protocol-level metrics.
- Token holders are a stable source of contributions to the protocol, primarily through total value locked (TVL) rather than activity. These wallets are likely held by the team or early community members.
- User demographics can be divided into three clusters: “defi experts” who appreciate the added variance that PoolTogether offers investment portfolios, “mid retail users” who test the platform and remain for a short time (using few DeFi apps, but having a decent web3 activity), and “bargain hunters” who are sensitive to incentives, quests, and similar offerings.
On the B2C marketing side:
- Create a referral system to reach out to new users. Identify a cluster of valuable / genuine users that can spread awareness about the protocol.
The wallet eligible to be referrer should be a subset of the most active users, token holders and possibly governance voters to reduce sybil attacks. The target users for this initiative would be relatively new to web3 (the mid retail users)
- Switching to longer term quests to boost loyalty. The idea here is to have an on-chain mechanism to assign XPs and badges to the top users consistently, instead of single-off initiatives. These quests have to be targeted and require specific on-chain actions
- Identify the wallets most prone to churn and offer them a personalized protocol experience
On the B2B side:
- Identify protocols that could be interested in providing lottery-like rewards to their pools.
This could be helpful in acquiring top DeFi users (see above) that like the underlying investment but prefer a bit more variance. We know that this is something Pooltogether is already working on, and it may lead outsized returns in TVL and usage terms
About Tide
Tide is on a mission to make web3 marketing more efficient and fair.
Our quest and analytics suite helps project reach, engage and retain the right users, leveraging insights from on-chain data.
To launch your engagement program, visit our website and start now.
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