Growth in Web3 Just Hits Different

March 2nd, 2022

Instead of acquiring users through ads, the best web3 companies grow by turning users into contributors and owners.

Web2: grow with ads

For more than a decade, there has been one default way to acquire new users for a project: paid advertising. Whether through Facebook, Amazon, Instagram, or Google Search, startups have set aside large budgets to engage and retain new customers using these platforms. Facebook alone is responsible for over a quarter (!) of global advertising spend. This playbook for growth is very well established, but makes it difficult for newer players to break through a crowded market.

Web2.5: grow with gimmicks

We’ve seen some newer DAOs and token-based projects adopt both ad-based acquisition models and other short-term plays to bring in new users. Beginning in 2020 across DeFi, we saw yield farming bring in massive amounts of capital. In 2021, hype around minting NFTs had a similar draw. Here’s the problem: short-term incentives attract short term users.

When NFT traders didn’t see the floor of a project quickly moon, they’d abandon ship. A similar pattern arose in yield farming. One could argue that, at their worst, yield farming and building hype around secret NFTs mints are short-term gimmicks that simply replace paid advertising.

Web3: grow with ownership

Some of the most successful web3 platforms have upended this model. How? They turn their first set of power users into contributors, who are paid with native tokens. Think of a designer who is so inspired by an early product that they sign up to help re-do the user onboarding flow. Or a marketer who hosts online events that introduce the product to new communities.

Turning users into contributors introduces a powerful virtuous cycle:

  • Because they are users, they know the product as well as anyone and can contribute effectively
  • Because their contributions helped make the product what it is, they are more inclined to share it with friends
  • Because they are paid for their contributions in native token, they want to see the project continue to grow

Each action strengthens a contributor’s incentive to continue building and using the protocol.

Builders = Users. Users = Builders

In web2, the lines between the builders and the users are typically very clear. Facebook has tens of thousands of well-paid engineers and designers who make and maintain the product every day. They are paid to do just that. At many newer web3 projects, the core builders also represent a more significant percentage of early users. They are creating the features that they want to see, and interacting with fellow users through a community Discord. This kind of community is more engaged because they all have a stake in its success. The question is this: how can a project build this kind of dynamic out of nothing?

Your first 100 contributors

A lot of projects in today’s crypto ecosystem have a robust treasury, upwards of $100m in their native token. The challenge is figuring out the best way to spend that capital to incentivize the right kind of community participation. At Layer3, we enable DAOs and other projects to bring in new contributors for discrete tasks and be compensated with tokens. This is a powerful way to transform passive interest into active contribution. To transform those initial users into contributors, and early contributors into owners of the protocol.

Kickstart growth

Layer3 is the most effective way to convert your users into contributors and vice versa. We’re a crypto-native engine enabling long-term growth through community participation.

What’re you waiting for? Spend less on ads and come build with us. Find the true value of your community.

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