What is a “user” in Web3?

What is a “user” in Web3?

How many users does the average Web3 platform have? If you’re curious, you’re not the only one. A recent spike in how many users certain Web3 platforms have has even more people wondering. But the reports may also have opened up a completely new question: What does it mean to be a “user” in Web3?

Why are user numbers important?

Jon's avatar stands alone in a Decentraland world

From a consumer standpoint, depending on the platform or game, high user numbers may not be very important in a number of ways. In social apps, small regular user numbers can feel intimate, like the regulars at a neighborhood restaurant. Of course, if you play rounds of social games, you might see your squad change up every now and then.

Many Web3 platforms are open worlds. Open worlds with few users (and no NPCs) can feel quite empty and may even discourage revisiting that platform.

However, some Web3 platforms are built on open worlds so large that visitors use a map to teleport wherever they want. The number of users in a particular location for a particular event may be high even if the overall daily platform usage is low.

For investors, however, user numbers are very important. Users generate revenue, so if a site doesn’t have users, investors may not have faith in the platform. This can form a Catch-22: low user numbers mean that investors do not invest. Investors not investing means the platform cannot be improved. The platform doesn’t get better, so user numbers never go up.

However, remember one important thing. This is Web3. “Investors” are not people with top hats and monocles who live in the bank. Anyone can be an investor in Web3.

How many users does the average Web3 platform have?

It may not be fair to suggest that there is such a thing as an “average Web3 platform”. However, Decentraland may be one of the clearest examples.

In addition to some of the big names, including José Cuervo and JP Morgan, having open offices on the platform, it is home to a number of online events. As of November 2021, the virtual land on which the site was built was estimated to be worth nearly $1.5 billion. But how many people actually use the platform?

Dapp Radar's Top 10 Decentralized Social Platforms

According to Dapp Radar, a kind of app store for decentralized applications including Web3 platforms, the platform’s daily active user base is around 770 people. To put that into context, Roblox reports “net cash” of just over $67 million and a daily active user base of just under 59 million.

A number of people in the Web3 community felt that the Decentraland numbers reported by Dapp Radar seemed low, especially given the high valuation of the platform. Are these numbers wrong?

How many users does the average Web3 platform really have?

Web3 social platforms with little crypto activity

With 770 people, Decentraland ranks 8th among social Web3 apps available on Dapp Radar. At the time of writing, DSCVR is ranked number 220 and has 0 users. DSCVR has a different view on the matter. They claim to have over 15,000 accounts and over 14,000 daily active users – still “small” compared to a comparable site like Reddit, but respectable.

The company’s CEO, Rick Porter, explained the situation to new technology analyst Tom Ffiske. Dapp Radar does not actually report users. It reports “Unique Active Wallets” – cryptocurrency wallets where users have the ability to connect to Web3 platforms to unlock certain features and potentially purchase goods within the platform.

According to Porter, the vast majority of DSCVR users do not choose to connect to the wallet. And even when they do, they don’t necessarily use the wallet regularly on the platform. Decentraland also has the option to join without a wallet or to join with a wallet to save your profile and never spend money.

Join Decentraland with or without a crypto wallet.

Dapp Radar (or anyone else) can track how many unique active wallets interact with a Web3 application because all blockchain transactions are transparent. But when it comes to users who don’t make blockchain transactions, we’re back in the Web2 days when we just took a company’s word for it.

What is a user in Web3?

All of this raises an interesting question. What is a “user” in Web3? Should we measure site usage by “visitors” or some other label? If you don’t connect your wallet to a Web3 platform, are you really “using” Web3?

That might sound like a strange litmus test question to count people out. However, some Web3 platforms allow users to log in with their wallet as a form of identity verification.

That means if you don’t log in with your wallet, you’re using the site in a kind of spectator mode. Furthermore, by linking a wallet across Web3 apps they can often work together in ways that may be characteristic of Web3.

More importantly for the platforms themselves, most Web3 applications do not monetize advertising in the way that Web2 applications do. Web3 platforms typically don’t make money from people passively viewing content – they make money from people paying them, which requires connecting to a wallet.

So, how many “users” does a Web3 platform need to be successful?

How many users need a Web3 platform?

Let’s look at Decentraland again. We have determined that we do not know how many users the site actually has. But even looking at the relatively small number of “active wallets”, the platform is still worth a frankly astronomical sum of money. How?

The advantage of Web2 is that users do not need to pay for a website to earn money. However, when users choose to deposit, the amount a user can realistically spend on a platform is quite small. Think of all the money you could spend on the additional features of platforms like LinkedIn or Twitter.

Web3 platforms usually do not have these caps. In November 2021, a single investor reported holding over $350,000 worth of digital land in Decentraland. From a conventional operational standpoint, these “whales” can easily subsidize the users who access platforms without paying in.

Remember that much of the infrastructure and costs of Web3 platforms are essentially paid for and maintained by the users themselves. Users verify the transactions, pay the transaction fees, and in most cases even create digital goods that are bought and sold on the platform.

This is the ideological goal of Web3. It also explains how a platform can run profitably with small percentages of paying users.

A world all to yourself?

As a visitor to a Web3 platform, it’s usually pretty easy to see how many people are around. Most Web3 platforms are pretty good at showing you how many people are in a world before you enter.

If you want to get your bearings without judgement, or just explore a place on your own, you can usually find time to do so. But you can almost always find a virtual room with a few other residents.

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