Financial web3 projects’ user bases are falling; blockchain games have 5x user retention versus web2
Levan Kvirkvelia from the chain analysis platform Cluster contacted CryptoSlate to share their findings from analyzing over a hundred “web3 services.”
Cluster, which is still in beta, analyzes data from critical blockchain services, including user retention, bot activity and active user counts. The platform currently supports Polygon and BNB Chain.
The data from Cluster revealed that over 100+ projects reviewed by Cluster, only five had seen an increase in user base year-on-year. However, one area of crypto that stood out was web3 games, where usage retention was three to seven times higher than in web2. Kvirkvelia concluded that the data suggested that
“The next big things are not in finance, but in gaming … users are not tied to the use of financial crypto-instruments.”
The platform allows users to create dashboards from chain data, similar to Dune. However, Cluster focuses on bot interaction and user retention to measure the true human interaction with blockchain projects rather than raw financial data.
From the Cluster ranking page, five of the first eight projects have a label warning users about the high level of bots active in the project. Sunflower Land on Polygon has registered 11,700 monthly active users, but 68.28% are reportedly bots.
According to Cluster, 33.99% of the activity on Polygon’s Uniswap V3 is also the result of bot actions. For a web3 DEX, this amount of bot activity is unlikely to be a significant problem, as arbitrage and trading bots are often used to smooth out prices and provide a better experience for end users. However, a high number of bots on a web3 gaming platform can be a more significant cause for alarm from developers.
Activity on Polygon’s Uniswap V3 has increased steadily throughout 2022, yet the number of transactions per user has decreased since May. Over seven days, user retention for DEX is staggeringly high at 13.91%, around twice the average retention for apps in web2.
Kvirkvelia shared a dashboard created by the Cluster team that analyzed all major stablecoins on BNB Chain and Polygon. Noting the difference between wallet and user interactions, he picked out that many projects had a much lower user adoption than the number of active wallets.
Across all stablecoins on the chains, Kvirkvelia suggested that the number of wallets was double that of new users. Therefore, active wallets may not be the most accurate metric to measure a web3 project that requires real human interaction.
and the problem is storage! the next month after registration, only 16% of users will use the wallet, and in the eighth month – 2%.
if we don’t fix retention, we need to get 50 billion people to reach 1 billion users in Web3. pic.twitter.com/7yvWyboArF
— Levan Kvirkvelia (@LevanKvirkvelia) 24 October 2022
However, Kvirkvelia identified that even though user acquisition is relatively high, user retention in web3 falls within month eight. He stated it
“if we don’t fix retention, we have to get 50 billion people to reach 1 billion users in Web3.”
While user retention for many financial web3 projects can be a real problem, web3 gaming is one area that does not have this problem. Kvirkvelia presented data showing slow user growth for web3 games, but high “retention rates of 10-30% for several months.”
the retention rate in web3 is 3-7 times higher than in web2 games where only 4% of users return to games after 1 month. it’s a revolution! pic.twitter.com/q01gdk6TfW
— Levan Kvirkvelia (@LevanKvirkvelia) 24 October 2022
Web3 gaming projects seem to have the reverse problem of their financial counterparts. Attracting users is the biggest problem for the sector, which is not surprising given how it is received by legacy gaming media. Sites like Kotaku regularly deny and downplay the benefits of blockchain technology in gaming.
It is not always easy for those who want to find exciting games within the blockchain and NFT world. Projects like Polkastarter Gaming and Xborg try to shed light on the amazing gameplay of the latest web3 games, but it’s no easy task. Polkastarter Gaming’s recent announcement of Gam3 Awards later this year we hope to showcase what web3 games have to offer.
web3 games have trouble attracting users.
here is the average New Users graph for games, they once attracted users (for example during release) and users are not coming anymore.
I think the lack of advertising for web3 is one of the reasons for this problem pic.twitter.com/y50vgg1mrr— Levan Kvirkvelia (@LevanKvirkvelia) 24 October 2022
Kvirkvelia noted that the high level of user retention in web3 games is “a revolution!” but “the lack of advertising for web3 is one of the reasons for this problem.”
While much of this data is skewed by the decline in the price of Bitcoin since the beginning of the year, it is encouraging to see growth in the web3 gaming space. Financial products are likely to take a hit during global financial crises, and 2022 has had its fair share.
