🔥 3 tools to skyrocket your web3 user base
And insights on fundraising and deal structuring from a former a16z
Today's Agenda...
Discover user acquisition in web3 : Zealy, Layer3 and Galxe supercharge growth through gamification, tasks and token-based incentives. 🚀
Leverage fundraising and deal structuring : Jesse Walden’s insights on capital, decentralization, and community-driven growth strategies. 💡
⏰ Reading Time: 6 min
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🚀 User Acquisition in web3 : 3 top solutions you need to know
Acquiring users in the Web3 space presents unique challenges and opportunities. Traditional methods often fall short in this decentralized and rapidly evolving landscape. Let's explore three innovative solutions that can supercharge your user acquisition strategy: Zealy, Layer3, and Galxe.
🎮 1- Zealy : Gamify your growth
Zealy is a gamified user acquisition platform designed to make growth fun and engaging. By leveraging game mechanics, Zealy encourages users to participate in tasks and challenges that drive engagement.
1.5 million monthly active users.
Key Features & Advantages :
High engagement : Users complete tasks to earn rewards, gamification keeps users motivated.
Community building : Fosters a strong sense of community among users. Leaderboards create competitiveness.
Versatile campaigns : Suitable for a variety of growth strategies.
Disadvantages :
Complex setup : Requires careful planning to design effective campaigns.
Potential for spam : May attract users only interested in rewards, not long-term engagement.
✅ 2- Layer3 : On-chain task-oriented engagement
Layer3 is a Web3 platform that drives user acquisition through task-based activities. It incentivizes users to engage with dApps and other web3 services by completing specific tasks and earning rewards.
More than 800,000 people engaged through over 27 million on-chain action.
Key Features & Advantages :
Clear incentives : Users know exactly what they can earn. A wide range of tasks for users to complete.
Targeted tasks : Tasks are aligned with specific user acquisition goals. Rewards users in tokens or other digital assets.
Analytics dashboard : Track user engagement and campaign effectiveness.
Disadvantages:
User retention : Task completion does not always translate to long-term user retention.
Cost & Selectivity : the average cost of a campaign is around $10K, and Layer3 is very selective in the projects it puts forward (prior external audit).
🚨The Chain Reaction team believes that there is a strong likelihood that user engagement will drop sharply after Layer3 airdrops its token (scheduled for this summer, according to the project's twitter account).🚨
🌟 3- Galxe: token-based incentives
Galxe Quest leverages the power of NFTs, OATs or tokens to drive user acquisition. By offering unique NFTs as rewards, Galxe creates a sense of exclusivity and ownership among users, fostering deeper engagement.
More than 21 millions of unique addresses participated quests and 4,900 partners with reward-based loyalty programs.
Key Features & Advantages:
On-chain rewards: Users earn unique rewards for completing tasks, what creates excitement and exclusivity.
Custom campaigns : Brands can design bespoke campaigns to attract users.
Loyalty : Builds a loyal user base through exclusive NFTs or OATs ownership.
Disadvantages:
Complexity : Designing and managing campaigns can be complex.
Market volatility : NFT or tokens value can fluctuate, impacting user perception.
Conclusion
Zealy, Layer3 and Galxe offer unique solutions that leverage gamification, task-oriented engagement, and token-based incentives to attract and retain users. However, several points of attention are crucial:
Competition : The landscape is highly competitive, with thousands of projects vying for user attention.
Innovation : Continuous innovation is necessary to stand out and keep users engaged.
Sustainability : Ensuring the long-term sustainability of user engagement strategies is essential.
Leveraging web3 for effective fundraising and deal structuring : Insights from Jesse Walden (former a16z)
Understanding the nuances of fundraising and deal structuring is crucial for entrepreneurs. Jesse Walden, formerAndreessen Horowitz (a16z), now Managing Director at Variant offers invaluable insights into this domain, emphasizing the unique aspects that distinguish crypto startups from traditional ones.
Our source :
Key Takeaways :
Fundamental Concepts : Financial Capital vs. Production Capital :
Traditional startups convert financial capital into production capital through hiring and product development. In contrast, crypto startups leverage community contributions significantly for production capital. As Jesse Walden puts it,“Financial capital is an investment of money used to hire people and to build products and services. And production capital is the value of those products and services once built”
Progressive Decentralization :
Crypto startups follow a three-step journey : building a desirable product, fostering a community, and finally, transitioning ownership to the community. This process ensures active participation and robust network effects, essential for the network's success. According to Jesse Walden,“By giving ownership to the community, community members have a strong incentive to participate in generating the production capital of a network”
Fundraising Trajectories :
While initial stages mirror traditional startups, crypto startups diverge by inviting community ownership and operation post initial fundraising rounds. This community-centric model is pivotal for sustainable growth. Jesse Walden notes,“Crypto startups being community-owned follow a slightly different trajectory...subsequent growth for a crypto startup...comes from the community itself who has a direct economic incentive to ensure that growth of the network over time”
Deal Structures :
Equity with Token Rights : Equity remains the preferred fundraising instrument due to its alignment potential between founders and investors. However, incorporating token rights ensures alignment when transitioning to a decentralized network. Jesse Walden explains,
“Equity facilitates long-term alignment between the founders, the team, and investors...there's no obligation for a crypto company to produce a token”
Dilution Dynamics : As in traditional startups, dilution happens during fundraising. However, in crypto, this dilution extends to community ownership, incentivizing early investors and founders to accept dilution for greater network growth. Jesse Walden states,
“By giving community members a stake in the network, early founders and investors have a new tool to fuel growth and network effects that grow the pie”
Token Economics :
Network Monetary Policies: Crypto networks vary in their token supply policies, from Bitcoin’s fixed supply to Ethereum’s inflationary model. Entrepreneurs must carefully design these policies to balance rewarding contributors and maintaining network stability. Jesse Walden highlights,
“There’s no one size fits all monetary policy in crypto networks that dictates what the supply of tokens or ownership stakes will be”
Staking Mechanisms : Proof-of-stake models, like those in Celo and Forte, offer ways to productively use tokens, ensuring non-dilutive growth for active participants. Jesse Walden mentions,
“Token owners can actually stake their assets as a bond that secures the work that they do to keep the network operational”
Capital Sources :
The evolution of crypto fundraising has seen a shift from ICOs to crypto-focused VCs, each with its alignment and specialization benefits. Choosing the right source of capital is crucial for long-term alignment and network success. Jesse Walden observes,
“The evolution of financial capital available to crypto startups...has seen a shift from crowdfunding to crypto hedge funds to crypto-focused VC”
Practical Applications :
Equity Flexibility : Start with equity to maintain flexibility in achieving product-market fit without the immediate pressure to issue tokens.
Community Engagement : Plan for community ownership early, structuring deals that ensure long-term alignment with investors and community members.
Monetary Policy Design : Tailor your network’s monetary policy to suit the specific needs and contributions of various stakeholders.
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Disclaimer : The goal of this newsletter is to inform and produce content related to management in the world of Web3. It is not investment advice. Investments in crypto-assets and NFTs are risky and can result in the loss of your entire capital. Always conduct your own research and exercise caution.