Web3 monetization means capturing value from onchain apps and protocols—but it presents unique challenges compared to Web2. While many teams focus on vanity metrics like wallet connections, true growth comes from understanding where revenue comes from through onchain analytics.
This guide covers key Web3 product monetization models and the metrics needed to measure and optimize them effectively.
Web3 Monetization Models
Platform Fees
Charged on transactions such as trading, lending, or listing.
Common in DEXs (like Uniswap, Sushiswap), NFT marketplaces, and lending protocols.
Fees are typically a small percentage of each transaction.
Revenue can go to protocol treasuries, token holders, or be used to fund operations.
Example: OpenSea charges a marketplace fee on every NFT sale, distributing revenue to protocol maintenance and growth.
Pay-per-use
Users pay for exactly what they consume—think storage, computation, or other resources.
Flexible for users with unpredictable or infrequent needs.
Ideal for infrastructure providers or oracles.
Example: Filecoin charges based on the amount of storage used; Chainlink oracles require payments for each data request.
Subscriptions
Offers recurring payments for ongoing access to a service, community, or premium feature set.
Works well for unlockable content, gated communities, data feeds, or productivity tools in Web3.
Payments can be managed through onchain contracts, often using stablecoins for predictability.
Example: Unlock Protocol enables creators to set up onchain memberships where users gain access to content or communities through recurring or one-time payments.
Token-Gated Access
Users hold or stake a certain amount of a specific token to unlock features, content, or privileges.
Encourages deeper user engagement and loyalty by tying benefits directly to token ownership.
Often used by DAOs, DeFi apps, and membership-based communities.
Example: Holding a specified NFT grants access to exclusive Discord channels or governance rights within a DAO.
The best model for your product depends on what your users value—attention, data, or direct transactions. Use analytics to see which model drives real adoption and sustainable growth.
Why Onchain Analytics are Key for Monetization
You can't improve what you don't measure. In Web3, this means moving beyond surface-level metrics like wallet connections.
Track the entire user journey, from offchain engagement to onchain transactions, to understand what drives revenue. This data helps identify high-value users and optimize acquisition spending.
Core Metrics for Web3 Monetization
Wallet Connections vs. Activated Wallets
What it is: Wallet connections show initial interest. An “activated" wallet means the user completed a key action—like staking, swapping, or minting.
Why it matters: Connections measure attention, but activation shows users actually understand and get value from your product.
Example: If 10,000 users connect but only 2,500 activate, your onboarding may be confusing or expectations aren’t met.
Use case: Pinpoint where most users drop off. Test onboarding flows and measure which changes drive more activation.
Cost Per Wallet (CPW)
What it is: The total marketing spend divided by the number of new wallet connections.
Why it matters: Shows how efficiently you acquire wallet-connected users—a must for campaign optimization.
Example: Spent $5,000 on ads and got 500 new wallets? Your CPW is $10. Lowering CPW means better ROI.
Use case: Compare CPW from different channels. Double down on sources with lower costs and higher activation.
Average Revenue Per User (ARPU)
What it is: Total onchain revenue, divided by the number of active users in a period.
Why it matters: A clear view of how much each user generates, guiding pricing, roadmap, and marketing investment.
Example: $50,000 earned from 1,000 users = $50 ARPU. If ARPU climbs, your monetization model is working.
Use case: Segment ARPU by acquisition source or cohort. Find and focus on high-value segments.
Customer Lifetime Value (CLV)
What it is: The total expected revenue a user brings over their entire lifecycle with your app or service.
Why it matters: Higher CLV justifies higher acquisition costs. Shows if your platform drives ongoing value.
Example: If CLV is $200, but you’re spending $150 to acquire a user, margins are good. If not, fine-tune messaging or retention.
Use case: Use CLV to set budget limits on paid campaigns. Identify where retention efforts pay off most.
Retention Rate
What it is: The percentage of users who keep transacting or engaging with your platform after a set period.
Why it matters: Growth gets expensive if users leave fast. High retention means word-of-mouth, recurring profits, and community strength.
Example: 70% retention after 30 days signals strong product stickiness.
Use case: Track retention for specific cohorts—like users from a launch event or campaign. Identify which features or incentives keep users coming back.
How Formo Drives Web3 Monetization
Formo makes onchain analytics simple for Web3 teams building apps and protocols.
Unified Analytics and Attribution: Connects offchain activity (campaign clicks, social engagement) with onchain transactions to measure true ROI.
Wallet Intelligence: Creates detailed user profiles to identify high-value segments for targeted campaigns.
No SQL Required: Empowers product and marketing teams to get insights without needing a data team.
Start Measuring What Matters
Successful Web3 monetization requires understanding user behavior through proper onchain analytics. Formo provides the tools to track the entire user journey, identify what drives revenue, and make data-informed decisions.
Try Formo for free to start measuring what matters for your Web3 product.
FAQs
What are the key onchain metrics for effective Web3 monetization?
Tracking the right onchain metrics is essential for building a sustainable Web3 monetization strategy. Key performance indicators include Total Value Locked (TVL), which shows the overall health of a DeFi protocol, and protocol fees, which represent direct revenue. User-focused metrics like Average Revenue Per User (ARPU) and Customer Lifetime Value (CLV) help you understand user value. It's also vital to monitor wallet activation rates to see how many new users complete a meaningful first action. Combining these onchain analytics provides a clear view of your product’s financial performance and user engagement, allowing you to optimize for growth.
How can onchain analytics improve user retention and CLV?
Onchain analytics gives you a direct line of sight into user behavior, which is critical for improving retention. By analyzing onchain metrics, you can identify which features drive repeat usage and what causes users to drop off. For example, tracking how users interact with your protocol helps you refine the user experience and reduce friction. This data enables you to segment users based on their activity and value. By understanding what your most valuable users do, you can build features that increase engagement, leading to a higher Customer Lifetime Value (CLV) and a stronger monetization model.
Which Web3 monetization models are most common for onchain apps?
The most common Web3 monetization models are directly tied to onchain activity. Transaction fees, where a small percentage is taken from each onchain action, are a popular choice for DeFi protocols and marketplaces. Another model is selling premium features or access via NFTs or token-gated subscriptions, which creates exclusive value for loyal users. Some projects also generate revenue through protocol fees earned from activities like lending, borrowing, or staking. Choosing the right model depends on your app's function, but all rely on robust onchain analytics to measure performance and guide strategy.
