This is a summary of an episode from the Onchain Growth Club podcast titled "Building Cross-Chain DeFi Beyond the Hype w/ Shaun Janse van Vuuren, ChainFlip"
Chainflip has quietly achieved staggering growth, processing over $3.4 billion in total volume, with a remarkable $2.4 billion in the last year alone. This success wasn't built on fleeting hype or top-of-funnel noise. Instead, it signals a strategic shift in crypto marketing—a move from narrative-driven speculation to a product-led approach centered on user retention.
This post uses Chainflip as a case study to explore a more sustainable model for web3 growth, one that prioritizes high-value users over high-volume vanity metrics. We'll unpack the key insights from their playbook, including targeted user segmentation, data-driven marketing tactics, and the evolution of tokenomics from pure hype to genuine product utility. For onchain builders looking to grow, Chainflip's journey offers a masterclass in building for the long game.
The Problem with Top-of-Funnel Obsession
The standard crypto marketing playbook is well-known: run incentive campaigns, partner with influencers, and make noise to attract as many users as possible. This approach focuses almost exclusively on top-of-funnel metrics, but it often fails to deliver lasting results.
According to Chainflip's Head of Growth, Sean, the conversion rates from these typical campaigns are shockingly low. "You're looking at probably less than 1 or 2% by far," he explains. The industry's obsession with attracting a wide audience often overlooks the most critical element: retaining high-value users who drive real activity.
Chainflip's analysis revealed a common pattern, similar to what's seen in many Web2 startups: a small group of power users generates the vast majority of volume. In the case of Polymarket, for instance, 90% of their volume is driven by just 5% of their user base. Recognizing this, Chainflip chose to focus on customer retention rather than chasing inflated user counts. As Sean puts it, "I'm happy with... a third of those users if they're power users and active users." This philosophy guides their entire growth strategy.
Chainflip's User Segmentation Strategy
To effectively target these power users, Chainflip developed a nuanced user segmentation strategy based on the distinct ecosystems they serve. This approach allows them to tailor their crypto marketing efforts to the specific behaviors and needs of different user groups.
Their strategy breaks down into three main segments:
The Bitcoin Ecosystem: This group consists of high-value, low-frequency users. These are often OG crypto holders with significant capital who are looking for secure ways to activate their Bitcoin in DeFi. They aren't making hundreds of small trades; they're moving six or seven figures in a single swap.
The Solana Ecosystem: In contrast, the Solana community is characterized by high-frequency trading in smaller amounts. Many of these users are looking to diversify gains from fast-moving assets like meme coins into more stable holdings like Bitcoin and Ethereum.
The Ethereum Ecosystem: Ethereum users represent a mixed spectrum, falling between the high-value, low-frequency Bitcoin holders and the high-frequency, smaller-sized Solana traders. This ecosystem acts as a bridge, containing both large and small players.
By segmenting users based on swap size, experience level, and ecosystem preferences, Chainflip can identify and nurture their ideal customers: a "small subset of retail users who move in size." This precision targeting is a core component of their data-driven marketing, though it comes with challenges, such as distinguishing between large retail traders and institutional players.
Data-Driven Marketing in Action
With a product that has found its market fit, Chainflip has transitioned from general branding to focused product marketing. Their approach is grounded in data and a deep understanding of user behavior.
Here’s how their data-driven marketing works in practice:
Behavior Tracking and Wallet Analysis: Chainflip tracks volume, swap sizes, and wallet activity to identify their power users. This allows them to understand where their growth is coming from and who is driving it.
Direct User Feedback: Rather than relying on assumptions, the team actively engages with its most valuable users. Sean mentions having "check-ins with them, some calls with them, see how they're doing, like what do they think of the product, what improvements they could see."
Customer Success Methodology: This feedback loop directly informs product development. By understanding what new chains or features their users need, Chainflip can make improvements that directly enhance the user experience and encourage customer retention.
Targeted Content and SEO: Their marketing efforts are focused on their core value propositions. The team has revamped its website with a strong SEO focus and uses AI-enhanced content to ensure that when users search for a solution like theirs, they find clear, transparent information.
This approach may not generate the same level of social media hype as a massive incentive campaign, but it builds a loyal user base that trusts the product and continues to use it.
From Buy-and-Burn to Community Value
A crucial part of Chainflip's evolution has been the strategic shift in its tokenomics. Initially, the focus was on building hype to drive token purchases. Now, the token plays an integral role in the product's utility and community growth. The team has moved from a "buy-and-burn" model to a "stake-and-earn" system. This new model allows token holders to stake their FLIP and earn a percentage of the protocol's revenue, effectively receiving dividends.
This change transforms the token from a speculative asset into a tool for securing the network and sharing in its success. It aligns the interests of the protocol with its community, creating a powerful incentive for long-term participation. Sean's philosophy is clear: "If you really want to build a community in crypto, you need to get your token holders wealthy." By distributing real revenue, ChainFlip empowers its community and fosters sustainable web3 growth.
Beyond the Standard Crypto Playbook
Chainflip's success challenges the conventional wisdom of crypto marketing. Instead of relying on incentive campaigns and partnerships that often attract mercenary capital, they've prioritized organic growth through product excellence and user retention.
As they prepare for their next major product launch, their strategy remains focused on delivering real value rather than manufactured hype. Sean’s advice to other builders is to think differently: "Get creative when you're doing your go-to-markets... experiment where you can." He encourages teams with a solid product to move beyond the standard playbook and find unique ways to connect with their audience.
Build for the Long Game
ChainFlip's growth playbook offers several key lessons for any team building in the onchain space:
Focus on user retention: Acquiring users is only the first step. True growth comes from keeping your most valuable users engaged.
Segment your users strategically: Understand the different user profiles in your ecosystem and tailor your product and marketing to meet their specific needs.
Build real utility: Create a product that solves a genuine problem and integrates your token in a way that provides tangible value to holders.
The crypto industry is maturing, and the most successful projects will be those that shift from narrative-driven marketing to product-led growth. By using data-driven marketing to build a product that users love, sustainable web3 companies can build a loyal community and thrive in the long run. The most actionable takeaway is simple: experiment with new approaches rather than blindly following the standard crypto playbook.
Frequently Asked Questions
How can crypto projects improve user retention?
Improving user retention in crypto requires a shift from top-of-funnel acquisition to a focus on the post-acquisition user experience.
This includes gathering direct user feedback to inform product development, offering real utility through tokenomics (like revenue sharing), and providing excellent customer support.
It also requires product analytics that works from offchain to onchain.
What are some data-driven marketing strategies for DeFi?
Data-driven marketing strategies for DeFi include user segmentation based on onchain behavior (like transaction size and frequency), wallet analysis to identify power users, and tracking user journeys to optimize the product funnel. It also involves using targeted content and SEO to attract users who are actively searching for the solutions you provide.
Why is user segmentation important in crypto marketing?
User segmentation is crucial because the crypto space is not a monolith. Users in different ecosystems (like Bitcoin, Ethereum, and Solana) have distinct behaviors, needs, and levels of technical expertise. By segmenting your audience, you can create more effective marketing campaigns and product features that resonate with specific user groups, leading to higher engagement and retention.
