Web3 User Rise Strategy: The Combination of Community and Market

In the Web3 space, many projects experience a brief period of rapid rise before quickly losing users, ultimately falling into a "death spiral" and declaring failure. Unlike traditional sectors, Web3 is greatly influenced by the cryptocurrency market: during a bull market, there is a proliferation of projects, while in a bear market, many projects vanish. These failed projects often see their Token prices continually decline against the background of a bear market, leading to ineffective incentives and even harming user interests, ultimately resulting in a significant loss of users.

The core of long-term user growth lies in building a virtuous system between products and users, obtaining market share through continuous iteration, and achieving a steady rise in user scale and value. In 2022, in addition to the rapid growth trend in the Social & Media sector, the number of active addresses in major dApp categories such as Collectibles, DeFi, GameFi, and MarketPlaces all saw varying degrees of decline.

Basic ideas for the rise of Web3 users

Although the cryptocurrency market cycle has a huge impact on user rise, entrepreneurs should not be constrained by macro factors. The primary task of user rise is to find the "market" that matches the product, which is the "M" in PMF(Product Market Fit). It is important to identify the appropriate niche market based on product characteristics and resources, rather than greedily covering the entire "big market". For Chinese entrepreneurs, abandoning the Chinese-speaking community and Chinese users is unwise, as it is equivalent to giving up one-third of the potential user base globally.

At the product development level, the Minimum Viable Product ( MVP ) is a concept worth adopting. It emphasizes launching basic functions that can meet the minimum business loop for core scenarios first, and then iterating and optimizing based on market feedback. Developers should focus on solving the user's most urgent "single" problem, simplify the usage process, and build an MVP product that aligns with PMF.

Launching a PMF-compliant MVP to the market is the GTM(Go To Market) strategy. The goal of GTM is to acquire and retain users, which typically follows the "funnel model": from the top of user acquisition down to the bottom of user conversion and retention, it is a process of decreasing user numbers. The GTM for Web3 is more enriched compared to Web2, with a particular emphasis on the unique element of "community". The GTM strategy for Web3 projects usually comes with community incentive measures mediated by tokens, as well as corresponding referral programs.

PMF: Identify the market accurately and meet real demand

Product market fit ( PMF ) is the key to project success. The main questions to consider are:

1. Why develop this product/feature?
2. Can the product/function meet market demand?
3. Why choose to develop now rather than in the future?

According to a survey by CBInsights, a lack of market demand is the primary reason for the failure of startup projects, accounting for as high as 42%. Therefore, developers should conduct sufficient market research in the early stages of product planning to avoid overlooking this important step due to personal biases.

Finding PMF is a cyclical iterative process that requires continuously collecting feedback and validation to gradually achieve the best fit between the product and the market. This process includes:

1. Identify the niche market, target the user group, and discover unmet needs.
2. Develop product strategy, clarify value proposition, highlight differentiation and core competitiveness
3. Selected MVP feature set to conduct user requirement testing.

MVP: Quick iteration to avoid detours

The core of the Minimum Viable Product ( MVP ) is to develop a usable product that showcases the project's highlights at the lowest cost and in the shortest time. Although MVP is simple, it can quickly validate ideas. Adopting the MVP approach can avoid spending too much time on secondary features in the early versions, helping to focus attention on the most important aspects.

The purpose of MVP is to quickly launch into the market to test feasibility. By validating market demand, continuously adjusting direction, and ultimately iterating to create a product with market space and revenue potential. The MVP can even be a well-designed testnet product, which can avoid the investment of large amounts of capital in developing a product that is not recognized by the market.

When developing an MVP, you need:

1. Define key features around core needs
2. Prioritize completing the nodes on the critical path
3. Launch the corresponding features at the right time, focusing on timing rather than quantity.

GTM: Attracting new users and retaining existing ones, managing the community

The GTM strategy of Web3 not only includes traditional marketing but also emphasizes managing a richer "community". The community includes not only users but also stakeholders such as developers, investors, and partners. Only by continuously meeting user needs can a highly engaged and high-quality community be established.

The GTM strategy of Web3 projects usually includes:

1. Acquire new users:

   • Airdrop activities through task interactions
   • Publish tasks on the Web3 task interaction platform

2. Increase engagement and retention rate:

   • Continuously optimize product experience
   • Organize community activities ( such as Twitter Space, Discord, and Telegram AMAs )

3. Promotion and Self-Propagation:

   • Design incentive mechanisms to encourage users to share
   • Analyze user on-chain behavior data, optimize operational strategies

Acquiring new users is the traffic entry point, improving retention relies on product value, and referrals and self-propagation amplify community power. These three steps work together, with the ultimate goal of achieving scalable profitability. According to TokenTerminal's data from 2022, there are significant differences in profitability among various dApps, and developers should pay attention to this data to formulate appropriate development strategies.