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Most analytics in crypto today primarily focuses on blockchains and protocols rather than users. Transaction volume and TVL are good metrics for most DeFi and infrastructure protocols. Market analytics tools like Nansen help DeFi and NFTs traders keep track of and identify opportunities. Dune lets you build protocol-specific dashboards for basically everything you want (making it hard to practically use it for anything you need). We lack of analytics tools focused on users made for teams.

The idea is to make analytics with users at its core to help teams grow. If you have a wallet app, dapp, or NFT collection, you have the user wallets. The data is on-chain and public, but you barely know who your users are. As we use user analytics for websites and apps, we need tools to make a list of wallets and get analytics on them. The blockchain version is portfolio net-worth, token holdings, and protocol activity.

We'll see more consumer and non-financial crypto applications over the following years. Current crypto teams will also become more professional and hire growth teams. In such future, on-chain user analytics will take a new important part of the growth in web3.

Once we have tools, teams who use them will outcompete those who don't — image running service, store, or mobile app without analyzing users. In web3, you'll get an advantage by improving your product and analyzing your competitors' users without permission.

In this article, I'll describe the idea behind on-chain user analytics and how it can be built, provide use-cases for several types of apps, and discuss privacy concerns.

User audience

A user audience is a set of wallets defined by conditions such as a filter based on on-chain activity or a custom list of wallets. A simple example is all the wallets that own one or more lobsterdao NFT tokens or wallets holding 75 Friends With Benefits tokens (to actually get into a community you have to pass a community approval). You can also combine such filters and take any wallet holding at least 1 NFT from BAYC ecosystem.

Generally, you can define user audience by any on-chain activity like smart contract calls and events or tokens holdings. For example, take monthly OpenSea traders, Uniswap LPs, or Lido stakes.

Then you’ll calculate wallet portfolio value based on ETH, ERC20, and ERC721 tokens to filter high net-worth users. Next, you can use Zerion, Zapper, or DeBank API to see what protocols and EVM chains are used. That’s a quite difficult task and I don’t recommend to implement that manually. In fact that is a good startup idea itself.

A combination of user audiences with computed filters and protocol integration can be a powerful tool to analyze users of competing protocols or NFT communities. The best part is permissionless access retail investors and VCs will get.

Besides viewing analytics, teams can use this to identify power user cohort, track changes over time, and identify whales across their users. You may further make a snapshot, airdrop a token, create a special offer, or reach those users individually.

User overview

A user overview dashboard for an audience can display aggregated analytics of your users. There's a general stats such as average and median portfolio value, the number of transactions, time since first and last on-chain actions, and fees burned. You can also learn top ERC20 and NFT token holdings across the audience, most used protocols, and EVM chains.

By tagging protocols and tokens with abstract categories, you'll see audience interest distribution such as "DeFi", "NFT trader", "smart contract", "Flashbots user", "OG", etc. Wallet labels on Nansen and especially DegenScore do this well for individual wallets.

Event analytics

In web and mobile products, you can track and analyze user events. In web3, you can track on-chain transactions, smart contract calls, and smart contract events. This can be further extended with event parameters.

Aggregated event analytics must be useful as a general tool to build charts for different cohorts: "what's the average number of trades by Opensea users from my dapp?", "a chart of total value deposited on Aave on different chains from 1 Jan 2022".

This is easily possible for web and mobile apps, while Dune makes you write SQL. That would be a powerful tool to run something like Amplitude on structured blockchain data. The simplest form can be achieved by building an indexer to push events into existing analytics like Amplitude.

Competitive analysis

Blockchains allow permissionless competitor analysis. User analytics can leverage that by applying user overview and event analytics for multiple user audiences.

A team can define their competitor's user audience to see a side-by-side user overview. Opensea can track the share of users who only use Gem. Wallets with integrated DEX may analyze the percentage of trades done externally. You can analyze churn and learn if your users stopped using crypto or left to another protocol or chain.

Here's an excellent example by Joel John of the on-chain user analytics of Opensea's acquisition of Gem learning that Gem has more power users the number was growing quickly.

Use-cases

The most useful analytics is actionable. While on-chain user analytics can be used for all types of web3 projects, consumer applications would probably benefit the most.

Wallets and DApps

On-chain user analytics can help wallets and dapps to increase the number of active users and conversion to action by combining user audience with user overview dashboards:

1. Target users who use an on-chain protocol, not from your app

2. Compare user acquisition channels by looking at net portfolio value or how relevant user interests are

3. Learn what chains and protocols your users use to support them next

4. Find churn users who stopped using your app but are still active on-chain

5. Offer a partnership to an NFT collection that's popular across users

NFT projects

Some goals for NFT projects are growing the number of holders, increasing community engagement, and making tokens more valuable to drive demand and price.

If you treat NFT projects as a product, a user overview helps you better understand your audience and their on-chain behavior. At Hashscan, we are currently building the following analytics for NFT projects:

1. Filter users to target a subset for an airdrop or giveaway and exclude unwanted participants

2. Compare NFT project audiences between each other by net worth, number of ENS domains, OGs, and bots to build a community quality score

3. Find collaboration projects by estimating how relevant it is for holders. A good example of partnerships is the lobsterdao community offering members early access, airdrops, and free NFTs in new projects

DeFi protocols

DeFi protocols aim to increase TVL and revenue, the number of governance token holders, and how many integrations they have. On-chain user analytics is helpful to learn what users do on other protocols, whether acquired users are representative, and let you identify and target whales from specific user cohorts.

Games

Although most games are hybrid, with most activity happening on a private server, the economics of web3 games are as important as the game itself. Hence connecting game activity with user profiles may let you optimize product and marketing.

Privacy

The idea of tracking users doesn't go along with crypto values. Some apps and wallets like Rainbow respect user privacy and don't collect wallets. Teams like Sismo are working on privacy-preserving access control to let users log in and proof credentials without disclosing a wallet address.

Also, treating the user as a wallet is highly questionable. Many crypto users use multiple wallets, and combining users' wallets with some confidence is possible. The question of tracking users is whether teams are ready to sacrifice users' privacy for the value given and if users know the benefits of being tracked.

Privacy in crypto must be the default without relying on trust. Nevertheless, you can still leverage on-chain user analytics for unique wallets to some extent to build better products for the right users. Degenscore lets you share a profile combined from multiple wallets with credentials anonymously.

Final thoughts

Token incentives haven't proved to be sustainable in most web3 projects. Growing crypto teams are hiring product managers and marketing teams to succeed. They will need better approaches and tools. The solution to learning about your users more deeply is an important step to make maturing crypto industry more efficient.