A Flipside report reveals that blockchain networks have lost casual users. Four out of five accounts with low engagement are inactive after three months.
Recently, a study revealed a harsh truth: Most users are quickly bored with blockchain ecosystems. Flipside’s data, which examined user behavior on networks including Solana, Ethereum, Arbitrum” Avalanche, shows The retention of users is very low. Users tend to disappear after a couple of months, except if they are already very active.
Flipside looked at the behavior of wallets over time. The users were categorized into low-value (0-3), medium-value (4-7), or high-value (8+) based on their previous activity on the chain. They then checked on each group once a month, for a half-year, to see how many people were still actively involved.
The Retention Cliff
It is clear from the data that first months are brutal. Low-value users — wallets with little or no previous activity — dropped off almost immediately. The report shows that the consistently. “lowest retention, falling below 5% after 6 months.” It’s simple: in half a calendar year, 95 out of 100 wallets will be gone.
Medium-value users — regular but not power users — fare better but still drop sharply early on before stabilizingm while high-value users decline slowly, losing just 5-8% of their numbers each month.
Some blockchains are better at retaining users than others. Ethereum and Avalanche are the two blockchains that retain users best, maintaining 35-38% of their high-valued addresses after 6 months. Solana is behind despite being a large project, but the reasons for this are unclear. In general, the drop-off for newer chains is steepest. This suggests that initial growth statistics may be inaccurate.
The metric trap
This report highlights a problem that is common in the crypto world: Chains chase large numbers of users, but many of them are not active. “users” don’t last. Airdrop seekers, speculators or bots are among those who just pass through. It is clear from the data that only a fraction of addresses are responsible for real and sustained activity.
“If we zoom in on the retention charts, you can see it extremely clearly: only a handful of addresses are contributing any sustained activity or liquidity volume across the major chains studied.”
Flipside
It creates a problem: blockchains are trying to demonstrate rapid adoption by inflating the number of users. The growth will not be real if the majority of users leave. According to the report, protocols should target high-quality users right from the beginning. Even if this means slower growth in headlines.
Flipside’s research suggests that blockchain networks focus their efforts on high-value users. The incentives for one-time activities may increase short-term metrics but fail to create long-term engagement.
“It’s a hard pill to swallow, but the protocols that embrace this reality will outperform those that waste their incentives on addresses that won’t adopt them. The data clearly indicates that focusing on quality user acquisition and retention — rather than inflating address counts — represents the most sustainable path to ecosystem growth.”
Flipside
According to the report, blockchain developers should consider giving more consideration when designing reward and token systems which encourage long-term engagement. Short-term incentives may help to drive the initial activity but they don’t always lead to meaningful engagement.
Data suggests that it is more beneficial to develop mechanisms which reward consistent engagement, as this could build a stronger and more active base of users. The data suggests that putting more emphasis on sustained engagement, as opposed to one-off activities, could be a good way of achieving long-term growth.
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Source: crypto.news
