From airdrops to ecosystems: how Ethereum L2 networks can construct person loyalty

Ethereum Layer 2 (L2) networks have change into important options to blockchain scalability points. As these networks compete for market share, incentive packages – primarily airdrops and subsidies – have change into important to development methods. Even when the allotted assets are immense, their effectiveness stays underneath surveillance.

The scope of the analysis

This evaluation focuses on two important incentive mechanisms: airdrops and subsidies. Utility-specific incentives, reminiscent of liquidity mining, are excluded to make sure a transparent concentrate on L2 ecosystems. The information extends from 2021 to December 2024, with the primary metrics being:

1. Month-to-month lively customers (MAU): Reflecting sustainable person development.
2. Income technology: Consider the return on funding of incentive packages.

Key observations

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

An examination of MAU developments amongst main L2 options reveals important disparities:

• Base has demonstrated constant development, with a median MAU improve of 56% per 30 days, far outpacing different L2 networks.
• Arbitration And Optimism confirmed slight will increase after the airdrop, aided by subsidies.
• Newer L2s reminiscent of The zkSync period And Starknet skilled massive drops in MAU after the airdrop.

Key data:

1. The proliferation of recent L2 options dilutes person exercise on networks. For instance, zkSync Period's MAU dropped 32% within the three months after its launch.
2. Ecosystems with sturdy grant packages, like Arbitrum and Optimism, retain customers higher, sustaining MAUs at over 300,000 in the newest quarter.
3. Cultural elements, as seen with Base, play a central function in sustaining engagement with out symbolic incentives.

2. Incentive earnings and prices

Evaluation of the cost-effectiveness of incentives in L2s reveals hanging contrasts:

• Base: For each greenback spent on incentives, $50 in income was generated, the best among the many L2s studied.
• Optimism: Maintained a constructive income/price ratio in its early days, however noticed diminishing returns with successive drops.
• Arbitration: Struggled to generate income, with $100 in incentives producing solely $8 in income.
• zkSync Period vs Starknet: Generated lower than $0.10 for each greenback spent on airdrops, reflecting poor profitability.

3. Incentive prices per person

The associated fee per person on L2 networks has three distinct fashions:

• Efficient fashions: Base maintains a value per person under $0.10, primarily because of the absence of a token and the strategic use of subsidies.
• Reasonably environment friendly fashions: Optimism, with a value of $304 per MAU, combines recurring grants with multi-stage airdrops.
• Ineffective fashions: Starknet's price per person exceeds $11,000, the results of speedy person decline after the airdrop.

Why new L2s fail to retain customers

1. Overreliance on airdrops: Airdrops typically appeal to short-term speculators fairly than long-term customers. For instance, 65% of preliminary zkSync Period customers stopped all interplay inside two months of its launch.
2. Lack of ecosystem growth: New L2s typically lack a sturdy utility layer, making it troublesome to retain customers. In distinction, Optimism and Arbitrum host over 50 very helpful dApps, considerably enhancing retention.
3. Cultural and neighborhood elements: Base's concentrate on neighborhood occasions and person expertise has cultivated belief and engagement, even with out token-based incentives.

Suggestions for efficient incentive methods

1. Undertake multi-stage launch fashions: Like Optimism, staggered releases linked to ecosystem participation can promote lasting engagement.
2. Spend money on builder grants: Directing assets to builders helps create a thriving dApp ecosystem, as demonstrated by Arbitrum's assist for GMX and Aave.
3. Concentrate on cultural growth: Robust neighborhood tales, as Base demonstrates, can construct person loyalty even within the absence of direct financial incentives.
4. Monitor profitability: Usually consider prices per person and regulate methods to optimize ROI. Base price <$0.10 per person needs to be an business benchmark.

Conclusion

The information spotlight that efficient L2 incentive methods require a stability between short- and long-term mechanisms. Whereas airdrops are helpful for preliminary person acquisition, subsidies and cultural investments are important for retention. Networks like Base and Optimism illustrate this method, providing worthwhile classes for brand spanking new L2 options searching for to construct sustainable ecosystems.