What Is a ‘User’ in Web3?
Reading Time: 5 minutesUsers play a crucial role in Web3. But what does it mean to be a ‘user’ and how is it different from a Web2 ‘user’?
How many users does the average Web3 platform have? If you’re curious, you’re not the only one. A recent peak of how many users some Web3 platforms have got even more people wondering. But, the reports may have also opened up a whole new question: What does it mean to be a ‘user’ in Web3?
Why Are User Numbers Important?
From a consumer standpoint, depending on the platform or game, high user numbers might 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 diner. Of course, if you’re playing rounds of social games, you might like to see the squad switched up now and then.
Many Web3 platforms are open worlds. Open worlds with low users (and no NPCs) can feel pretty empty and might even discourage return visits to that platform.
However, some Web3 platforms are built on open worlds that are so large that visitors use a map to teleport where they want to go. The number of users in a specific location for a specific event might be high even if general daily platform use is low.
For investors, on the other hand, user numbers are really important. Users generate revenue, so if a site doesn’t have users, investors might not have faith in the platform. This can form a Catch-22: low user numbers mean investors don’t invest. Investors not investing means the platform can’t improve. The platform not improving means that user numbers never go up.
Remember one important thing, however. This is Web3. ‘Investors’ aren’t people wearing top hats and monocles who live at the bank. Anyone can be an investor in Web3.
How Many Users Does the Average Web3 Platform Have?
It might not be fair to suggest that there is such a thing as an ‘average Web3 platform’. However, Decentraland might be one of the most ready examples.
In addition to some of the big names including José Cuervo and J.P. Morgan having open offices on the platform, it is home to a number of online events. In November of 2021, the virtual land that the site was built on was estimated to have a value of almost $1.5 billion. But, how many people actually use the platform?
According to Dapp Radar, a sort of app store for decentralized applications including Web3 platforms, the platform’s daily active user base is about 770 people. To put that in 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 thought that the Decentraland numbers reported by Dapp Radar seemed low, particularly given the high valuation of the platform. Are those numbers off?
How Many Users Does the Average Web3 Platform Really Have?
With 770 people, Decentraland ranks 8th among social Web3 apps available on Dapp Radar. As of this writing, DSCVR is ranked 220th 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 web2 site like Reddit, but respectable.
The company’s CEO, Rick Porter, explained the situation to emerging technology analyst Tom Ffiske. Dapp Radar doesn’t actually report users. It reports ‘Unique Active Wallets’ – cryptocurrency wallets where users have the option to connect to Web3 platforms to unlock certain features and potentially buy goods within the platform.
According to Porter, the vast majority of DSCVR users don’t choose to connect their wallets. And, even when they do, they’re not necessarily using their 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 then never actually spend any money.
Dapp Radar (or anyone else) can track how many unique active wallets are interacting with a Web3 application because all blockchain transactions are transparent. However, when it comes to users that aren’t making blockchain transactions, we’re back in the Web2 days of just taking 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 use by ‘visitors’ or some other label? If you don’t connect your wallet to a Web3 platform, are you really ‘using’ Web3?
That may sound like a weird litmus test question to count people out. However, some Web3 platforms have users sign in with their wallets as a form of identity verification.
That means, if you don’t sign in with your wallet, you’re using the site in a sort of spectator mode. Further, connecting a wallet across Web3 apps often allows them to work together in ways arguably characteristic of Web3.
More importantly for the platforms themselves, most Web3 applications don’t make money from advertising in the way that Web2 applications do. Web3 platforms don’t typically make money from people passively viewing content – they make money from people paying them, which requires connecting a wallet.
So, how many ‘users’ do a Web3 platform need to succeed?
How Many Users Does a Web3 Platform Need?
Let’s look at Decentraland again. We’ve established that we don’t know how many users the site actually has. But, even looking at the comparatively small number of ‘active wallets’ the platform is still worth a frankly astronomical sum of money. How?
The upside of Web2 is that users don’t need to pay for a site to make money. But, when users do choose to pay in, the amount that a user can realistically spend on a platform is fairly small. Think about all of the money that you could manage to spend on the additional features of platforms like LinkedIn or Twitter.
Web3 platforms don’t usually have these caps. In November of 2021, a single investor reported holding over $350,000 worth of digital land in Decentraland. From a conventional operating standpoint, these ‘whales’ can easily subsidize the users who access platforms without paying in.
Keep in mind that a lot 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, they even make digital goods that are bought and sold on the platform.
This is the ideological goal of Web3. It also explains how a platform can profitably run with small percentages of users paying up.
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 about 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 solo, you can usually find time to do that. But you can almost always find a virtual space with a few other occupants.
Reference: https://www.makeuseof.com/what-is-user-in-web3/
Ref: makeuseof
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