Understanding user behavior is critical for the growth of any product or service. In Web3 projects, tracking and managing the user lifecycle create unique opportunities to engage users and promote product-market fit. This article examines the Web3 user lifecycle, how to analyze it, and best practices.
Key Takeaways:
Web3 user lifecycle maps the entire user journey from discovery to advocacy, critical for growth and retention.
Lifecycle segmentation helps target users with personalized strategies at every stage.
Sustained engagement and retention rely on gamification, rewards, and community involvement.
Web3 ULM uses onchain + offchain data to track and optimize user behavior.
Focusing beyond acquisition, especially on retention, maximizes lifetime value (LTV) and reduces costs.
Continuous lifecycle analysis reveals growth drivers.
The Web3 user lifecycle maps the stages users go through when interacting with Web3 apps
What Is the Web3 User Lifecycle?
The Web3 user lifecycle describes the stages a user experiences when engaging with Web3 applications — from initial discovery and exploration to sustained, long-term involvement.
By segmenting users according to these lifecycle stages, you can more effectively track their behavior, tailor your targeting strategies, and deepen engagement. The Web3 user lifecycle framework provides valuable insights into how users discover, interact with, and ultimately become advocates for your decentralized application (dApp), protocol, or ecosystem. Understanding this journey allows you to strategically nurture users, transforming initial curiosity into lasting loyalty and active participation.
What Is the Web3 User Lifecycle Management (ULM)?
Web3 User Lifecycle Management (ULM) refers to the process of tracking, analyzing, and optimizing a web3 user’s journey across decentralized apps (dApps), networks, and platforms — from acquisition to retention, monetization, and advocacy — using both onchain and offchain data.
5 Stages of the Web3 User Lifecycle (with Examples)
Here's a step-by-step breakdown of the Web3 user lifecycle management process:
5 Stages of the Web3 User Lifecycle
1/ Discovery
The discovery phase is when potential users learn about your dApp or onchain project. This can happen through various channels such as social media, crypto forums, influencer marketing, or community events. Community-driven marketing and incentives such as NFTs and token rewards in DeFi projects are particularly effective at this stage.
Goal: Make users aware of your dApp or ecosystem.
Key Strategies for Discovery:
Community-Driven Marketing: Leverage your existing users to share their experiences and drive organic growth.
Content Marketing: Create high-quality, educational content to highlight the benefits of your dApp.
Incentives: Offer rewards, bonuses, or referral programs to encourage word-of-mouth promotion.
Metrics:
Social mentions
Site visits (referral traffic)
Active Wallets
Example: A user sees a viral thread and clicks through.
2/ Onboarding
After discovering a dApp, users enter the onboarding phase, which is critical for shaping their first impressions and setting the tone for their overall experience. A seamless onboarding process is important, as demonstrated by platforms such as Uniswap, which simplify cryptocurrency trading with user-friendly interfaces.
Uniswap’s friendly UX interface
Goal: Convert awareness into first actions
Best Practices for Onboarding:
User-Friendly Interfaces: Ensure the platform design is intuitive and reduces the complexity of Web3 processes.
Guide Tutorials: Provide interactive guides or step-by-step instructions to help users navigate your dApp.
Support Channels: Offer robust support systems such as FAQs, chatbots, or live assistance to resolve user queries quickly.
Metrics:
Connected wallets
Form submissions
Quest completions
New Discord or Telegram members
Example: A developer connects their wallet, fills out a beta access form, and joins your community.
3/ Engagement
Engagement is about how actively users interact with your dApp after onboarding. Sustained engagement is critical for retention and is achieved through innovative features such as Axie Infinity’s play-to-earn model.
Axie Infinity game interface
Axie Infinity’s cumulative trailing 30-day revenue
Goal: Keep users coming back and exploring more features.
Techniques to Enhance Engagement:
Gamification: Add game-like elements to make user interactions more enjoyable and rewarding.
Regular Updates: Continuously release new features and improvements based on user feedback.
Community Events: Host live Q&A sessions, webinars, or other interactive activities to build a stronger user connection.
Metrics:
Daily/Weekly active wallets
Actions Per Wallet
Multi-Feature Usage
Example: User returns to using your DApps weekly
4/ Retention
Retention ensures users return to your platform over time, indicating a powerful product. Platforms such as Ethereum Name Service (ENS) retain users through discounts on renewals and responsive customer service.
Goal: Build habit loops and long-term product usage.
Strategies for Retention:
Personalization: Use data to tailor user experiences based on their preferences and behaviors.
Loyalty Programs: Reward long-term users with exclusive perks or tokens.
Feedback Loops: Regularly collect and act on user feedback to enhance their experience and satisfaction.
Metrics:
Retention rate
Churn rate
ROI
5/ Advocacy
Advocacy occurs when satisfied users actively promote your platform within their networks. Advocates are invaluable for acquiring new users and building trust in your brand.
Example of Referral Program
Goal: Encourage users to advocate or bring others.
Encouraging Advocacy:
Referral Programs: Celebrate and reward loyal users who actively promote your dApp.
Referral Bonuses: Incentivize users to bring new members into the community.
Community Building: Create forums or social media groups where advocates can connect, share experiences, and foster a sense of belonging.
Metrics:
Number of referred wallets
UGC mentions (content, threads)
Community growth
Example: A DAO contributor shares a product link to their community and brings 15 new users.
Web3 Lifecycle Analysis
Tracking user growth is a common practice for product teams, but analyzing growth without understanding its drivers can be misleading. Lifecycle analysis breaks down users into segments, providing actionable insights. Typical user groups include:
Visitors: First-time users of your platform.
Active Users: Users who continue to engage with your product over time.
Resurrected Users: Previously inactive users who return to your platform.
Lifecycle analysis reveals user behavior patterns, offering a clearer picture of what drives growth or decline in the active user base.
Example of a user lifecycle period
How Do I Know What Stage a Lead Is In?
Understanding what stage a lead is in can be achieved through two primary methods:
User Behavior Analytics
Behavior analytics is important in defining Web3 user lifecycle stages. By tracking user actions such as viewing product pages or engaging with content, you can identify their stage in the lifecycle. For example, a lead clicking on an email offer may indicate they have moved from the "discovery" stage to the "onboarding" stage. Web3 user analytics tools such as Formo and CRM platforms provide valuable insights into user behavior to help you track user progression.
The Sales Funnel
The sales funnel model aligns with the user lifecycle, where leads at the top of the funnel are still in the "discovery" stage, those in the middle are “engagement”, and those at the bottom are “retention” leads. Each funnel stage requires specific types of content and promotions to nurture leads toward conversion.
Engaging Customers at Every Stage of the Lifecycle
A common mistake Web3 teams make is focusing primarily on the top of the funnel, neglecting leads after they convert into users. The lifecycle doesn’t end with a purchase — effective engagement should continue post-sale. Web3 teams must continue engaging users after the sale to boost customer retention and lifetime value.
The three types of Web3 users: casual, core, and power user
Example: If it costs $50 to acquire a lead, and they make a $100 purchase, the initial LTV of this customer is $50 (purchase value minus acquisition cost). However, if that customer makes another purchase of $100 two months later, their annual LTV increases to $150 ($100 purchase x 2 minus $50 acquisition cost) - a 200% increase compared to the initial LTV.
Retention Strategies for Later Stages
Retention is one of the most cost-effective ways to grow revenue. According to the Harvard Business Review, retaining existing users can cost up to 25 times less than acquiring new ones. Moreover, existing users tend to spend more, with purchase prices 67% higher on average.
Here are some strategies to keep customers engaged and encourage repeat purchases:
User-Only Promotions: Offer exclusive promotions to existing customers. Loyalty programs and referral programs can incentivize repeat purchases.
Exemplary Customer Service: Providing exceptional customer service is key to retaining loyal users. Timely, responsive support strengthens user relationships.
Retargeting Campaigns: Retargeting allows you to stay in front of users with personalized ads, reminding them to make another purchase.
Re-engagement Email Campaigns: Personalized re-engagement emails help keep your brand top-of-mind and show that you value the user’s project.
A well-structured Web3 user lifecycle is important for any Dapp project looking to improve user retention and maximize lifetime value (LTV). Each stage of the Web3 user journey presents unique opportunities to build deeper engagement and stronger user relationships. By understanding and adopting strategies tailored to these stages, from awareness to advocacy, Web3 builders can foster loyalty and drive growth in Web3.
Read more:
Web3 User Segmentation: A Guide to Targeting the Right Audience
Web3 User Analytics 101: What it is and how it works for growth
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FAQs
1. How does wallet anonymity impact Web3 user lifecycle tracking?
Unlike Web2 analytics that rely on cookies and login IDs, Web3 analytics must adapt to pseudonymous wallet addresses. Wallet anonymity limits direct identity resolution, but lifecycle tracking is still possible through onchain activity analysis, wallet clustering, and linking wallets to optional offchain identifiers (such as email, Discord, or social accounts). This provides a privacy-first view of user behaviour while still mapping lifecycle stages.
2. How do onchain and offchain behaviours combine in Web3 lifecycle analytics?
The Web3 user lifecycle spans both onchain actions (wallet connections, transactions, NFT mints, staking, governance) and offchain behaviours (website visits, community engagement, referrals, ad clicks). Accurate analytics requires unifying both data types to track complete user journeys. Without bridging onchain and offchain, lifecycle models miss key attribution and engagement insights.
3. What unique lifecycle stages exist in Web3 compared to Web2?
Web2 follows acquisition → activation → retention → revenue → referral. In Web3, additional stages emerge: wallet connection, first onchain transaction, token/NFT ownership, governance participation, and multi-chain migration. These stages redefine how user behaviour is measured, requiring specialized Web3 analytics to map the journey accurately.
4. What are the main stages of the Web3 user lifecycle?
The Web3 user lifecycle typically includes:
Acquisition – user discovers the project and connects a wallet.
Activation – first onchain action, such as a swap, mint, or stake.
Engagement – ongoing use, like trading, staking, or product interaction.
Community Participation – joining groups, contributing to governance, or engaging in social channels.
Retention & Loyalty – repeat activity, increased volumes, week-on-week retention
Expansion – cross-chain activity, word-of-mouth, and referrals
Churn or Exit – inactivity or wallet abandonment.
Mapping these stages helps teams apply product and growth strategies targeted at impacting users at a specific stage of the lifecycle.
5. How is user churn measured in Web3 when wallets change?
Churn tracking in Web3 differs from Web2 because users may abandon or switch wallets. Basic analytics define churn as wallet inactivity over time. More advanced Web3 analytics tools cluster wallets and analyze behavioral patterns across addresses, ensuring churn reflects real user attrition rather than simple wallet hopping.
6. How do token incentives influence user behaviour and retention?
Token incentives can accelerate growth by attracting new users, but sustainable retention depends on long-term value creation. Strong tokenomics align incentives with meaningful engagement—encouraging staking, governance, or community contribution—while weak systems risk short-term farming behaviours that inflate metrics without true loyalty.
7. Why does cross-chain activity matter in the Web3 user lifecycle?
Users increasingly interact across multiple blockchains. Without cross-chain tracking, lifecycle analytics becomes fragmented, underestimating true engagement. Effective Web3 analytics must capture wallet behaviours across chains, including bridging, wrapped assets, and multi-chain wallets, to deliver a unified understanding of the user journey.
8. How does attribution work in Web3 user analytics compared to Web2?
Web2 attribution relies on sessions, pixels, and cookies. Web3 attribution ties actions directly to wallets and smart contracts, tracking onchain conversions. However, to fully understand user acquisition, hybrid attribution models are needed—blending offchain data (website, content, socials) with onchain behaviour (transactions) for complete picture of the user lifecycle.
