From airdrops to ecosystems: How Ethereum L2 networks can retain customers

Ethereum Layer 2 (L2) networks have confirmed to be a vital resolution to blockchain scalability points. As these networks compete for market share, incentive packages – primarily airdrops and grants – have develop into central to development methods. Whereas the assets allotted are big, their effectiveness stays below management.

Scope of analysis

This evaluation focuses on two major incentive mechanisms: airdrops and grants. Utility-specific incentives comparable to liquidity mining are excluded to make sure a transparent deal with L2 ecosystems. The info covers the interval from 2021 to December 2024, with the first metrics being:

1. Month-to-month Energetic Customers (MAU): Reflecting sustainable consumer development.
2. Earnings Era: Analysis of return on funding for incentive packages.

Key insights

1. Affect of incentives on month-to-month energetic customers

An summary of MAU tendencies throughout main L2 options reveals vital variations:

• Base has proven constant development with a mean MAU improve of 56% per thirty days, considerably outperforming different L2 networks.
• Arbitration and Optimism confirmed a slight improve after the airdrop, supported by grants.
• Newer L2 comparable to zkSync period and Starknet skilled steep declines in MAU after touchdown.

Key Stats:

1. The proliferation of latest L2 options weakens consumer exercise throughout networks. For instance, zkSync Period's MAU dropped 32% inside three months of its launch.
2. Ecosystems with strong grant packages – comparable to Arbitrum and Optimism – do higher at retaining customers, maintaining MAUs at over 300,000 over the past quarter.
3. Cultural components, as seen with Base, play a key function in sustaining engagement with out token incentives.

2. Earnings vs. incentive prices

Evaluation of the cost-effectiveness of incentives throughout L2 reveals stark contrasts:

• Base: For each $1 spent on incentives, $50 in income was generated, the very best of the L2s surveyed.
• Optimism: Maintained a constructive revenue-to-cost ratio in its early phases, however noticed declining returns with incremental declines.
• Arbitration: They’re making an attempt to generate income, $100 incentives solely usher in $8.
• zkSync Period and Starknet: Generated lower than $0.10 for each greenback spent on airdrops, reflecting poor cost-effectiveness.

3. Incentive prices per consumer

The associated fee per consumer in L2 networks reveals three distinct patterns:

• Efficient fashions: Base retains the fee per consumer below $0.10, primarily as a result of token shortage and strategic use of grants.
• Reasonably environment friendly fashions: Optimism, priced at $304 per MAU, combines repeated grants with multi-stage airdrops.
• Inefficient fashions: Starknet's value per consumer is over $11,000, a results of the speedy drop in customers after the shutdown.

Why new L2s fail to retain customers

1. Over reliance on airdrops: Airdrops usually appeal to short-term speculators relatively than long-term customers. For instance, 65% of zkSync Period's authentic customers discontinued the interplay inside two months of its launch.
2. Lack of ecosystem improvement: New L2s usually lack a strong utility layer, making consumer retention troublesome. In distinction, Optimism and Arbitrum host greater than 50 extremely helpful dApps, significantly enhancing retention.
3. Cultural and group components: Base's emphasis on group occasions and consumer expertise has cultivated belief and engagement, even with out token-based incentives.

Suggestions for efficient motivational methods

1. Undertake multi-stage airdrop fashions: Following Optimism's instance, gradual landings tied to ecosystem engagement can foster sustained engagement.
2. Spend money on builder grants: Channeling assets in direction of builders helps create a thriving dApp ecosystem, as seen in Arbitrum's assist of GMX and Aave.
3. Deal with cultural improvement: Robust group tales, as Base has confirmed, can retain customers even with out direct financial incentives.
4. Monitor value effectiveness: Repeatedly consider value per consumer and modify methods to optimize ROI. A base value of <$0.10 per consumer must be the trade commonplace.

Conclusion

The info underscore that efficient L2 incentive methods require a stability between short-term and long-term mechanisms. Whereas airdrops are helpful for preliminary consumer acquisition, grants and cultural funding are important for retention. Networks like Base and Optimism exemplify this method and supply beneficial classes for newer L2 options trying to construct sustainable ecosystems.