The Definitive Guide to Consumer Crypto
A deep dive Analysis of the Most Prominent Projects and Their Impact on the Market.
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Introduction
Over the last decade, crypto has primarily focused on infrastructure and tooling. However, with much of this infrastructure now in a "ready to use" condition, there's a significant opportunity for consumer apps to gain traction and run experimentations with.
Despite this potential, consumer apps in the crypto space have struggled to achieve the scale they anticipated. A few, such as Notcoin, KaiKai launched this year, have managed to reach more than 1mn+ users already.
Notion has been particularly successful, being able to reach a massive global audience and having a community-led ecosystem built with the underlying game mechanics being super simple. Meanwhile, other categories, like social, prediction markets and betting, are now seeing a rise of apps going off the roof (polymarket) and new apps being developed as well.
The main metric for any consumer app is retention, which hinges on delivering an enhanced user experience that is not only engaging and interesting but also rewarding and entertaining.
However, retention and user loyalty remain significant challenges. Many new users are drawn to speculative event-based applications, with recent consumer interest driven partly by external factors, such as elections being one of the hot topics of discussions.
It's interesting to see that there have been various use cases have already been emerged in the crypto, including social apps, RWA, web3 gaming, and DeFi.
However, the standout use case for blockchain technology hasn't been fully nailed down yet. The areas where it’s likely to make the biggest impact include applications that:
bring together a global audience
facilitate seamless cross-border payments
enable product-led rewards distribution
ensure transparency
It will be interesting to see how these areas evolve as the crypto ecosystem continues to develop.
Challenges in building social apps
It's a well-known fact that building successful social applications is challenging, even outside the web3 ecosystem. Acquiring the first thousand users is difficult, and scaling to the next ten thousand is even more complicated. Once a user base is established, the focus shifts to identifying the best features, creating effective notification strategies, and ultimately driving retention and loyalty.
Even after these elements are figured out, making the business sustainable requires developing a strong business model. Interestingly, out of every 1000 applications, only about 4-5 are actually able to achieve lasting success in the market. This highlights just how tough and competitive the landscape is.
Some of the existing challenges in web3 first consumer apps are:
→ User experience and onboarding challenges
In web3, the challenges are compounded by constraints such as
inadequate onboarding processes
broken user experiences
a lack of personalization
These factors make it difficult for users to become daily active users of a product, presenting a significant hurdle for Web3 applications.
→ Token dynamics and it’s impact
Another major challenge for web3 products is managing the token along with the app. Balancing the token to prevent it from being sustainable while still driving project relevance and supporting operations is difficult. A well-managed product-led token can help fund the project and demonstrate long-term user interest rather than just attracting users seeking short-term gains like airdrops.
→ The Issue of incentive-driven engagement
Unfortunately, many current crypto applications fall into the category where a small set of users continuously try out different applications, not out of genuine interest but because of high incentives associated with them. A recent study by 6thman ventures supports this, showing that many "lurkers"—users who don't fit the core audience—are often rewarded, which can gather traction and eyeballs but doesn't lead to genuine engagement.
This remains a persistent challenge in the market, where products must navigate between attracting a wide audience and ensuring that core engagement is meaningful and long-lasting.
Infra vs Apps
Generally speaking, there’s a well-established cycle between building infrastructure and developing applications. This cycle was illustrated effectively by Union Square Ventures showing how, after each wave of infrastructure development, the focus naturally shifts to building apps. Once the potential of these applications has been explored and exhausted, the cycle returns to addressing new infrastructure challenges, before eventually moving back to applications again.
Currently, we find ourselves at a similar inflection point in this web3 cycle. The infrastructure that has been built over recent years is now decently ready - though not entirely complete - to start testing how it performs at scale. This phase is crucial because it allows us to experiment with the existing infrastructure, determining whether it truly works and meets the needs of the current audience. One of the best ways to conduct this testing is through building consumer apps and actually interacting with the users, which can serve as a proving ground for the broader crypto ecosystem.
What makes this moment particularly exciting is the potential for breakthrough applications. My prediction is that we might be on the verge of seeing a purely crypto-based product that can attract and retain over 10 million users. Achieving this milestone would be a significant success for the consumer crypto ecosystem and could mark a turning point in how crypto is perceived and utilized by the broader public.
However, the success metric shouldn’t just be about user acquisition; but about retention and engagement. For an app to truly make an impact, it must not only draw users in but also keep them coming back as daily/ weekly active users who are genuinely interested in the product. A high number of DAUs will be a key indicator of an app’s success.
Looking ahead, certain categories seem particularly ripe for this kind of growth. Social applications, socialfi , gamefi, and rewards-based apps are all promising areas where we might see these breakthrough products emerge. These sectors are likely to play a significant role as the current cycle continues to unfold and could lead to the next big leap in mass crypto adoption.
What’s hot in the space?
The space is ripe with many experiments being run by builders who are trying to create entertaining and interesting products.
It’s interesting to compare different blockchain ecosystems, especially when looking at the number of active addresses on various chains like Near, Solana, BNB, Polygon, Ethereum, and Base. These chains are showing a lot of activity, and it's intriguing to see how they stack up against each other in terms of user engagement.
But it's not just about counting active addresses; it's also about understanding how transactions are happening across these chains and what kinds of use cases are emerging. Some key areas to watch include: