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Crypto's Metrics for Success

Jun 9, 2023

One of the biggest challenges with new technologies and new companies is user engagement and user drop off. You build a seemingly great product, generate a bunch of PR, get a number of users to your site/app/protocol, only to have it fall flat shortly thereafter or trickle downwards. Running a technology company for the past decade or so, I'm accustomed to discussions revolving around metrics like ARPU, DAU/MAU, ARPDAU, K-Factor, and so forth and it dawned on me that crypto, as a community, or as an ecosystem, doesn't really seem to have these metrics.

On the micro level, businesses are surely measuring themselves (whether they should be or not is debatable), but as an industry are there any such metrics that people refer to that actually make sense? 

We dove down a (short) rabbit hole this morning with a few thoughts...

[ Note: These are my personal views, and not that of the firm ]

Number of Addresses

Source: Glassnode, 22 March 2023

For the Bitcoin ecosystem, this chart illustrates a nice story showing the number of addresses increasing over time. While the slope isn't exponential, anything upward sloping is good in respect of adoption.

Number of New Addresses

Source: Glassnode, 22 March 2023

Breaking this down further we can see a healthy-ish number of new Bitcoin addresses being created regularly which again, points to an increasing number of users, but how many of these are active? 

Number of Active Addresses

Source: Glassnode, 22 March 2023

Thankfully Glassnode also provides 'Active Addresses' metric. This shows that there are maybe ~ 1 million active addresses in the space. I'll now share the same graphs for Ethereum, USDC, and USDT accordingly where we see roughly the same story.

Source: Glassnode
Source: Glassnode
Source: Glassnode

While this helps, the issue is that most people have multiple addresses, and they continue to add new addresses. If this is the case, then it means that there are no net-new users, that active users is decreasing and crypto, perhaps, has reached a saturation point? Have enough people 'touched it and otherwise weren't satisfied with it that they will then drop it forever? What was/is largely an avenue to speculate tokens in the more recent days, this surely has tapered off on the back of FTX blowout and unfavorable regulatory movements in certain jurisdictions. Will crypto get a second chance? 

The fear is that many users view crypto as an environment to trade, when really, it's a new form of money. While the above metrics are indeed important, as an industry, we need to be looking deeper and getting more data so that entrepreneurial energy, engineering resources, and venture capital can flow in the right direction.

Wallets per User

In order to breakdown Active Addresses into Active Users, we need to then divide by a Wallets per User metric. Does anyone know of such metrics? We tried looking for some stats but can't find any reliable stats on this. Statista has some types of DAU metrics but in typical fashion, it is out of date and the sources or completeness being questionable at best.

Source: Statista


Source: The Internet somewhere

This is where we need to get. What are the DAU, MAU, and other standard retention metrics as an industry? Can we add these up across multiple areas, find a way to deduplicate them and then generate such a graph? Has anyone come across metrics like these for DeFi protocols? (i.e. retention on a per-wallet basis?). As an industry, we're working together to grow it, but at other times are competing with one another and thus keeping the above data private.

I implore everyone in the industry - wallet providers, exchanges, foundations, and more to share this information. Elsewhere, I encourage those with a knack for data science and sleuthing skills to see how far they can get. The hope is that with this information we can all be better informed and can grow the industry better, and faster.

That's it for this morning's brain fart.

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