Measuring growth in Web2 already has many playbooks detailing which metrics to consider and which growth strategy to employ. This is not the case for onchain growth. Web3’s playbook is still being written through trials and errors to discover what works, and while some metrics are still relevant for Web3, some are just redundant.

For Web3, financial metrics still matter, but onchain activity and community health are equally important indicators in Web3. Understanding how to measure success in Web3 remains a challenge. Ultimately, choosing which metrics to track and what to do with the data depends largely on your product

Key takeways:

• Key metrics to track Web3 growth include CAC, LTV, ARPU

• Web3 growth funnel is similar to Web2 growth funnel, but has some onchain-specific differences that can affect your growth strategies.

• Growth metrics differ in Web3 compared to Web2.

Growth metrics in Web3

Web3’s success is not defined the same way Web2’s is. Offchain businesses rely on financial and user acquisition metrics to measure success (revenues, monthly active users (MAUs), customer lifetime value (LTV), conversion rate). These metrics are easy to capture in a centralized system like Web2, and do signify growth. 

Web3 companies should use the same baseline business metrics, but they must adapt them for wallet-based, pseudonymous, token-incentivized ecosystems

Web3 growth metrics help you understand whether your growth strategy is effective. While KPI for each project might differ, here are some foundational metrics that you can consider to measure growth:

1. Customer Acquisition Cost (CAC)

Customer Acquisition Cost (CAC) is the cost of acquiring a new user. It’s a metric that measures whether your acquisition efforts are paying off. This is usually measured in two ways:

• Blended CAC, which is calculated by dividing total acquisition costs by total number of new users acquired. It averages the cost for each new user acquired across channels, organic and paid. While this does give you an average cost, it doesn’t show which tactics are actually working.

• Paid CAC, as the name suggests, only considers users acquired from paid channels. Paid CAC lets you know how much you’re paying to acquire those users and what is working for your project. When calculating CAC in Web3, projects should separate users gained through token incentives (airdrop hunters, mercenary liquidity) vs. organic users who stick around.

Depending on your team, you might consider Blended CAC if it fits your model. However, paid CAC, which only considers paid channels, is more common as it lets you know which campaigns are actually effective.

2. Customer Lifetime Value

Lifetime Value (LTV) refers to the value each user generates across their cycle of engaging with your product, starting from acquisition and ending after drop-off. In Web2, this is straightforward, measuring each user’s spending across the cycle. 

However, Web3’s pseudonymity creates a slight difference: each user can hold multiple wallets. So, in the Web3 growth context, LTV doesn’t really reflect an individual user’s value, but instead answers the question how much a particular wallet contributed across its life cycle. For a more comprehensive view, LTV can also be analyzed at a cohort level, by grouping users with similar traits and observing how they interact with your products, you can uncover more insights.

3. Average Revenue per User

Similar to LTV, Average Revenue per User (ARPU) also sheds light on how effective your user acquisition effort is. ARPU calculates the average revenue generated per user over a specific period. To calculate ARPU, you take the total earnings in a specific period and divide them by the number of paying users in the same period. 

4. Conversion 

A stable metric since Web2, conversion measures whether your leads take the actions you want them to, e.g., signing up, purchasing your products, participating in a webinar. In Web3, these actions can be purchasing a token or minting an NFT. It all depends on your goals.

In Web2, conversion tracking happens through pixels and cookies. However, it can be challenging to track users whose journeys span across traditional sites and Web3. However, attribution is an important to see onchain growth since it helps optimize ad spend and marketing efforts by telling you which channels are most effective in acquiring users.

5. Churn

Churn measures the rate at which users stop engaging with your product or community over a period. In Web2, this drop-off point is often subscription cancellations or inactive accounts. For Web3, it is represented by wallets that stop interacting with your protocols or community members that stop contributing.

Tracking churn is important since it shows you whether you are retaining users. Churn metrics let you know whether your growth in Web3 is sustainable and address any issues that are pushing users away.

6. Retention Rate

In contrast, the retention rate measures the percentage of users who continue to engage with your product over a set period. It shows how well your products perform with users to keep them using. A high retention rate means sustainable Web3 growth.

Retention rate is calculated as follows::

• Retention rate = percentage of users (or wallets) who remain active in a product over a given period 

• E.g., MAW at month-end ÷ MAW at month-start, excluding new wallets

7. Active Wallets

This measures how many wallets are active with your project in a time frame—Daily Active Wallets (DAW), Weekly Active Wallets (WAW), or Monthly Active Wallets (MAW), with MAW being the most common. Generally, you are looking for a flat trendline when viewing this metric since it means you have found a solid user base. 

Looking into the behaviors of these users can be insightful for growth. You can even dive deeper by segmenting active wallets into super users, high-value users, and competitive users.

Web3 Growth Funnel

While an onchain growth loop shares some similarities to an offchain one, there are certain differences like Web3-specific strategies, measurements, and opportunities. The next part will briefly explain the stages of a growth funnel and some strategies to consider for each stage.

Overall, the Web3 growth funnel can be divided into four stages, namely Awareness, Consideration, Conversion, Post-conversion.

1. Awareness

Awareness is the first stage of every marketing funnel. This is where you want to get your users to know that you exist, before convincing them to take any actions. In this stage, CAC is the key to measuring effectiveness.

In this stage, you will want to consider the following awareness campaign to reach your potential audience:

• Paid advertising

• Content marketing

• Referral programs

• Airdrop campaigns

• Influencer marketing

2. Consideration

Now that your potential users know that you exist, they will compare you against your competitors. In Web2, this stage is already competitive, but Web3 makes it even harder. 

Consideration is a stage where potential users are “educated” about your products, but it’s a much more complex case for Web3. In the onchain ecosystem, educational content goes beyond just your products, but also Web3 as a whole, since it’s still in the early stage, with many users not having an understanding of Web3. 

In other words, your strategy for this stage is about building a trustworthy presence in the Web3 space through content marketing, collaborations (partnership marketing), and Generative Engine Optimization (GEO). Success in this stage is shown more clearly in the next section, conversion.

3. Conversion

In this stage, you’ll want your users to take the desired actions after engaging with them in previous stages. 

Conversion itself is a broad term because, as we have explained before, it differs depending on your goals. However, for the most part, this is where they will convert into a user. The challenge with this is understanding which tactics actually convert them, especially if their journey spans offchain and onchain. 

In this phase, combining offchain and onchain attribution is probably the most ideal approach. Tools like Formo can unify onchain activities and offchain signals to provide you with insights on what drives those conversions. 

4. Post-Conversion

Just because you successful acquire a user doesn’t mean the funnel end. Onchain growth depends on your post-conversion engagement. Acquiring without retaining users is not sustainable. So even after they successfully convert, you will want to keep them from churning. This is where you measure Active Wallets (MAW), Retention Rate, and Churn Rate. These three metrics let you assess your project's health and make adjustments where necessary to increase MAW and Retention Rate. A longer lifecycle will also increase LTV, which is more beneficial for long-term growth.

Generally, this stage usually requires you to conduct product or path analytics to understand users’ behaviors and optimize UX/UI to reduce in-app inefficiencies and drop-offs. Onchain data also lets you know where your users go after churning, giving insights on how to potentially re-engage them with your products.

How Growth Metrics differ in Web3

While the general definitions of growth metrics remain the same, Web3’s unique nature — decentralization, pseudonymous identities, and tokenized incentives — creates important differences and new opportunities. Below, we’ll explore how key Web3 Growth Metrics differ from their Web2 counterparts.

Customer Acquisition Cost 

In web2: 

• CAC is relatively straightforward: it’s the total cost of acquiring a new customer divided by the number of customers acquired. Marketers look at advertising spend, sales expenses, and marketing budgets to determine CAC. The goal is to minimize CAC while maximizing customer lifetime value, ensuring the business is sustainable over time.

In web3: 

• CAC becomes more complex because acquisition doesn’t only involve ads and sales funnels — it often includes token incentives, airdrops, quests, and referral rewards. These strategies introduce new costs that aren’t present in Web2, such as the distribution of native tokens or NFTs to drive onboarding. For example, while a Web2 business might spend $20 on paid ads to acquire a user, a Web3 project might spend the same value in tokens or liquidity incentives. 

• The challenge is that token-based incentives can create short-term spikes in growth without guaranteeing long-term retention. Some wallets may engage only to claim rewards and then exit, inflating acquisition numbers without contributing to sustainable adoption. This is why measuring CAC in Web3 requires filtering between organic and incentivized users.

• Ultimately, CAC in Web3 should not just be measured in raw costs, but also evaluated against the quality of acquisition. Projects need to track whether those wallets stay active, stake assets, or contribute to governance. Without that added layer of analysis, CAC risks becoming a misleading metric in decentralized ecosystems.

Lifetime Value 

In Web2: 

• Customer Lifetime Value (LTV) refers to the total revenue generated by a single customer across their relationship with the company. Businesses calculate this based on spending patterns, churn rates, and engagement frequency. A high LTV signals that a customer is loyal and provides long-term profitability.

In Web3: 

• The concept shifts from customer lifetime value to wallet lifetime value. Because users can hold multiple wallets, it’s difficult to attribute all of a single person’s activity to one identity. Instead, projects measure the value generated by each wallet across its lifecycle — from acquisition through staking, transacting, or governance participation until inactivity.

• This introduces both opportunities and challenges. On the one hand, wallets allow for precise tracking of onchain actions, meaning you can measure exactly how much liquidity, staking, or transaction volume a wallet contributed. On the other hand, wallet-level data doesn’t always reflect the true user relationship if the same person is using multiple wallets.

• To adapt, teams often combine onchain analytics with offchain data (e.g., community engagement, event participation, or KYC for certain services). This hybrid approach creates a more accurate picture of lifetime value in a decentralized world. Ultimately, LTV in Web3 tells you less about an individual’s total worth, and more about how much value specific wallet behaviors generate for your ecosystem.

Conversion

In Web2:

• Conversion is a well-established metric: it measures the percentage of leads who take a desired action, such as signing up for a service, completing a purchase, or subscribing to a newsletter. Tracking is typically handled with cookies, pixels, and analytics tools that follow users across websites and campaigns.

In Web3: 

• Conversion expands to include onchain-specific actions such as minting an NFT, staking tokens, connecting a wallet, or voting in a DAO. These actions often signal deeper engagement than a Web2 sign-up form, since they involve financial commitment or governance participation. However, tracking becomes more complicated because user journeys often span both offchain (social channels, websites, ads) and onchain (blockchain transactions, smart contracts).

• Attribution is one of the biggest challenges. In Web2, tools like Google Analytics can easily show which ad drove a sign-up. In Web3, attribution requires unifying offchain signals (ads, socials, CRM) with onchain actions (wallet connects, transactions) is the biggest gap in current analytics tools. For instance, a user might discover your project on Twitter, join your Discord, and then finally connect their wallet to interact with your dApp — each of those touchpoints needs to be accounted for.

• This complexity creates an opportunity: onchain attribution gives more transparency into actual user intent. By analyzing which wallets convert from campaigns and continue engaging afterward, projects can not only measure ROI more accurately but also optimize marketing spend across both Web2 and Web3 channels.

Post-Conversion Engagement

In Web2:

• Post-conversion engagement usually happens through email campaigns, push notifications, loyalty programs, or personalized recommendations. Businesses aim to keep customers active and encourage repeat purchases. These engagement strategies often depend on centralized user data and controlled communication channels.

In Web3:

• Post-conversion engagement extends across both onchain and offchain ecosystems. Once a wallet completes an action — say, minting an NFT — teams can re-engage users through community platforms (Discord, Telegram, X/Twitter), onchain rewards (staking, airdrops), or governance incentives. The presence of multiple decentralized engagement layers creates both more touchpoints and more complexity in managing user relationships.

• What makes post-conversion engagement in Web3 powerful is the role of community-driven participation. Unlike Web2, where engagement is brand-driven, Web3 allows users to become co-creators. DAO proposals, ambassador programs, and social shilling are forms of engagement that wouldn’t exist in traditional growth funnels.

• The challenge lies in measuring impact across fragmented channels. For example, someone might stop transacting onchain but remain highly engaged in governance discussions. Post-conversion engagement metrics in Web3 therefore need to blend transaction data, community contributions, and offchain signals to truly capture how users stay active after their initial conversion.

Retention

In Web2:

• Retention is often tracked through Monthly Active Users (MAU), Daily Active Users (DAU), and churn rates. Companies measure how many customers keep using their product over time, using product analytics to understand which features drive stickiness. A stable retention curve indicates a healthy business.

In Web3:

• Retention is measured through Monthly Active Wallets (MAW) and onchain activity patterns. But the presence of token incentives complicates the picture: many wallets may remain active only while rewards are attractive, dropping off when incentives end. This means teams must distinguish between organic retention (users staying because of real product value) and incentivized retention (users staying only for rewards).

• Product and path analytics help uncover why users stay or leave. For instance, analyzing which onchain journeys (staking, swapping, governance voting) correlate with higher retention can help optimize UX flows. Similarly, tracking retention across different wallet cohorts (e.g., early adopters vs. airdrop farmers) gives insight into long-term growth.

• Retention in Web3 is less about "keeping users inside a product" and more about building community resilience. Since communities are decentralized, retaining engaged members across Discord, DAOs, and onchain participation matters as much as repeat product use. Projects that achieve high organic retention tend to have the strongest long-term ecosystems.

Churn

In Web2: 

• Churn is defined as the percentage of customers who stop using a product over time. It’s often measured by subscription cancellations, inactive accounts, or app uninstallations. High churn is a warning sign that acquisition is being wasted and product-market fit may be weak.

In Web3: 

• Churn is measured by inactive wallets, unstaked tokens, or lack of repeat transactions. Just as in retention, the challenge is separating short-term activity driven by incentives from long-term meaningful participation. A wallet that engages once for an airdrop and never returns is technically churned, but it may not represent true loss if it was never an organic user to begin with.

• Product analytics can help identify drop-off points in the user journey — for example, if many wallets stop engaging after staking once, that signals friction in your product experience. Combining onchain and offchain data is key, since users may disengage onchain but remain active in offchain communities, or vice versa.

• Ultimately, churn in Web3 should not only be seen as "wallets going inactive," but as a signal to improve both product and community experience. By diagnosing why wallets churn — whether it’s due to high gas fees, lack of new features, or weak community incentives — teams can make the necessary adjustments to improve sustainability.

Fuel Onchain Growth with Formo

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Read more:

Top Web3 Growth Analytics Tools

Web3 Behavioral Analytics: Metrics, Tools & Strategies for Onchain Growth

What are Wallet Profiles? A Complete Guide for Beginners

FAQs

1. What are Web3 Growth Metrics?

Web3 Growth Metrics are performance indicators that measure how users interact with decentralized applications, tokens, and communities. Unlike Web2 metrics that focus on revenue and customer data, Web3 metrics track wallet activity, token velocity, governance participation, and onchain growth.

2. How is Growth in Web3 different from Web2 growth?

Growth in Web3 goes beyond financial performance. While Web2 measures success using KPIs like revenue, sign-ups, and customer lifetime value, Web3 focuses on onchain behaviors such as wallet retention, Total Value Locked (TVL), staking, and community contributions. This shift reflects the decentralized nature of Web3 ecosystems.

3. Why is onchain growth important?

Onchain growth shows the real health of a Web3 project by measuring how many users are actively participating on the blockchain. Metrics such as active wallets, transaction frequency, and governance activity reveal whether a community is thriving or if engagement is short-lived. Onchain growth is often a better indicator of long-term sustainability than short-term token price movements.

4. What is an onchain growth funnel?

An onchain growth funnel is a framework that maps the stages users go through in a Web3 ecosystem — from awareness to post-conversion. At each stage, specific Web3 Growth Metrics such as CAC, DAW (Daily Active Wallets), and TVL help measure effectiveness and identify where projects should optimize their strategy.

5. Which Web3 Growth Metrics should every project track?

While metrics vary depending on the type of project (DeFi, NFT, DAO, GameFi), foundational Web3 Growth Metrics you can consider are:

• Customer Acquisition Cost (CAC)

• Customer Lifetime Value (LTV)

• Average Revenue per User (ARPU)

• Conversion rate

• Churn rate

• Monthly Active Wallets (DAW)

Using data platforms like Formo lets you track these metrics to ensure onchain growth funnel is optimized for long-term growth.