Web3 User Rise Strategy: How to Build Successful Communities and Products

In the Web3 space, we often see some projects achieve a rapid rise in a short period, but soon lose users and ultimately fall into a "death spiral" resulting in failure. Unlike traditional industries, the impact of the cryptocurrency market on Web3 projects is more direct and severe - during a bull market, everything rises, while a bear market leads to the elimination of many projects. These failed projects often share a common characteristic: during market downturns, the price of project tokens continues to decline, resulting in the failure of token incentives and even harming user interests, which in turn triggers severe user attrition.

Long-term user rise is key to product success, which core lies in building a positive interaction system between products and users, continuously iterating to gain market share, and achieving sustained rise in user scale and value. Data shows that from the beginning to the end of 2022, the number of active addresses for mainstream dApps such as collectibles, DeFi, game finance, and trading markets saw significant declines, while social media applications exhibited a rapid rise trend. This article will explore the core ideas for Web3 user rise.

The Basic Ideas for Web3 User Rise

Although the cryptocurrency market cycle has a significant impact on user growth, entrepreneurs should not be constrained by the macro environment. The primary task of user growth is to find the "market" that matches the product - that is, the PMF(Product Market Fit)'s "M". It is important to focus on the niche market that best fits one's product characteristics and resources, rather than greedily trying to satisfy the entire large market. One should first delve deeply into a single market and achieve a leading position before considering horizontal expansion. For Chinese entrepreneurs, it is unwise to abandon the Chinese-speaking community and user base they are most familiar with, as this amounts to giving up a third of the potential customers worldwide.

In product design and development, the Minimum Viable Product ( MVP ) is a very effective concept. It refers to launching basic functions that can satisfy the minimum business loop of the core scenario first, and then iterating and optimizing based on market feedback to ultimately create a product that best meets market and user needs. Developers should not attempt to create a perfect "whole" product from the beginning, but instead focus on solving the most pressing "one" problem for users, simplifying the usage process, and building an MVP product that aligns with PMF. In this process, developers often need to say "no" to a lot of seemingly good ideas.

If PMF is understood as the state of product-market fit, then MVP is an effective way to achieve PMF. Bringing a PMF-compliant MVP to market is the GTM(Go To Market) strategy. The goal of GTM is to acquire and retain users, typically following the "funnel model": from customer acquisition at the top of the funnel to user conversion and retention at the bottom of the funnel, which is a process of gradually decreasing user numbers.

The GTM of traditional Web2 projects includes aspects such as pricing, marketing, and sales, focusing on metrics like website click-through rates, average revenue per user, and transaction times. Although the Web2 GTM framework provides mature methods, the connotation of Web3 GTM is much richer. "Community" is a unique domain of Web3 GTM and an important traffic pool for user growth. The GTM strategy of Web3 is often accompanied by community incentive measures mediated by tokens, as well as corresponding referral programs, where old users are rewarded with tokens for referring new users, and new users may also receive rewards as a result.

PMF: Identify the market, meet real needs

Regarding product-market fit ( PMF ), it is essential to consider the following questions:

• Why develop this product/feature?
• Do the products/features meet market demand?
• Why develop this product/feature now instead of later?

Research shows that a lack of market demand is the primary reason for the failure of entrepreneurial projects, accounting for as much as 42%, far exceeding factors such as running out of funds and an unsuitable team. Therefore, developers should consider these issues during the early stages of product planning, rather than waiting until the product is about to launch to start looking for the market. People can easily overlook the necessary market research work due to their own biases and stubbornness.

Finding PMF is a cyclical iterative process that requires continuous feedback collection and validation, allowing the product to gradually reach a level that matches the market. In the subsequent validation process, feedback information is used to return to specific steps for optimization and improvement, in order to enhance the fit between the product and the market.

1. Lock in the target user group, discover unmet needs.

Identifying the right niche market and target users is key to determining whether a product can meet user needs. By segmenting the larger market to pinpoint the target user group, a user profile database can be established for demand analysis. After establishing the target user profile, the next step is to understand their needs. When attempting to create value for users, it is also important to identify the corresponding good market opportunities for this demand. If the user needs in a particular market have already been well met, it is better not to enter that market, but to seek new opportunities instead. When it is discovered that the user needs in a certain market have not been well met, one can then make an entry.

2. Develop product strategy, define value proposition, highlight differentiation and core competitiveness.

Users inevitably compare different products, so user satisfaction largely depends on the uniqueness of the product. The value proposition is to highlight the product's features, allowing users to feel that this product better meets their needs than competing products. Among the various needs that the product can satisfy, which one should we focus on? What unique features does the product have to delight users? How does the product stand out in the competition? These are the three core questions that need to be answered when formulating a product strategy.

3. Select the minimum viable product ( MVP ) feature set, complete user demand testing.

Once the product strategy and value proposition are clear, you should start to select the features that the MVP needs to include. It is very frustrating when developers invest a lot of time and effort only to find that users do not like the product; this can lead to burnout after repeated occurrences. The purpose of the MVP is to determine whether the development direction is correct, and then to create sufficient value at points that users find valuable. After completing the MVP, it should be thoroughly tested within the target user group to ensure that the feedback collected comes from a sufficient number of users in the target market. Otherwise, that user feedback may lead the product development in the wrong direction. Based on accurate user feedback, readjust assumptions and return to the earlier steps in the process to iterate the MVP until a product that closely matches the market is designed.

MVP: Rapid iteration, reduce detours

Regarding the Minimum Viable Product ( MVP ), the main questions to consider are:

• What are the components of the product/function?
• What problem can it solve?
• What are the future iteration plans?
• What is the value of the product/function?

MVP means developing a usable product that can showcase the project's highlights and innovations with the least development cost and the shortest development time. Although this product is simple, it can quickly validate ideas. People often have a perfectionist mentality, thinking that the absence of certain features would be terrible, but in reality, nothing significant will happen. If a non-MVP approach is adopted, it may not only consume a lot of time on secondary features during the development of the first version but also lead to continuous detours in subsequent version updates. When we start to develop products with an MVP mindset, our attention can focus on more important areas.

The MVP is not the perfect product; its purpose is to quickly launch to the market to test feasibility. By validating through market demand, it continuously adjusts direction and iterates to produce a product with market space and protocol revenue. In fact, the MVP does not even need to be a mainnet product; it can simply be a well-designed testnet product that provides users with a clear experience. This can help avoid the predicament of spending a large amount of money on products that are not recognized by the market.

Developers should deliver the MVP to the target user group, collect their feedback on product preferences, and see if they believe this product is necessary, in order to validate the ideas behind the market and user positioning of the initial version. If the ideas are correct, they need to quickly increase the product's exposure in the market, allowing these seed users to truly start using the product.

Hold more internal product meetings to discuss which features are unnecessary at the current stage. After eliminating these features, what remains is the MVP. Creating an MVP requires an ability to simplify, defining basic functions around core needs, ensuring the key nodes in the path are well done before refining the details and auxiliary functions. This ability to simplify is essentially about grasping the rhythm, aligning with the pace of business and user development: launching corresponding product features at the right moment, not seeking to be comprehensive, but aiming for just the right fit.

GTM: Attract new users and retain old ones, manage the community

Regarding going to market ( GTM ), the main questions to consider are:

• How do products interact with users?
• Do users need help learning to use the product?
• How frequently do users use it?
• Where is the product released? Locally, domestically, or internationally?
• Which channels to cooperate with?
• Are there any restrictions on cooperation channels?

In Web2, GTM usually acquires users through marketing strategies. In Web3, GTM not only needs to acquire users through marketing but also to manage a more enriched "community". The community includes not only users but also developers, investors, and partners, all of whom are stakeholders in the Web3 project. Every excellent Web3 project typically has a strong community. Some projects adhere to the "community-first" principle, some projects are "community-led" in their decision-making, and others directly let the "community own" it. Only by continuously meeting user needs and maximizing the subjective utility of the product for users can a project have a highly engaged and high-quality community.

Traditional GTM refers to pushing the product to the market through advertising, launch events, channel training, etc., after product development is completed. Web3 has changed the entire traditional Web2 funnel model. Token rewards provide an alternative solution to the cold start problem. Development teams do not spend real money on traditional marketing to acquire early users; instead, they use token rewards to attract users during the stage when network effects are not yet apparent. Rewarding early contributions from users will attract more new users, who also hope to earn rewards through their contributions. From the perspective of user loyalty, the early users of Web3 contribute to the community more significantly than the BD personnel of traditional Web2.

1. Acquire new users

Airdrops with task interactions are an important GTM strategy, referring to the distribution of tokens to users in a project direction, where users need to complete certain specific tasks to have a chance to receive tokens. Sometimes, there are additional conditions, such as having to hold specific tokens. Incentivizing early users to complete task interactions is a common method for project cold starts, allowing for the acquisition of the first batch of seed users at a lower cost.

Publishing tasks on the Web3 task interaction platform and guiding users to participate in product interactions is a win-win operation. For project parties, it gains traffic; for users, they can obtain on-chain activity proof, receive airdrop tokens, and accumulate platform usage experience during the task interaction process.

2. Increase activity and retention rate

Although token incentives can attract users, relying solely on them is not enough to increase user stickiness. Since the cryptocurrency market entered a bear market in 2021, a major challenge for operating projects has been "users come quickly but leave quickly." User inactivity and difficulty in retention are significant ailments for current Web3 projects. Project parties should invest more effort in converting first-time users into loyal users, continuously optimizing products, and consistently conducting community activities to provide users with a better experience. Holding AMAs on Twitter Space, Discord, and Telegram is a common method to enhance community activity and enthusiasm.

3. Recommendations and Self-Propagation

Self-propagation ( Referral ) refers to promoting the product through existing users.