Currently, over 125 startups are working to provide solutions to support some of the world’s most innovative companies, ecosystems, and brands as they navigate Web3 growth. As the world becomes increasingly digitized, the Web3 Growth Stack has emerged as a key innovation in the digital landscape. In this article, we will explore the Web3 growth stack, examining the technology, key players, and trends shaping the future of the Internet.

Understanding Web3 Growth Stack

The Web3 Growth Stack includes the tools and platforms that product managers and marketers use to acquire, engage, and retain users (utilizing Web3 technologies). 

The MarTech category has grown exponentially - an increase of up to 6,571%, from 150 to over 9.9 thousand companies between 2011 and 2022. 

Brinker, S. Growth of the Martech Landscape 2011-2022. Source: chiefmartech.com

These tools (e.g., CRM/MarTech software) help brands and startups manage key activities, including demand generation, user engagement, conversion measurement, monetization, and customer satisfaction. Unfortunately, many Web2 growth tools are inadequate for the needs of crypto and Web3 brands. Marketing automation and customer interaction tools such as Salesforce and Mailchimp do not account for onchain activities and events. Product analytics and attribution platforms such as Segment and Amplitude lack blockchain and NFT data.

Worse still, no one has combined in-app activity with programmable payments, one of the biggest opportunities in web3 growth. As a result, Web3 developers are often left "fumbling in the dark," falling behind in the battle for user attention online.

This is starting to change. As we enter 2024, the Web3 Growth Stack is undergoing rapid development, driven by the integration of core crypto primitives, such as onchain attribution and identity, and native bi-directional value flow.

The Web3 Growth Funnel

To better understand the impact of Web3 ideas on the industry, it's critical to examine each part of the growth funnel. We'll start with user acquisition and then move on to engagement and retention. 

The Web3 Growth Funnel

Web3 User Acquisition

User acquisition refers to the process of finding, acquiring, and activating new users for a product. In the Web3 ecosystem, user acquisition relies on advanced targeting and segmentation, supported by the combination of onchain data with offchain information. This approach delivers more accurate targeting and a better user experience.

Moreover, Web3-enabled ad units allow users to earn rewards or purchase directly within ads without leaving the publisher's page. This revolutionizes core advertising metrics, transforming cost-per-click (CPC) and cost-per-impression (CPM) models into cost-per-transaction models.

Beyond advertising, direct outbound marketing also benefits from Web3 technology integration. Address-to-address messaging through protocols such as Dialect, XMTP, and Nansen Connect enables Web3-native lifecycle marketing, allowing you to reach high-value users.

Web3 User Engagement

Engagement analytics are critical for understanding user behavior and making informed decisions about product improvement. Crypto-native teams such as Spindl.xyz and Boost.xyz are developing solutions that combine Web2 engagement tools with onchain attribution and identity. By linking granular in-app actions to onchain personas, product teams can identify inflection points in the product lifecycle and more effectively address issues like Sybil attacks.

Web3 User Retention

Retaining users is often more cost-effective than acquiring new ones, making it a crucial aspect of the growth funnel. Onchain identity and attribution data help product teams develop stronger incentive models and improve user loyalty. Quest platforms such as Galxe, Layer3, and Gitcoin leverage onchain credentials, airdrops, and token-gated events to engage and retain users. Additionally, these brands are exploring ways to incentivize users through rewards and ownership.

Understanding Users — The Key to Growth in Web3

Although Web3 has experienced growth in recent years, the competitive landscape is fierce, leading to high attrition rates. Around 40% of the 4,000 DApps listed on Defilama appeared between 2020 and 2021 but disappeared after just one or two years. The constant challenge of attracting new users and keeping them engaged with products is a puzzle for brands in both Web2 and Web3. The key to sustainable growth lies in a thorough understanding of your users.

User insights and their preferred online destinations are important for Web3 projects to build effective strategies for attracting new users. By examining user journeys and funnels from offchain channels such as social media, quest platforms, and landing pages to onchain smart contracts, Web3 projects can optimize their marketing campaigns. 

In-depth research into user behavior within your products and other Web3 ecosystems can provide valuable insights to improve the user experience and drive growth.

Challenges and Opportunities in the Web3 Growth Stack

As the Web3 Growth Stack gains traction, brands and developers need to navigate challenges and opportunities in this emerging landscape: 

• Scalability: With more users and applications adopting Web3 technology, effective scalability becomes increasingly important. Layer-2 solutions such as Optimistic and ZK Rollups can help address scalability concerns, enabling faster transactions and lower costs.

• Regulation and Compliance: The Web3 growth industry faces a complex and evolving regulatory landscape that varies by jurisdiction. brands must navigate these legal challenges while ensuring compliance with existing and emerging laws, including user privacy, data protection, and anti-money laundering (AML) requirements.

• Tokenomics: Tokenizing digital assets and services is a critical part of the Web3 Growth Stack. brands must carefully design tokenomics models to ensure sustainability and create value for users. 

• Ecosystem Collaboration: The Web3 Growth Industry is marked by rapid innovation and competition. To thrive, brands must actively engage with the broader ecosystem, collaborating with other projects, developers, and users to build partnerships and drive collective growth.

Web3 Growth Stack: Brands and Areas to Watch

Here are some of the leading players in each field:

The common categories of Web Growth Stacks

1. Loyalty Platforms

• Blackbird: Enhances customer loyalty through wallet-based rewards.

• Token Proof: Verifies wallet ownership to unlock loyalty rewards.

• Kazm: Builds wallet-based loyalty programmes for personalized engagement.

2. Quests

• Layer3: Gamify user engagement with interactive quests.

• Galxe: Empowers brands to create quest-driven growth campaigns.

• Boost: Rewards users for completing tasks and quests onchain.

4. Community Tools

• Collab.land: Manages community memberships based on token ownership.

• Jokerace: Hosts decentralized community-driven contests.

• PartyDAO: Facilitates collective decision-making and participation in Web3 communities.

5. Messaging

• XMTP: Enables secure, wallet-to-wallet messaging across platforms.

• Push: Provides decentralized notifications for dApps and wallet users.

• Dialect: Offers customizable onchain messaging solutions.

6. Social

• Warpcast: Decentralizes social networking for Web3 communities.

• Hey: Focuses on building privacy-centric social experiences.

7. Ad Networks

• Hypelab: Provides onchain advertising solutions for dApps.

• Slise: Focuses on Web3-native advertising with wallet-based targeting.

This category of software will replace the previous generation of MarTech tools, as it addresses many of the challenges startups face in the Web3 space. 

Formo - Web3 Growth Analytics for Web3 Startups

Formo empowers Web3 teams to capture and analyze onchain data (DApps, contracts, etc.) and offchain data (social media, etc.) to create a comprehensive customer profile. With Formo’s Web3 Form Builder, Web3 product and marketing teams can better understand their users, gain a complete view of their product, target the right users at the right time, and achieve product-market fit.

Achieve product-market fit and drive growth with Formo’s Web3 Form Builder

The Web3 Growth Stack is an exciting development that brings great potential for both brands and users. By embracing this new paradigm, Web3 teams can unlock the transformative power of decentralization and create more user-centric digital experiences.

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