Glossary
Glossary: Return on Investment (ROI)
A measure of the profit generated by a campaign or investment relative to its cost.
Return on investment (ROI) measures the profit or value generated by a campaign, program, or investment relative to what it cost. In marketing and growth, it’s used to judge whether spend on ads, incentive campaigns, or points programs is paying off.
Examples
A team calculates ROI on a liquidity mining campaign by comparing rewards paid out to the protocol revenue generated.
A paid social campaign is paused after its ROI falls below a target threshold.
An incentive campaign shows strong short-term ROI but weak long-term retention.
FAQs
How is ROI calculated?
ROI is typically calculated as (return minus cost) divided by cost, expressed as a percentage.
What counts as “return” for a DeFi campaign?
This can include protocol revenue, TVL growth, or the lifetime value of acquired users, depending on the goal.
Why is ROI hard to measure in web3 marketing?
Attribution gaps between off-chain campaigns and onchain outcomes make it difficult to tie spend directly to results without a tool like Formo.
Related Terms
A/B Testing
An experiment that compares two versions of a page, feature, or campaign to see which performs better.
Account Abstraction
Account abstraction is an approach that turns blockchain accounts into programmable smart contract wallets, enabling features like gasless transactions, social recovery, session keys, and paying fees in any token.
Activation Rate
Activation rate is the percentage of new users or wallets that complete a key activation milestone, such as a first transaction, out of all users who signed up or connected within a given period.
Active Users
Active users are people or accounts that interact with a product, app, website, platform, or protocol during a specific time period.
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