To grow a Web3 product, you need more than just user acquisition—you need a complete view of how users engage, interact, and return over time. Unlike Web2, where metrics focus on centralized events like clicks or signups, Web3 introduces a new paradigm. Here, success is measured through wallet-level activity, onchain interactions, and protocol-level engagement.

In this guide, we’ll break down the key Web3 product growth metrics across acquisition, activation, engagement, retention, and revenue. You’ll learn how these metrics differ from Web2, why they matter, and how to apply them using real-world insights and tools like Formo to optimize your dApp’s performance.

Web3 product growth metrics measure onchain activity, wallet balances, and ecosystem mindshare

Key Takeaways

• Web3 ≠ Web2: Go beyond surface-level metrics—track wallets, onchain behavior, and ecosystem activity.

• Wallet connections ≠ real growth: True activation happens when users mint, stake, or transact.

• Engagement is onchain: Active wallets, transaction frequency, and usage intensity reflect real traction.

• Retention is critical: Analyze returning users, identify at-risk wallets, and track re-engagement.

• Revenue isn't just TVL: Use ARPU, CLV, and fee contribution to understand and optimize monetization.

Why Are Web3 Product Metrics Important?

As a Web3 product team, it’s essential to understand what drives meaningful user behavior—what gets users to engage, return, and generate value. While Web2 growth metrics like conversion rates,  customer acquisition costs  (CAC), and customer lifetime value (CLTV) still have relevance, they don’t fully capture the pseudonymous, wallet-based nature of onchain apps in Web3.

Web3 product growth metrics measure user engagement and growth based on onchain activity, wallet balances, and ecosystem mindshare, providing a comprehensive view of your product’s overall health.  It offers more accurate insights into meaningful impact by focusing on wallet activity and onchain conversions. By monitoring the right metrics early, teams can enhance onboarding, iterate more quickly, and develop products that users truly want.

Web3 product metrics help you iterate faster, optimize acquisition, and build a Web3 app that users truly want.

Web2 vs. Web3 Product Growth Metrics

Product growth metrics such as daily active users (DAUs), retention rates, and click-through rates are critical performance indicators. In Web3 product development, you need to monitor who is using your app and how they interact with similar protocols. Instead of focusing solely on sign-up numbers, you’ll look at Web3 product growth metrics such as wallet connections and onchain activity. Indicators such as Total Value Locked (TVL) and active wallets provide a better picture of user engagement than page views and visitor numbers.

Data-driven onchain apps should track the full user journey, including wallet and onchain activity.

Web2 metrics emphasize pageviews, visitors, and sessions. Web3 metrics track wallet connections, onchain activity, and meaningful transactions. Metrics like Total Value Locked (TVL), active wallets, and protocol fees provide stronger signals of user trust and ecosystem engagement.

Key Web3 Product Metrics to Track

Key onchain product growth metrics

Onchain Acquisition Metrics

Key Web3 acquisition metrics

• Wallet Connections: The first sign of user interest. Tracking wallet connections helps you gauge how many users are exploring your dApp. Optimize onboarding and support multiple wallet types to improve conversion.

• Cost Per Wallet (CPW): It’s crucial to measure how much you're spending to acquire each wallet connection. You can assess the efficiency of different acquisition channels (e.g., ads, content marketing, referrals) with this information.

• Conversion Rate: Measures how many users connect their wallets or sign up for your service. A high conversion rate typically means an easy, smooth onboarding experience. Focus on reducing friction in the process to improve conversions.

Onchain Activation Metrics

Key onchain activation metrics

• Activated Wallets: Track wallets that perform meaningful actions like staking, minting, or swapping. This helps you identify your most engaged users and connect feature adoption to user activation.

• Activation Rate: The percentage of new wallets that complete at least one meaningful action post-onboarding. Low rates may signal UX, technical, or messaging issues.

• Time-to-First Transaction: The time it takes a user to complete their first transaction. Reducing the time-to-value can significantly improve early engagement on your app.

Onchain Engagement Metrics

Key onchain engagement metrics

• Active Wallets (DAW/WAW/MAW): Track daily, weekly, or monthly active wallets to measure user engagement. Incentives, push notifications, and regular product updates can increase these metrics.

• Unique Active Users (DAU/WAU/MAU): Avoid inflated numbers by identifying how many unique wallets are interacting with your product.

• Transaction Frequency: Measures how often users engage with your app. How often do users interact with your dApp? A high frequency implies strong product utility and PMF.

• Intensity of Use: Look at volume, size, and frequency of user interactions—e.g., large stakes or recurring governance participation. Larger volumes are a signal of deep user engagement.

• Customer Engagement Score (CES): CES assign points to actions (e.g., swap = 2 pts, mint = 3 pts) to quantify user engagement. CES scores help with user segmentation and personalization by identifying which actions lead to activation.

Onchain Retention Metrics

Key onchain retention metrics

• Retention Rate: Measures the percentage of active wallets that continue engaging with your platform over time (daily, weekly, or monthly). High retention is a sign of a valuable dapp. If retention is decreasing, consider implementing loyalty programs or regularly updating your product based on user feedback to reignite interest.

• At-Risk Users: Identifies users who have been inactive for a specified period (e.g., 30-60 days). Monitoring this helps you proactively address potential churn. If many users stop engaging, it may signal a need for feature improvements or better user experience (UX).

• Saved Users: Tracks users who were once at risk but have returned to active status. This reveals the impact of recent product updates or feature releases. By understanding what drives re-engagement, you can optimize retention strategies.

Revenue Metrics

Key onchain revenue metrics

• Transaction Value per User: This metric measures the average value of transactions per user. It helps assess the spending behavior of your user base. High transaction values indicate trust in your platform, but if not correlated with retention, it suggests acquiring high spenders who don't stick around. 

• Total Value Locked (TVL): TVL is a key metric, especially in DeFi platforms. It represents the total assets locked in a protocol's smart contracts. Higher TVL indicates greater user trust and confidence. Tracking TVL fluctuations helps assess the health and growth potential of your project.

• Average Revenue per User (ARPU): ARPU measures the average revenue generated per active user. It's important to evaluate the success of your monetization strategy. If ARPU is lower than expected, it suggests that your pricing or in-app offerings need adjustment. Tracking ARPU by user segments helps you target valuable demographics.

• Customer Lifetime Value (CLV): CLV estimates the total revenue a user generates over their entire engagement with your platform. This metric helps you gauge whether your acquisition costs are justified and assess long-term growth potential. 

• User Fee Contribution: This metric measures how much revenue users generate through protocol fees. It's critical for projects relying on transaction-based income. Understanding which users contribute the most fees helps make strategic decisions about features and fee structures, ensuring they're balanced to maximize engagement and revenue.

Final Thoughts

Web3 product growth metrics don’t replace traditional metrics—but they do augment them. Choosing the right onchain growth metrics depends on your product and growth stage. What matters most is tracking quantifiable metrics that help you understand and optimize the user journey.

Formo provides critical onchain growth metrics that empower you to turbocharge your dapp. Formo’s Web3 Product Analytics helps you track, analyze, and visualize Web3 product growth metrics in real time, transforming raw data into actionable insights.

Follow us on LinkedIn and Twitter, and join our community to learn how Web3 teams turn data into action with Formo!

Read more: 

• Top 5 Web3 Growth Analytics Tools to Unlock Marketing Insights

• 8 Web3 Product Analytics Use Cases to Supercharge Your Growth

• What is Product-Led Growth? Definition, Strategy & Metrics

Additional FAQs

1. What makes Web3 product metrics different from Web2 metrics?
While Web2 metrics focus on pageviews, visits, and clicks, Web3 metrics go beyond surface-level activity. They track wallet behavior, onchain transactions, monetization, and retention. This offers a more transparent and decentralized view of product performance.

2. Why isn’t wallet connection alone a reliable growth metric?
A wallet connection simply indicates user intent or curiosity—it’s a low-friction action. To measure meaningful growth, you need to track deeper actions like minting NFTs, staking tokens, or swapping assets. These onchain behaviors reflect product activation and real engagement.

3. How do I know if users are truly engaged with my Web3 product?
Monitor metrics like active wallets (daily/weekly/monthly), transaction volume, time between transactions, and Customer Engagement Score (CES). These indicators reveal both the frequency and depth of interactions, helping you assess user stickiness and product value.

4. How can I identify users who are likely to churn?
Watch for inactivity windows. Wallets with no meaningful interaction in the past 30–60 days are considered at-risk users. Tracking resurrected users—those who return after inactivity—also helps identify what features, messages, or incentives successfully re-engage users.

5. What’s the most effective way to measure revenue in Web3? Use metrics like ARPU (Average Revenue Per User) and CLV (Customer Lifetime Value). Revenue metrics reflect the value that helps you assess monetization performance and long-term sustainability.