Say goodbye to Web2 growth models. What new metrics do crypto projects need?

Author | Maggie Hsu

Translation | Deep Tide TechFlow

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This article does not constitute any investment or financial advice. Readers should strictly comply with local laws and regulations.

How do you evaluate the success and growth of a crypto protocol or product? In Web2, marketers have various strategies to measure success. In the crypto space, especially in L1, L2, and protocol domains, marketing strategies are still being developed. Some metrics are unavailable, some are less important, and many require rethinking in the context of blockchain.

I have discussed with many growth and marketing leaders, each of whom has different dashboards, which is normal because the definition of growth for L1 or L2 differs from that of DeFi protocols, wallets, or games. Let’s explore these differences more broadly:

Growth in L1 and L2 is closely related to user and developer communities. We can measure success by looking at monthly active addresses (MAA), Monthly Active Addresses(, and the number of applications built on them. Growth in MAA without significant application growth may simply indicate the presence of a few popular or spam applications; ideally, both should grow in sync. In this case, the role of the Chief Marketing Officer )CMO( is less about promoting the protocol itself and more about acting as a community marketing engine.

The basic growth indicators for protocols are user count, transaction volume, and Total Value Locked (TVL) — the total assets deposited into protocol smart contracts — or Total Value Secured (TVS) — the total assets protected by the protocol. Although TVL is a controversial metric, when combined with other discussed indicators, it can roughly reflect protocol growth. One founder shared that they also calculate “active TVL”’s “cost of capital,” which is the ratio of rewards provided to achieve a certain locked value relative to the fees or value generated.

Growth in infrastructure and other Software-as-a-Service )SaaS( typically relates to individual product growth. For example, developer platform Alchemy focuses on customer and revenue growth within each product line, similar to traditional SaaS companies. More specifically, the percentage of recurring revenue from existing customers or overall revenue retention rate )GRR( indicates product stickiness and a stable customer base, which is crucial for recurring revenue. Net Revenue Retention )NRR( also considers upselling and reflects the ability to increase revenue from existing customers.

Wallet and game growth also appear more traditional (similar to the SaaS example above). Here, the overall usage and revenue are measured by:

· Daily Active Addresses (DAA), the number of unique addresses active on the network each day;

· Daily Transaction Users (DTU), the number of unique addresses conducting revenue-generating transactions on the network (a subset of DAA);

· Average Revenue Per User (ARPU), the revenue generated from users or customers within a specific period.

However, if tokens are involved, then token price and holder distribution are affected, but even these metrics depend on your goals. For example, do you want a large number of small token holders or a few whales? This depends on your product or service category, stage, and strategy, and you need to choose appropriate metrics.

So, how to build a company-specific dashboard? Here are some potential metrics suggestions, combined with their position in the marketing funnel for more insights. Ultimately, you need to decide what to measure, how to weigh each metric’s importance, and how to act based on the data…

Core Metrics: What Matters?

Customer Acquisition Cost (CAC), Lifetime Value (LTV), and Average Revenue Per User (ARPU) are core to understanding the success and efficiency of customer acquisition efforts (we will define these metrics below).

While these concepts are widely recognized in traditional SaaS, adjustments are necessary in crypto because “customers” usually refer to “wallets,” and value creation takes different forms. We will redefine these metrics below and explore their unique nuances in the crypto space.

1. Customer Acquisition Cost (CAC)

CAC refers to the total cost of acquiring a customer, measured in several ways:

Broadly, the hybrid CAC )CAC( is calculated by dividing total customer acquisition costs by the number of new customers. It tells you the average price paid per new customer across all channels — — including not only acquisition costs but also organic growth costs (making it hard to see which specific growth strategies are driving performance).

On the other hand, paid CAC focuses solely on customers acquired through paid marketing. Often, teams “aimlessly” invest in paid marketing without measuring effectiveness. Paid CAC reflects the cost of acquiring these customers and whether specific marketing campaigns are truly effective. In crypto, this is especially important because early on, many teams get distracted by paid rewards without understanding what their product actually does.

What counts as “cost”? When calculating CAC, costs may include advertising spend, sponsorships, marketing collateral development, task token incentives (on platforms like Galaxe, Layer3, or Coinbase Quests), and airdrops to target wallets.

Who counts as “customers”? In this context, “customers” may refer to “users” or “developers”; for example, a new wallet transacting on a protocol can be considered a customer of that protocol.

2. Lifetime Value )LTV( and Average Revenue Per User )ARPU(

LTV represents the present value of future net profit from a customer relationship over its duration. Essentially, LTV measures the return from a customer after they become a customer, including their spending on the product.

LTV itself is a complex calculation and concept. In crypto, this concept doesn’t always translate directly because “users” aren’t always “customers” in the traditional sense. For example, they may be anonymous wallets, and one user might hold multiple wallets. Therefore, LTV may reflect the contribution of a single wallet to total TVL, which is the total dollar value of assets stored in protocol smart contracts, as previously discussed.

For DeFi protocols, TVL provides a snapshot of “current assets,” while LTV can help answer “what is the value of a specific wallet over its lifecycle to the protocol?”

3. LTV:CAC Ratio

Customer Lifetime Value )LTV( is often used to evaluate the initial CAC )CAC( and the “value” of that customer over time. The LTV:CAC ratio compares the value brought by a customer to the cost of acquiring that customer, providing insight into the cost-effectiveness of attracting new customers.

For traditional SaaS, a 3:1 ratio is considered reasonable because it means the value generated from a customer is three times the cost of acquisition, leaving profit for reinvestment. In crypto, we have yet to establish such benchmarks.

When evaluating the LTV:CAC ratio in crypto, other incentives like airdrops or points should also be considered, as they can distort the metric. Ideally, such incentives help attract users and onboard them, but when users genuinely like the product, growth can continue even without incentives — — leading to lower CAC and higher LTV, thus improving the ratio.

Below is a brief summary of the key metrics outlined in the article and their considerations in crypto:

Overall, these metrics provide a foundation for measuring how your growth marketing efforts attract users at different stages of the funnel, while also considering the costs involved.

Analyzing the Crypto Growth Funnel

After identifying core metrics, the next step is to map them from top to bottom onto the marketing funnel. It’s important to note that while the crypto growth marketing funnel differs from the traditional Web2 funnel, the differences mainly lie in the unique marketing strategies, behavioral traits, and opportunities at each stage, such as on-chain behaviors, token incentives, and community-driven dynamics.

Next, we will explore each stage of the funnel, analyze key strategies and metrics, and highlight how they differ from Web2…

1. Awareness / Lead Generation

Whether through traditional channels or crypto, the first stage of the marketing funnel is increasing brand awareness. Even in crypto, raising awareness is a prerequisite for everything that follows.

At this stage, you will also start measuring CAC. “Reach” (the number of unique individuals who see your content) should also be a core metric. Reach is especially important when evaluating the success of mass marketing channels like news, media, and PR. The challenge here is distinguishing between short-term attention peaks and genuine “stickiness”: Are users just curious, or genuinely interested in using the product?

In addition to core acquisition metrics, the channels you use to find new users have their own advantages, risks, and crypto-specific nuances:

2. Key Opinion Leaders )KOL( and Influencers

Paying random influencers or KOLs with large audiences may seem like a reliable way to boost visibility, but this often fails to generate meaningful engagement, especially when influencers have no genuine connection to the project, and their audiences don’t resonate.

However, collaborating with influencers aligned with the project’s ethos can be valuable, as they can credibly share their excitement. Consider “micro-influencers,” who are more niche, targeted, and trusted by their audiences; or even native influencers, such as team experts who have established strong personal influence. Claire Kart, CMO of privacy-focused L2 Aztec, is a typical example. She is not only an internal influencer but actively seeks emerging influencers, builds organic relationships, and brings them into the Aztec ecosystem.

3. Advertising

In crypto, advertising faces a series of challenges. For example, due to vague and evolving policies on crypto advertising, many crypto companies cannot run campaigns on traditional platforms like Google or Meta. Additionally, the crypto community is wary of traditional ads, as similar formats are sometimes exploited by scammers to lure users to malicious sites.

Crypto marketers have found more success promoting specific apps on X (formerly Twitter), LinkedIn, Reddit, TikTok, or the Apple App Store. They can also consider alternatives like Brave browser ads, Coinbase/Base in-app Spindl ads, or Farcaster MiniApps and sponsored posts, even optimizing prompts and integrating them into AI search answers.

4. Referral and Affiliate Marketing

Referral programs share the same philosophy as traditional marketing: when others sign up through your recommendation, you get rewarded. The difference in crypto is that rewards can be sent instantly and verified on-chain, coordinating incentives and making the process smoother. Projects like Blackbird demonstrate how on-chain referrals can develop into complex network effects through ongoing loyalty programs and community engagement, not just one-off customer acquisition.

Word-of-mouth is one of the strongest growth drivers in crypto: for consumer-facing products, adoption is often driven by recommendations, as users enjoy the experience and discover the value, then recommend to others. For infrastructure projects, referrals often come from existing customers and developers.

Measuring word-of-mouth growth can be as simple as tracking Net Promoter Score (NPS) or directly surveying new users whether they were recommended and by whom.

In this sense, referrals are like an inverted, bottom-up marketing funnel: users don’t just convert but reintroduce new potential users at the top of the funnel. Early users become advocates, bringing more into the network (and possibly earning rewards for their contributions), fueling the growth flywheel.

Regarding accuracy: accurately measuring genuine user/customer growth versus bot accounts is a challenge across industries, especially in social media. Crypto has unique primitives, such as World ID for “proof of humanity” verification or zero-knowledge proofs (via zkPassport) to verify identities, which can distinguish real users from bots or airdrop farmers. Growth teams can leverage these primitives to build anti-sybil mechanisms for community growth and better understand actual users, aiding retention planning.

5. The Power of Growing Networks

Finally, a unique growth driver in crypto is tokens, which are often the best way to attract users, developers, and liquidity into markets that are traditionally hard to bootstrap. But this is not just speculation: as token prices rise, they can attract new users interested in participating in a movement or emerging project. Developers also notice this, as rising prices indicate an active community and real demand, making the platform more attractive.

6. Consideration / Interest

The next stage in the traditional marketing funnel is consideration, where potential customers develop positive interest, evaluate, and compare products.

In crypto, this is especially important because every decision — — from buying tokens to ordering hardware wallets — — requires substantial education, as crypto remains a relatively new (and often complex) industry for users and developers. Providing the right information, helping them make decisions, and weighing competing products or platforms can have a huge impact. That’s why many companies, from Coinbase to Alchemy, invest in educational content for consumers and developers.

Effective educational content not only explains features and benefits but also how the product works (e.g., security, custody, community and treasury governance, tokenomics). Developers may need in-depth technical documentation and tutorials, while consumers often need explanatory content (e.g., before transferring real funds between wallets or blockchains).

User education during key processes (e.g., product registration or purchase), in-product prompts and tooltips, interactive onboarding, and demo/testnet setups before asset transfer are standard tools. Companies are also optimizing their educational content for large language models (LLMs), so that when questions are asked, the content can be retrieved.

Successful teams measure interest not only by clicks or downloads but also by intermediate actions users take (e.g., joining a wallet waitlist or testing small transactions) to demonstrate trust and intent. But understanding whether these efforts are successful depends on the channels used, as each has its own metrics. Ultimately, you need to map these metrics to some form of conversion, which will be discussed below.

7. Conversion

Conversion is the stage where users complete desired actions in the marketing funnel. At this stage, users have been attracted, engaged, and provided relevant information, ultimately taking the actions you want.

As a metric, “conversion rate” is a broad term: in traditional marketing, it may refer to the number of customers who purchase, demo requests, or contact sales. In crypto, conversions may include wallet downloads, token purchases, or even deploying code on the platform. Defining the specific conversion depends on the product and goals, but precise measurement of conversion is critical for optimal evaluation.

Tracking conversions through marketing channels (e.g., via offline events leading to wallet downloads) is essential. Knowing which source drove results helps optimize budget, messaging, and more.

Accurate measurement also depends on attribution mechanisms, which are especially complex in crypto, given the journey across websites, social networks, and on-chain behaviors (e.g., from off-chain to on-chain actions). Tools like Google Tag Manager can track website conversions, while new tools like Addressable bridge the gap between off-chain ads and on-chain actions, enabling teams to track from websites or Web2 ads to on-chain behaviors. User journeys are often non-linear; for example, a user might see a post on X, attend an offline event, then make their first transaction.

Although attribution tracking has historically been difficult in crypto, improved analytics tools now allow teams to better understand growth. While many users have multiple wallets, advances in analysis techniques make it easier to link multiple wallets to a single user, connecting on-chain activity to specific individuals. As privacy regulations (GDPR, cookie restrictions) make Web2 attribution harder, the transparency of on-chain data offers advantages while protecting user identities.

8. Post-Conversion Engagement

In traditional marketing, the interest/engagement stage measures product interactions before purchase. These interactions help users better understand the product and brand, and are key to converting initial interest into loyalty.

In crypto marketing, post-conversion user engagement is equally important, including online and offline, on-chain and off-chain behaviors. This helps teams understand how to retain users and maintain community health, regardless of where users are.

For example, online engagement (also discussed in social media guides) can include: participation in Discord or other forums/chat platforms; activity on X (formerly Twitter); sentiment analysis on social channels; governance participation or voting.

While many crypto marketers still rely on traditional social listening tools, these need adaptation for crypto. Sentiment tracking can provide directional insights into community feelings but should not be the sole basis for decisions. It helps identify active contributors, key influencers, and assess message effectiveness. However, crypto communities are dispersed across multiple platforms, with varying data quality and depth. Highly active accounts can skew data, creating noise.

In addition to sentiment tools, some teams use social media monitoring tools (e.g., Fedica) to track and reward user engagement, such as amplifiers, meme creators, discussion participants, or community energizers. But incentivized activities can be manipulated: some incentives attract those more interested in rewards than the project itself, which may lead to short-term activity but lack sustainability.

Crypto marketing can also achieve organic growth without incentives, through strategies like content weaving. For example, the stablecoin liquidity layer Eco employs a “4–1–1 principle”: publishing four educational pieces about market opportunities, one “soft sell” piece (e.g., third-party endorsement), one “hard sell” piece (e.g., “use our product”), and repeating this cycle every few hours over a week. Through organic posting and leveraging major product announcements and joint marketing, Eco increased its total monthly exposure by nearly 600%.

Offline participation (e.g., attending conferences or events) also plays a key role in deeper user engagement. Traditionally, this is measured by collecting emails via QR code scans. More advanced tools include NFC chips on giveaways (e.g., via IYK) and running activities to encourage clicks or scans. Online platforms (like Discord or Towns) provide dedicated spaces for ongoing interaction and relationship building, where teams can track user interactions (posts, likes, replies) over time and analyze their quality and sentiment.

9. Retention

Retention answers the key question: “Who stays?” It can be measured as the percentage of users who perform on-chain actions after a set period, or more broadly, the level of ongoing activity. Calculating retention involves dividing the number of existing users at the end of a period by the number at the start. If measuring email subscribers or wallet downloads, retention tracking is not about initial registration but about users remaining active after some time. Common metrics include returning users or daily active addresses over a period.

In crypto, retention metrics must consider the tension between “long-term” and “short-term” behaviors, especially given strong token mechanisms. For example, a surge of airdrop farmers at launch may look like growth, but once rewards stop, many leave. That’s why defining your “ideal” user and measuring retention relative to that group is important, rather than just total users. This is also why measuring product-inherent metrics (intrinsic to the product and natural interest) is crucial, to avoid confusing what is effective versus ineffective, especially if your product has not yet achieved product-market fit. Otherwise, you might think you’ve achieved product-market fit when you haven’t; that is, people’s interest may be in the rewards, not the product itself.

Retention naturally drives customer lifetime value )LTV(, as longer stay times mean more spending or trading. This not only increases their LTV but also improves the LTV:CAC ratio.

10. Churn

Churn is the opposite of retention, measuring how many users are lost over their lifecycle and when. Churn rate is calculated by dividing the number of users lost in a period by the total users at the start, expressed as a percentage. In crypto, an alternative metric (though not a perfect mapping) is the proportion of inactive wallets after a certain period. For example, users who registered during a marketing surge or cycle but never used their wallets again. Some of these users may re-engage later, but the key is to identify active, engaged, and returning users, not “dormant” users who only performed one on-chain action.

Tools exist to monitor user interactions with dApps (e.g., Safari), helping identify friction points causing churn, such as high transaction fees, complex UX, or multi-step onboarding. For example, when Solana launched the Seeker phone, some users wanted pre-funded wallets (similar to early Saga phones) to reduce initial barriers, as manual top-ups could delay adoption. Although Solana shifted to incentivize dApp activity after users get the phone, reducing onboarding friction remains critical.

To reduce churn, funnel tracking and user segmentation platforms tailored for crypto (e.g., Absolute Labs’ “Wallet Relationship Management”) can help. These tools allow teams to create custom user groups and re-engage users via Web2 channels and crypto-native strategies like targeted airdrops. Messaging via secure decentralized messaging tools (e.g., XMTP) can also provide timely, personalized prompts to encourage users to return and continue engaging.

11. Wallet Share

Another way to track churn and retention is by observing “wallet share”: the proportion of a customer’s total expenditure in a category allocated to your product or service. In crypto, this concept can be very straightforward. By analyzing wallet composition, teams can see what assets they hold, how active they are, and whether they’ve shifted to competitors. On-chain data can reveal if users have stopped interacting with your protocol and moved to rivals. Of course, as protocols grow more complex, reasons for user shifts may become harder to interpret. But if you observe user behavior tilting toward competitors or other products with unique features, that can be valuable insight.

Similarly, if many of your token holders also hold tokens of related projects, this can open opportunities for joint marketing — e.g., co-hosted events or token giveaways to each other’s communities. General analytics tools like Dune enable such analysis, while more specialized platforms can provide deeper insights into specific tokens. Since most users hold multiple wallets, linking them to a single user identity is important; on-chain analysis tools (e.g., Nansen) can provide wallet labels across multiple chains for more accurate wallet share analysis.

Measuring growth in crypto isn’t simply copying Web2 methods but adapting effective strategies, discarding ineffective ones, and building new frameworks around blockchain’s unique advantages. Given the diversity of crypto products—from L1 to gaming—each team’s growth dashboard will differ.

But data alone doesn’t tell the whole story. Ultimately, quantitative metrics are only part of the story: deep understanding of your audience and qualitative insights from user conversations are equally invaluable. Community discussions (about projects or just memes and atmosphere), event energy, and intuitive judgments about what works and what doesn’t all play vital roles in guiding growth strategies. In early stages, behaviors of a few core users may be more valuable than others. These qualitative signals are often the earliest signs of product-market fit. The best crypto growth strategies balance data and intuition, combining short-term tactics to generate excitement with long-term community-building efforts.