The interest in Web3 has increased a lot in the last year. NBA players are buying NFTs for a lot of money and showing them off. OpenSea is doing better than Etsy. The most popular game in the world uses Ethereum. Even though more people are interested in this now, not that many people are actually using crypto products yet.

Although there are many Web2 apps and games with a large number of monthly active users, Metamask is the only Web3 app that has reached this scale. The lack of developed growth strategies is the primary reason that Web3 projects have been unsuccessful in achieving a similar level of popularity. Web2 companies have had a decade to perfect their strategies and make use of available platforms, while Web3 projects are just beginning to do so.

Instead, they interact with the user through a decentralized network of peers, protocols, and cryptographic signatures Web3 applications differ from mainstream Web2 applications in several key ways. perhaps most notably, Web3 applications are decentralized, meaning that there is no central authority or server that controls them. Instead, they rely on a network of peers to function. Additionally, Web3 applications are pseudonymous, meaning that users are not required to use their real names when interacting with them. Finally, user-owned data is a key tenet of Web3 applications, meaning that users have complete control over their data and can choose to share it with others as they see fit.

If Web3 is going to be successful in creating an internet that is governed by open, community-controlled services, then entrepreneurs will need new growth strategies. Web3 will need a new growth playbook.

Web3 Growth Challenges & Opportunities

Web3 applications have three main challenges when it comes to attracting and keeping users.

Identity

Most Web3 growth strategies start from the assumption that (potential) customers are unknown. Viral growth generally happens on platforms that build social graphs based on IRL identity. Paid growth requires knowing information about your users so you can build targeting profiles. Many, many billion dollar companies have been built in helping companies do this effectively. Web3 breaks this assumption as the vast majority of on-chain activity is currently pseudonymous.

A number of teams are working on various aspects of identity for Web3. The Ethereum Name Service is growing quickly and making Ethereum wallets – which are currently the primary ‘accounts’ in crypto – more human readable. Ceramic and other DID providers are also working on building integrated account models for Web3.

Regulatory pressure and institutional interest are helping to drive the adoption of ‘whitelisted’ DeFi products that are less anonymous than their predecessors. Maple recently launched a ‘permissioned’ lending pool that required participants to go through KYC. Violet is tackling this problem in a more generalized way by building an identity protocol to bring off-chain identities onto Ethereum.

Other projects are trying to create on-chain identity from the bottom up rather than bringing offline data on-chain. Galaxy is working on a crypto-native identity solution that uses a users’ on-chain behavior to construct their profile. ARCx has created a ‘DeFi Passport’ that gives users’ a credit score based on their on-chain activity.

Communication

Many Web2 companies use Facebook ads to target new potential customers, while utilizing email to draw back in customers that have ceased using their services. In addition, they utilize push notifications to inform users of new products or services. However, there are very few tools available that growth teams can use to effectively manage cryptocurrency. This presents a major obstacle to teams that are hoping to establish growth loops.

Web3 communication tools are still in early development, but there are a few companies working on solutions. Ethereum Push Notification Service is working on a protocol to generate mobile push notifications based on blockchain activity. CyberConnect and other companies are developing decentralized social graphs to power user-owned social networks.

rather than building new Web3 applications from scratch, some companies are integrating Web3 into existing communication tools. For example, Collab Land uses token balances in a users’ Ethereum wallet to determine whether they can access a Discord server. Lit Protocol is working on a decentralized platform that uses tokens or NFTs to control access to content, software, and data.

Platform constraints

Contrast this with crypto where the constraint is actual – if you’re making a dapp that requires users to own ETH, your addressable market is constrained by the number of people who own ETH. If you’re making a dapp that requires users to own an iPhone, your addressable market is constrained by the number of people who own an iPhone. The comparison between crypto and mobile can be helpful in thinking about the market size. All products on mobile have platform dependencies – for example, if you’re making a mobile meditation app, your addressable market is constrained by the install base of Android and iOS phones. Given that nearly every adult on earth has a smartphone, this ‘constraint’ is largely theoretical. Contrast this with crypto where the constraint is actual – if you’re making a dapp that requires users to own ETH, your addressable market is constrained by the number of people who own ETH.

If you’re building a Web3 product, your immediately addressable market is limited to the number of people using cryptocurrency wallets.

We’re starting to see products that can make it possible for more people to use cryptocurrency. Some products make it easier to use cryptocurrency by not requiring the user to have a deep understanding of how it works. Dapper has made NBA Top Shot into a widely used cryptocurrency application by making it easy to use without needing to understand how the blockchain works. Everbloom is using a similar approach for a mobile first application that uses cryptocurrency, and we believe that this sets them up well to reach a larger audience.

0 by delivering a new and compelling use case for blockchain technology. Other products are getting new audiences excited about blockchain-based products to get around current platform constraints. For example, Helium has reached an install base of 350K+ by getting people excited about mesh networking and their hotspot’s revenue potential (rather than the fact that it runs on a blockchain). We believe that DIMO will likewise onboard a similarly large audience of auto enthusiasts into Web3.0 by delivering a new and compelling use case for blockchain technology.

There are a final category of products that are designed to get a broader audience excited about crypto itself. These products, offered by companies like CoinList and Coinbase, incentivize people to try out Web3 products. Rabbithole has done a great job of onboarding new users into Web3 in a crypto-native fashion, while Galaxy has done an amazing job of getting communities to use new products. Meanwhile, applications like Layer3 are making it easier to start earning in Web3.

How does Web3 company go out of the circle?

Briefly describe the growth of web2

Web3’s growth framework for the past decade has been focused on web2.0. This means that the company has been working to increase its presence on the internet by improving its website and making it easier for people to find and use. The company has also been working to improve its products and services so that they are more valuable to users.

Andy JohnsThere is a famous saying that can be used to explain what growth means at its most basic level:

If finance means having the cash inflow and outflow of the company, then growth means having the flow of customers in and out of products.

There is no specific set of tactics or silver bullets that define growth for web2 or Web3 products. Growth for these products depends on the role within your company.

Growth is a system that helps you define between your company’s mission, values and business model:

one How should our products grow?

The team did an excellent job of breaking the problem down into four questions to help us answer the above question.

1. How do we attract and keep users? 2. How can we make money from our users? 3. How can we create a competitive advantage?

If you want to help your business grow, you should look at how it develops during specific growth cycles. This will give you a better understanding of how to create an overall growth model for your company.

two Four basic coincidence points

There are four basic fit points that need to be found for a well structured growth model, not just the fit between products and the market. These fit points are market product fit, product channel fit, channel model fit, and model market fit.

three Your growth strategy

First, we need to understand how our products should grow and how they fit in with our community, market, channels, and business models. Then we can define a sustainable and scalable market entry or growth strategy.

four Build a growth team

As more and more companies put together teams to promote unique market entry and growth strategies, it’s becoming increasingly important to have not only the best method, but also the best team structure to deploy this strategy quickly and efficiently.

Kathy winters(former growth director of pinterest / grubhub) in hisDefinition of growthThese areas are separated in:

The purpose of growth is to expand the use of products with product / market fit. To do this, you need to establish a playbook on how to expand the use of products, which can also be called growth mode or cycle.

He continued:

Most product teams are built to create or improve the core value provided to customers. Growth is about connecting more people to existing values.

Growth can be a difficult concept to define, but it is a vital element for any product, enterprise, or team to succeed. There is a wealth of information available on this topic, and it is well worth taking the time to explore it in depth.

and how it can be used to achieve the objectives we have set for ourselves The growth model of Webthree can be used to achieve various objectives, such as increasing the number of users, increasing engagement, or improving conversions.

Growth of Web3 company

How is your Web3 product extended?

What are the four core questions that we need to answer in order to lay the foundation for our growth model?

How do we get users?

a business Lattice Capital has found a way for Web3 companies to start formulating their acquisition strategy by breaking down the business.

Web3 is looking to grow their business through partnerships, user ownership, and token driven growth pools.

The above tactics rely on users who are already familiar with the Web3 ecosystem. It is not about how or who will help bring in the next 1 billion users.

The way that cryptocurrency companies acquire new customers is currently very unstable and full of unknowns. This is especially true when considering the inherent difficulties that someone new to Web3 (the decentralized internet) must face when trying to join and participate. These include joining discord groups, establishing a metamask Ethereum wallet, purchasing NFTs, and participating in open bounties. For “ordinary users” the system is still full of these types of obstacles. As a result, competition between companies is rapidly increasing as they try to win over the current pool of educated cryptocurrency consumers.

The winners in Web3 will be those who can clearly define:

1. What is the position of this product in the scope of centralization and decentralization?
2. Is this a network effect driven business?
3. What does success look like? (user growth, total lock up, developer activities, transaction volume, connected wallets, etc.).

How do we keep users?

If a company wants to grow, it’s important to keep the users it already has. User retention rate is a way to measure how well a product fits the market. A good retention rate can help a company get more customers and make more money.

One of the biggest challenges facing growth in Web3 is how to retain users. In Web2, users are retained mainly through email, push notifications, and apps, which are driven by life cycle marketing strategies that attract and revive specific users. However, in Web3, there is no concept of “users” (they are identifiable individuals), so life cycle strategies cannot be used to lock them in.

If you want to use a decentralized application, you can only rely on your wallet address as a unique identifier. The problem is that a single user can access the application with multiple wallets, which may make the data less accurate.

Web3’s loyalty/retention program will be shaped by user ownership and governance, activities on the chain, and community participation.

I think a lot of these questions will be answered early this year. For example, NFTs, Defi, and Daos will have to continue to improve to keep users interested instead of losing them. Additionally, the current cryptocurrency market depends on the stock market, so if the stock market changes, the cryptocurrency market could as well.

How can we realize monetization?

For web2 and Web3 companies, “monetization is more than just price”, as reforge said. They have a great framework to solve this problem, as mentioned in Experiment + test plan.

The amount of friction someone experiences when trying to become a paying customer or user of a product is directly related to that company’s monetization strategy. Companies that operate on web2 or web3 platforms will have different amounts of friction for users.

If the thing we want to charge is really well-known and well understood by users, it is low friction. However, if the thing we want to charge is a new product in the market and is not well understood by users, it is unknown, it will produce high friction – reforge

So far, large, centralized Web3 companies like OpenSea or Coinbase have taken advantage of “high visibility and easy to understand” monetization strategies (such as transaction fees or listing / sales fees) to reduce the friction between new users joining and using their platforms.

Web3 provides new opportunities for decentralized organizations to generate income. It will be interesting to see how “free-to-x” Daos, games, and Web3 social networks use defi strategies to monetize their services and break the common belief that “if you don’t pay for a product, you are the product”.

How can we build a moat?

In the past few years, there has been a trend of new Web3 and cryptocurrency companies emerging rapidly, with no signs that this will slow down soon.

Looksrare is an important competitor of opensea, although web3 and cryptocurrency are still very emerging industries.

“Growth = speed, speed is the competitive advantage in today’s market – Matt bevons”

As more competition enters this field, the current distribution channels will become less effective. With more choices available, people will become less trusting of airdrops and will feel more aesthetically fatigued by the discord.

Time will tell Some very interesting things are happening in terms of user ownership, network participation, and token economy. However, it’s not clear yet whether the Web3 ecosystem will be built on the same foundations as successful Web2 companies (network effects, strong communities, and an organic growth cycle or flywheel effect). Only time will tell.

Web3 Growth Strategies

Partnerships & Integrations

It’s not new for software companies to grow through large business deals, and many Web3 projects have adopted this strategy. For example, ChainLink did this in the 2018-2019 bear market, and $LINK performed better as a result.

However, business development can look very different in Web3 when these partnerships are negotiated transparently in governance forums rather than behind boardroom doors. Given that these integrations often do not require permission from one of the two parties, they are not always mutually beneficial. For example, a number of platforms have integrated Curve in ways that do not necessarily benefit Curve itself.

A few examples of Web3 partnership categories:

• Token utility – projects that have a native token want to make it as useful as possible. This could include exchange listings, collateral listings (eg adding $LINK to Compound), or a partnership with a DEX to drive additional liquidity.
• Distribution – all users interact with DeFi protocols through wallets (Metamask, Rainbow) and increasingly aggregators (Zapper, Zerion). These frontend interfaces control which protocols they show to users and so getting your yield aggregator integrated with wallets can be a big deal.
• Lego building – leveraging another DeFi primitive to bring additional utility to your product. For example, Notional leverages Compound to increase its effective yield.
• Mergers – the recognition of two teams building in similar directions and no longer making sense to compete has led to protocol mergers, notable Keep & NuCypher and Fei & Rari.

We’re starting to see times where organizations prioritize hiring a partnerships/business development lead given its increased importance .

Liquidity Mining & Tokenomics

Growth hacking is a term used to describe a marketing technique that is analytical and engineering driven. This approach has become very popular over the past decade. Growth hacking in the Web2 world has traditionally been focused on building affordable, repeatable growth loops. However, in the cryptocurrency world, the focus is on using a project’s native token to drive growth loops.

Web3 protocols can use their native token to bootstrap their growth, just as VC funds have been used in the past to subsidize marketplaces until they reach scale.

Many crypto projects that have grown by giving out tokens as incentives are now having similar problems to Web2 startups that spent a lot of money from their investors too quickly. The data shows that most of the people who were given these tokens only care about making money, and not the project. Because of this, we are starting to see more products that are being made with more thought put into them, like OHM and Rift.

Community

The difference between Web2 and Web3 companies is that Web2 companies focus on driving loyalty amongst their users in the form of engagement and retention, while Web3 companies focus on driving user ownership. Web3 is exciting and unique because users fund the products, information, and services that they consume. We’re still early in understanding all the implications of this innovation.

We think that having an engaged community is critical for a network’s growth because they will be more likely to support and promote the network’s goals. This can be seen by looking at the Twitter feeds of projects with engaged communities – they usually have a lot of engagement and retweets for every announcement.

Communities can substitute or complement key stakeholders in Web3 projects:

• Early customers (and cheerleaders) – having a small group of fanatical customers is crucial for any startup. Community members can serve this role (and then some) because they’re both early customers and have meaningful upside
• Leverage core team – community members can help with hiring, token design, fundraising (things investors historically helped with)
• Extend core team – community members can provide both technical and non-technical support to the core team. Sometimes they step up and join core team, other times this happens more ad-hoc.
• Distribution – upstart token projects want to partner with other projects with large communities, just like new products look for distribution in channels with a large footprint