A product without users won't survive. This also holds true in crypto and DeFi.
In the traditional software world, a "user" is easily defined by a login or a cookie. In the onchain economy, this definition becomes far more complex. A common mistake among early-stage builders is equating a wallet connection with an active user. This is a vanity metric that often leads to inflated growth projections and misaligned product roadmaps.
In DeFi and crypto, simply connecting a wallet isn't enough. True value lies in meaningful engagement like transactions and onchain activity, not just wallet connects. To accurately measure product health, teams must distinguish between three tiers of wallet activity:
Connected Wallets: Passive visitors who have linked their address but haven't taken action.
Active Wallets: Addresses that perform specific, value-generating actions (swaps, mints, votes) within a set timeframe.
Power Users: Wallets that exhibit high-frequency engagement and retention over time.
Daily Active Users (DAU), Weekly Active Users (WAU), and Monthly Active Users (MAU) are essential metrics for tracking growth, retention, and monetization for any Web3 app. This guide will cover how to measure and analyze these key metrics for Web3 active users.
What is an Active User in Web3?
An active user in crypto (or active wallet) is a wallet address that performs at least one meaningful onchain or in-app activity within a specific timeframe.
Key considerations:
One person can control multiple wallets
Some wallets are bots or sybils
Receiving a transaction isn't the same as active engagement
DAU vs. WAU vs. MAU: Key Metrics
To navigate this complexity, crypto builders and marketers rely on three core time-based metrics: Daily Active Users (DAU), Weekly Active Users (WAU), and Monthly Active Users (MAU). While these acronyms are borrowed from traditional tech, their application in crypto requires a nuanced approach based on the specific utility of the protocol or app.
Metric | Definition | Primary Use Case |
DAU | Daily Active Users | Games, social dApps |
WAU | Weekly Active Users | DeFi protocols, trading apps |
MAU | Monthly Active Users | Infrastructure tools, dashboards |
Daily Active Users (DAU)
This metric tracks the number of unique wallets interacting with a smart contract within a 24-hour window.
Best for: High-frequency use cases like onchain gaming, social graphs, and messaging protocols.
Why it matters: For these apps, habit formation is the primary value driver. If a user isn't logging in daily to claim rewards or post content, the loop is broken.
Weekly Active Users (WAU)
WAU measures unique wallets engaging over a seven-day rolling period.
Best for: DeFi protocols, NFT marketplaces, and trading aggregators.
Why it matters: Most financial activity isn't daily. A user might rebalance a portfolio or check yields once a week. Tracking DAU for a lending protocol often creates noise, whereas WAU provides a clearer signal of consistent usage.
Monthly Active Users (MAU)
MAU counts unique wallets active over a 30-day period.
Best for: Infrastructure tools, wallet providers, and DAO governance platforms.
Why it matters: These tools are often utilitarian. A user might only need to bridge assets or vote on a proposal once a month. MAU captures the total addressable audience and long-term retention without penalizing for natural usage gaps.
These metrics are growth signals, not just vanity numbers. A high DAU/MAU ratio (stickiness) signals strong user engagement and product-market fit. A ratio above 20% is considered excellent.
Measuring User Stickiness: The DAU/MAU Ratio
Raw numbers tell you how many people are showing up, but they don't tell you if they are staying. To understand product-market fit, analytics teams calculate the DAU/MAU ratio, often referred to as "stickiness."
This percentage reveals how frequently your monthly users return to the app. For example, if an app has 1,000 MAU and 200 DAU, the stickiness ratio is 20%.
The 20% Benchmark: In the broader tech industry, a ratio of 20% is considered good, while 50%+ is exceptional (typical of social media giants). In Web3, due to the friction of signing transactions and gas fees, a ratio above 20% is a strong indicator of a highly engaging product.
Context Matters: It is vital to benchmark against similar categories. A decentralized exchange (DEX) might have a lower ratio than a play-to-earn game, yet still be highly successful in terms of volume and revenue.
Understanding active users and stickiness in crypto helps optimize growth, retention, and ROI.
Web3 vs. Web2 Tracking: Technical Differences
The fundamental architecture of the blockchain necessitates a different approach to analytics than the traditional client-server model.
The Identity Gap
In Web2, tools like Google Analytics 4 (GA4) rely on sessions, cookies, and device IDs. They track engagement metrics like scroll depth, time on page, and click-through rates. These metrics are excellent for optimizing front-end interfaces but fail to capture the economic reality of a crypto app.
In Web3, the "source of truth" is the blockchain ledger. Analytics must focus on wallet behavior rather than session data.
Web2 Analytics: Tracks the intent (clicking a "Swap" button).
Web3 Analytics: Tracks the outcome (the transaction hash confirming the swap occurred).
Unifying the Data
The challenge for modern growth teams is bridging this gap. A user might browse a website (offchain) and then execute a transaction (onchain). Standard tools treat these as two separate events, often leading to disjointed user journeys.
Platforms like Formo solve this by unifying offchain web events with onchain transaction data. This allows teams to build a complete profile of a user, linking their acquisition source (e.g., a Twitter link) to their onchain lifetime value (LTV). By moving beyond simple cookie tracking to wallet intelligence, builders can filter out noise and focus on high-value users.
Practical Applications: Using Active User Metrics for Growth
Collecting data is useless without application. Here are the key benefits:
Identify wallet churn: Are users leaving after an airdrop?
Track engagement stickiness: Are wallets consistently interacting with your dApp?
Improve monetization: If MAU is growing but revenue isn't, it signals a need to refine your strategy
Here is more now how leading teams use DAU, WAU, and MAU to drive tangible growth strategies:
1. Identifying Wallet Churn
High MAU with declining DAU is a leading indicator of churn. It suggests that while new users are trying the product (keeping MAU high), existing users are not returning (dropping DAU).
Action: Segment users who haven't transacted in 14 days and target them with a re-engagement campaign, such as a gas-fee rebate or a notification about new yields.
2. Optimizing Monetization
If your active user base is growing but protocol revenue remains flat, you likely have a monetization issue, not a growth issue.
Action: Analyze the specific transaction types of your WAU. Are they only performing free actions (like claiming testnet tokens)? You may need to introduce incentives that gate advanced features behind value-accretive transactions.
3. Filtering for Quality
Not all active users are desirable. A spike in DAU often correlates with airdrop farming or bot activity.
Action: Use onchain history to score wallets. Differentiate between "mercenary" wallets that only interact with incentive programs and "loyalist" wallets that hold governance tokens or provide liquidity long-term.
Challenges in Web3 User Measurement
While onchain data provides transparency, it also introduces unique hurdles that can skew analytics if not properly managed.
The Sybil Problem
Because creating a new wallet is free and permissionless, bad actors often spin up thousands of wallets to farm rewards or manipulate governance votes. This inflates DAU/MAU numbers artificially. Advanced analytics platforms address this by analyzing transaction patterns and wallet funding sources to cluster and flag Sybil networks.
Privacy vs. Visibility
Users value the pseudonymity of Web3. Analytics must respect this privacy while still providing actionable insights. The goal is to understand aggregate behavior and wallet profiles without necessarily doxxing the human behind the address.
Cross-Chain Fragmentation
Users often move assets across different chains (L1s, L2s, and sidechains). A single user might be active on Ethereum Mainnet one week and Arbitrum the next. If your analytics tool only tracks one chain, you will misinterpret this movement as churn. Comprehensive tracking requires a cross-chain view to capture the full lifecycle of the user.
By mastering these metrics and understanding the nuances of onchain behavior, builders can move beyond vanity numbers and build sustainable, high-retention applications.
Turn Data into Growth
DAU, WAU, and MAU are foundational metrics for understanding the health of a Web3 project. The goal is to move beyond just tracking numbers to understanding the behavior of onchain users.
Formo empowers Web3 teams with deep user insights. Turn your data into growth and build better products. Get started with Formo today.
Frequently Asked Questions
What counts as an active user in Web3?
In Web3, an active user is typically a unique wallet address that interacts with a smart contract on a blockchain within a specific timeframe. Unlike web2, where activity is tied to accounts, an onchain user is defined by their wallet's transactions. This could include actions like signing a transaction, swapping tokens, or engaging with a dApp's features. Understanding this distinction is key to accurately measuring your app's usage for product and marketing.
How are DAU, WAU, and MAU different for onchain apps?
DAU (Daily Active Users), WAU (Weekly Active Users), and MAU (Monthly Active Users) measure the number of unique wallets interacting with your app over different periods.
DAU: Tracks daily engagement, useful for games or high-frequency dApps.
WAU: Smooths out daily fluctuations, ideal for DeFi protocols.
MAU: Shows long-term user retention and overall audience size.
Choosing the right metric depends on your app’s intended use cycle.
What is a good DAU/MAU ratio in Web3?
The DAU/MAU ratio measures user stickiness, showing how many monthly users return daily. A "good" ratio varies by category, but a figure of 20% or higher generally indicates strong, consistent engagement. To improve your ratio, focus on enhancing the user experience, creating compelling features that encourage daily visits, and building a strong community around your project. Analyzing user behavior helps identify what drives regular interaction.
What's the difference between a connected wallet and an active user in Web3?
A connected wallet is just a passive visitor who linked their address—like a page view. An active user actually performs meaningful onchain actions like signing transactions or interacting with smart contracts. Connection alone doesn't indicate real usage.
Why is DAU/MAU ratio important?
The DAU/MAU ratio (stickiness) shows how frequently monthly users return daily. A ratio above 20% indicates strong engagement in Web3, suggesting users form habits despite transaction friction and gas fees.
Which metric should a DeFi protocol track?
DeFi protocols should track WAU (Weekly Active Users). Most financial activity isn't daily—users rebalance portfolios or check yields weekly. WAU provides clearer signal than noisy DAU data.
What's the main challenge in measuring Web3 users?
The Sybil problem: creating wallets is free and permissionless, so bad actors spin up thousands to farm rewards or manipulate votes. This artificially inflates DAU/MAU numbers unless filtered properly.
How do Web2 and Web3 analytics differ?
Web2 tracks intent through sessions and clicks. Web3 tracks outcomes on the blockchain ledger—actual transaction hashes confirming actions occurred. Web3 focuses on wallet behavior, not session data.
