The Problem with Benchmarking in Web3:
Web3 encompasses a diverse range of business models, from decentralized protocols to NFT marketplaces and DAO governance structures. This diversity, coupled with the lack of historical data and established industry standards, make it difficult to develop standardized benchmarks and KPIs that can be applied across the board. Additionally, the global and decentralized nature of Web3 projects, along with user privacy concerns, hinders the collection and aggregation of comprehensive data necessary for benchmarking purposes.
Further, unlike traditional companies, Web3 projects often lack transparency and standardized reporting practices, making it challenging to obtain reliable data for setting meaningful KPI targets. The integration of Web3 data with existing analytics systems also poses technical hurdles, leading to fragmented data and inaccurate performance measurements. As a result, Web3 companies struggle to establish appropriate targets and thresholds for their KPIs, hindering their ability to effectively track progress, identify areas for improvement, and make data-driven decisions.
How Should You Benchmark Success in Web3?
To even begin formulating benchmarks for your Web3 company’s success, you must first pinpoint the select KPIs you think are worth paying the most attention to evaluate your performance. However, due to the dozens of business models and applications existing in the ecosystem, there’s no one-size-fits-all solution. This is why Web2-based analytics platforms like Amplitude, MixPanel, and Google Analytics don’t completely satisfy the needs of Web3 companies – they only let you see a small part of the equation and none of the solution in the context of Web3.
To understand this point in live action, let’s imagine we are an NFT marketplace trying to find PMF. Many traditional Web2 KPIs still apply to us like retention, churn, community engagement, MRR/ARR, and DAUs/MAUs, and the aforementioned Web2 analytics platforms are fully capable of capturing those metrics for us. However, we’re missing out on a ton of important on-chain metrics that are critical to benchmarking our performance such as trading volume, liquidity levels, token velocity, specific chain popularities, and so much more. When we tie all of these disparate Web2 and Web3 datapoints together, that is when our analytics become really powerful and we can accurately measure and begin benchmarking our performance.
Many of these metrics can be tracked and measured using Multibase, but how do we know if the numbers are actually good compared to the competition? This is where we find one of Multibase’s key use cases: You can source a competitor’s most active smart contract address and analyze it in Multibase to see what their users are doing, what their retention or engagement looks like, and how their key metrics stack up to your own.
Conclusion:
By benchmarking your performance against direct competitors, you are able to gain valuable context and therefore identify areas where you excel or fall behind. This competitive analysis enables you to identify strengths and weaknesses, set realistic goals, develop best marketing practices, optimize your growth strategies, and maintain a competitive edge within your market.
The key here is to embrace the unique characteristics of Web3 and adopt a flexible, data-driven approach to benchmarking. This may involve experimenting with different KPIs, collaborating with industry peers to establish shared standards, and continuously refining the benchmarking process as the ecosystem evolves.
Ultimately, the ability to effectively benchmark performance in Web3 will separate the leaders from the laggards. By rising to this challenge, Web3 companies can make more informed decisions, optimize their operations, and ultimately drive greater success in this dynamic and transformative space.
About Multibase:
Multibase is a Web3 user analytics platform - the Mixpanel for web3. We allow teams to connect and query their users' on-chain and off-chain data to help them better understand and grow their users. Teams can query their product engagement, track user attribution, segment their user's data, monitor marketing campaign success, and much more. Our mission is to make web3 companies more successful by giving them the tools to track and optimize their KPIs and make the web3 customer lifecycle understandable.
Multibase is backed by top VC firms including Reverie, Y Combinator, and Orange DAO.
For more information, visit multibase.co
