[ARBITRUM] [Non-constitutional] ARB Incentives: User Acquisition for dApps & Protocols
Summary (TL;DR)
88% of LTIPP dApps & Protocols that spent $ on off-chain ads & content campaigns in 2024 indicated that it’s the 2nd most effective user acquisition strategy. However, only 54% of dApps have used it last year, with only 21% being able to calculate their CAC and 0% calculating their users’ LTV.
Patterns proposes a 1st iteration of a program for dApps & Protocols to help them build off & on-chain user acquisition campaigns with positive ROI. Participants can design their campaigns freely with a requirement for all of them to be measurable and Patterns will calculate ROI (based on CAC and on-chain LTV) for all campaigns to focus on the most efficient strategies in the next iteration.
The challenge
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💸 The main goal of incentive programs such as STIP & LTIPP is to increase the user inflow into the ecosystem that will lead to higher network usage, TVL and finally - the price of $ARB.
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❌ Even though the budgets for these programs are increasing, their results are temporary and most metrics fall back to their baselines right after the program is finished, which is underlined by many ecosystem stakeholders.
📈 Patterns team (f.k.a. Tokenguard) analyzed projects that took part in the LTIPP program and identified multiple reasons of this and similar programs not achieving long-term results that were expected:
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No off-chain marketing - most protocols didn't communicate rewarding to new users in other ways than using existing SM channels such as Twitter and Telegram.
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Lack of knowledge of on-chain user acquisition funnels - only 37% of protocols have off-chain tracking tools installed for marketing purposes, which makes it impossible to run successful user acquisition campaigns.
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No consideration for ROI and over-expenditure on non-performing projects - as discussed during ARB Liquidity Incentive calls, most teams don't have any active marketing & growth teams that would take care of CAC & LTV ratios for their marketing campaigns.
These insights along with the supporting data were presented at ARB Liquidity Incentives calls organised by L2Beat (thanks to Kaerste & Sinkas):
- 09.10.2024 - summary, recording & transcript are available here
- 27.11.2024 - summary, recording & transcript are available here
The above reasons make most incentivization programs attract only a small group of existing Arbitrum users and / or users that interact with cross-chain protocols available on Arbitrum.
Insights from dApps & Protocols
While working on this proposal, our team conducted surveys amongst LTIPP participants to understand their perspective on user acquisition and most efficient strategies they used. Out of 40 protocols we’ve contacted, 19 filled out the survey. The results bring in some significant new conclusions:
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84% of surveyed protocols indicated covering user gas fees & airdrops as the most efficient user acquisition strategies -- However, 53% of protocols haven’t spent a single dollar on off-chain user acquisition in 2024 -- Out of 47% of protocols that spent $ on off-chain user acquisition in 2024, 88% indicated 2 off-chain strategies (paid posts & ads; newsletters) as the second most efficient user acquisition tool.
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Only 21% of surveyed protocols know their CAC (“Customer acquisition costs”)
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0% of protocols know their LTV (“Lifetime value of a user”)
Further questions uncovered more interesting insights about user-related development plans of dApps & Protocols:
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Even though 84% of surveyed protocols mentioned covering gas fees & airdrops as the most efficient user acquisition strategies, only 37% of protocols are aware of or have plans to implement ERC-4337 standard (Account Abstraction standard allowing to easily onboard users and cover their gas fees).
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Only 37% of dApps & Protocols have some kind of off-chain tracker installed - which is a crucial prerequisite for running successful user acquisition campaigns and calculating CAC & LTV
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As many as 68% of surveyed dApps & Protocols mentioned metrics other than TVL as the most important for them.
The solution
Patterns would like to propose an iterative program, complimentary to the one proposed by IOSG, that would solve these challenges by helping protocols run and measure their off & on-chain user acquisition campaigns. The aim of the program is for protocols & ecosystem to learn how to run these campaigns successfully and build a culture of web3 user acquisition through measurable marketing that finally allows to calculate the LTV / CAC and ROI.
Duration: 3 months per iteration + 2 weeks application time
Budget (first iteration):
- 3,000,000 $USD / 10,263,158 $ARB (at $0.38 7-day avg + 30% reserve for price change)
- All unused funds returned to the DAO.
Scope: Patterns will run a program to boost user acquisition by dApps & Protocols into the $ARB ecosystem. All projects will be divided into categories, based on the ecosystem user acquisition funnel:
Budget will be spent on helping these projects achieve predefined measurable goals through all the steps of the above user acquisition funnel:
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Off & on-chain performance campaigns - consisting of measurable ad campaigns in networks such as Twitter, Linkedin and on-chain networks such as Hypelab and Slise; Paid content and landing page creation; Paid newsletters and cold outreach; Setting up off-chain tracking tools.
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On-chain incentivisation - including gas fee coverage, rewards and long-term on-chain incentives; Setting up Account Abstraction infrastructure to make Arbitrum products user-friendly and easily acquire new users.
Program KPIs: Each category will have a different set of on-chain KPIs connected to its role in the Arbitrum Ecosystem according to the user acquisition funnel:
- Bridges, On-Ramps & Wallets (up to 5 projects) - the only purpose of bridging & on-ramp projects is to bring in as much funds into the ARB ecosystem as possible and make them as hard as possible to move out. This strategy has worked really well in LTIPP projects and should be continued.
- DeFi (up to 10 projects) - this segment is characterized by high to medium value transactions and wallets. It's main purpose is to generate as many high volume trades as possible to keep users' capital engaged in the ecosystem for as long as possible. Additionally, offering assets available only on ARB would be highly appreciated.
- Others (up to 5 projects) - this segment includes all non-financial products within the Arbitrum Ecosystem - such as NFT Publishers & Marketplaces, Games, Social Platforms, AI Platforms and others. All of them are characterized by low value transactions and require high user stickiness to be sustainable. From ecosystem perspective, incentivizing these projects can be beneficial only if users stick with them for long, making their lifetime number of transactions high enough to generate sequencer fees.
| Goals | KPIs (every 1 month) | Retention KPIs (after 3 months) | |
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| Bridges, On-Ramps & Wallets | - Maximize inflow of new funds into $ARB ecosystem; - Minimize outflow of funds out of $ARB ecosystem | - Net inflow balance; -Net inflow volume | - % change in inflow balance; - % change in inflow volume |
| DeFi | - Maximize number & value of trades; - Increase TVL & trade volume on assets available only in $ARB | - Number of trades; - Volume of trades; - TVL | - % change in number of trades; - % change in volume; - % change in TVL |
| Others (NFT, Gaming, Social, AI) | - Maximizing stickiness; - Maximizing in-product purchase | - Monthly Active Purchasing Users; - Avg. in-product purchase volume per wallet | - % change in Monthly Active Purchasing Users; - % change in purchase volume per wallet |
Application process:
- Arbitrum dApps & Protocols apply to the program by filling out a predefined form, where they specify: 1.1. KPIs they declare to achieve every 1 month as well as Retention KPIs after the campaign. 1.2. Requested budget with expected items & costs 1.3. Tools used for running and off-chain measurement of the campaign * All activities must be measurable and Patterns will receive access to tools used (eg. Googl
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Off-Chain Vote
For
154 HVAXVC95.1%
Against
8 HVAXVC4.9%
Abstain
0 HVAXVC0%
Timeline
Mar 27, 2025Proposal created
Mar 27, 2025Proposal vote started
Apr 02, 2025Proposal vote ended
Mar 26, 2026Proposal updated