Let's jump right in, but before that, I want to thank Wisekim.eth (@wisekim_eth) for his invaluable feedback on this edition 🙌
The Questing Landscape:
So, you've probably noticed those rewarded quests and giveaways all over Web3 – Galxe, QuestN, Layer3, and Zealy. They're all about getting users to do tasks (like following on Twitter, joining Discord, signing up, and depositing some crypto), and in return, they get tokens, airdrops, or NFTs.
Gleam made this mainstream, and it's become a go-to growth hack in Web3.
Now, why are they so popular?
They give you big numbers super quickly, and it doesn't cost much. Sounds easy, right?
Here's the usual drill:
A Web3 project needs users, so they set up a quest, go to sleep, and wake up to a high surge in followers, retweets, and overall numbers. Investors are happy, and you start thinking, "Building a business is a piece of cake!"
But hold on, here is a reality check:
Those questers? They don't stick around. They complete the tasks, grab the reward, and vanish.
Most are airdrops hunters, and some are from less wealthy countries going for small rewards. They don't engage with your product. Many of them have a bunch of tabs open, switching between questing sites to get as many rewards as possible.
See below two tweets posted by the same account 2 days apart - one is via a rewarded quest platform and the other is organic. Guess which one is which! 😃
Rewarded Quest powered Tweet vs Regular Tweet
Now, you might argue, "Well, it helps, we're not starting from scratch. Social proof matters!" True, we've all been there – but that's where the problem lies.
Most quests platform today rewards users too early where short-term traction is good but user retention is low as an incentive is the key motivation. Based on research and on-chain data analysis, here are a few key insights into the behaviors of users acquired through airdrop campaigns.
Retention graph for users acquired through Airdrops for 5 major protocols: Source
CAC for Users acquired through airdrops for 5 major protocols: Source
Paul Graham's Wisdom on Product Building:
Paul Graham, co-founder of Y Combinator, famously said, "Find your 100 fans who find value in what you're doing." It's these early users who provide the real inputs and feedback to scale.
Airbnb, Dropbox, and Doordash—all started small, cultivating every user. It's uncomfortable, but it's real growth.
Let’s see what a typical customer journey looks like for a typical growth funnel.
The typical discovery to converting them into actual users can take weeks, sometimes months of iterative building, and the funnel can reduce to sub-1 % conversion rates in usual scenarios. Hard, isn’t it?
As the ex-head of Product at AWS, that is one crucial thing I learned about business building. Your users, especially the earliest ones, are the most important.
How you bring them on, how you go back and forth with them, how you make them part of your journey and use whatever you learn from them to grow, determines your path to true PMF.
Now, let’s see how a rewarded quest short circuits that for you and takes away all the feedback, learnings, and validations you get at each step. The conversion rates typically are high double digits within days of starting the quest but what you are left with is the dead weight of these users that do not add much value.
Not many people talk about it in Web3 because it doesn’t gel with the make money fast, capitalize on the arbitrage narrative. And that is why sustainable, long-lasting projects are few and far between.
Note, Rewards in themselves are not bad and we believe strongly in rewarding users for their time and attention - but the current “spray and prey” model for rewards doesn’t work. The reward funnel should be crafted for a deeper engagement level and aim for long-term retention (more on that in the future blogs :))
At Persona3.io, we're on a mission to untangle this mess. Our web3 Ad network places your ads in front of genuine users within high-quality dApps. No bots, no low-value users.
We often get asked for rewarded quest-like results, but our answer is simple: we help you connect with the right users. Real users who see value, not just chasing rewards.
It might take longer, more expensive, and more iterations, but it eventually leads to a product the users want.
So, here's the deal: let's break free from the existing rewarded quest cycle, focus on genuine growth, and build products that resonate.
As one wise Web3 friend put it, "We spent a few days acquiring these quest users and now will have to spend several weeks to remove them." Let's save those weeks for real progress.
Stay tuned for more discussion on Web3 growth and product building. 🌐✨