Starting a Business in the Consumer Crypto Sector: What No One Tells You

Original Title: What mom hasn't told you about building in consumer crypto

Original Author: Mac Budkowski

Source: kanfa

Translation: Zhou, ChainCatcher

Due to the length of the original article, the editor has compiled it while trying not to alter the author's original logic.

 

In the past two or three years, many people have equated growth with PMF. But in the consumer crypto track, this equation is most likely to fail: the growth you see may just be a magnifier for speculation, word-of-mouth support, or cyclical dividends. What truly determines life or death is retention and real usage motivation, and whether you can generate stable and reusable signals in a small, fragmented market constantly distracted by tokens and zombie projects.

I. Why do signals get distorted?

1) Revenue can also be a "false positive"

After Farcaster launched its Pro subscription, it generated over $1 million in revenue within 24 hours. This sounds like PMF, but a closer look at the data reveals that nearly half of the buyers had fewer than 100 followers, which doesn't match the "heavy user targeting." One reason is speculative motivation—early buyers received about $600 in airdrop rewards the next day, a 5x return in 24 hours. The result: money comes in, but validation may not. In the crypto environment, such external incentives can always make the dashboard look bright, but contribute little to the product's intrinsic value.

2) Well-intentioned payments do not equal real demand

Kiwi required the purchase of a $10 NFT pass in its early days, naturally attracting a group of paying users, including celebrities. But a later review found that a significant portion paid out of support for friends, value alignment, or simply because spending network money didn't hurt. In other words, payment does not equal retention, let alone hitting core value.

3) Cyclical dividends are a double-edged sword

If you built an NFT exchange in 2020, you might have been naturally pushed forward by the wave; but repeating the same path in 2025, the environment is completely different. When your curve rides on external hype (rather than intrinsic product value), the faster you rise, the faster you may fall.

4) Attention is hijacked

There are a large number of zombie projects in the crypto world. Founders leave the community, but users still stick to Discord and token narratives, unwilling to shift their attention. Add to this the pull of token prices on human nature: during the 2024 Base chain meme coin frenzy, many knowledge/tool products saw usage decline—for the same 15 minutes, do you read a long-form decentralized article, or look for the next 100x? Most people choose the latter.

II. Why is consumer crypto inherently harder?

1) Small market, low penetration

Ethereum (mainnet + L2) has about 40-50 million monthly active addresses; even assuming one person per address (which is clearly not the case), global penetration is still less than 1%. A small sample means noise is more likely to dominate than signal.

2) Complex user base, mutually exclusive preferences

Developers, speculators, artists, researchers, TradFi people are distributed across different L1/L2s, and their feedback naturally conflicts: some want technical depth, some want artistic aesthetics, some want light entertainment. The more you try to satisfy everyone, the easier it is to lose focus.

3) Early adopters love novelty

They are willing to try new things despite poor UX, which is a bonus; but they will also turn to the next shiny thing the following week, which is the cost. High trial rates do not mean high stickiness.

III. The correct understanding of PMF: Growth × Retention

PMF is not just about growth, but also retention. If users come in and leave, and never return, the faster the growth, the faster the market burns—download and revenue numbers can be deceiving; revisit, next-day/week/month retention, and active structure are the real waterline.

Twitch got 16 million downloads in four months in its early days, but the founder still said there was no PMF; the reason was low retention.

IV. Actionable countermeasures: from "noise reduction" to "focus"

Points, referral rebates, tradable tickets, predictable airdrops... all can lead people astray. In the early signal-finding stage, try not to use these. Kiwi once saw a surge in registrations due to "a certain influencer claiming there would be an airdrop," but there were very few long-term users, so it was eventually shut down.

Use karma/leaderboards/public acknowledgments to incentivize quality content and continuous contributions; use clear content standards and minimal governance rules to weed out low-quality and farming behavior. When necessary, check on-chain history to distinguish between newbies who haven't read the rules and farmers.

Telegram/Discord group chats are more likely to get instant feedback than email. Collect issues based on creator/commenter/lurker three-layer structure and adjust features accordingly:

Not enough content → Build a one-click submission tool;

Thin interaction → Enhance comment editor/reply preview/emojis;

High reading threshold → Optimize loading, information density, and sorting.

Larry Page's so-called toothbrush product—used 1–2 times a day, solves a clear small pain point. Pile resources on this one action: daily use → daily feedback → daily iteration. Fancy pages and long-tail features that don't affect core value should be cut if possible.

Let users feel value in seconds: comment previews, key point summaries, charts/memes, etc.; keep in-depth long-form content, but make the entry and reward curve more user-friendly. Instant gratification + long-term value are not in conflict.

Rather than convincing your mom to use a DeFi aggregator, start with the veteran who does 5 trades a day. High match → high retention. Offline ETH conferences, hackathons, professional podcasts, ENS/Gitcoin communities are all high-density crowds—acquisition is expensive, but the signal is clean.

Aave once contributed tens of millions of dollars in fees with about 25,000 monthly actives; Blur targeted "professional traders" and achieved results even when "everyone was bearish on NFTs." A small number of the right users > a large number of general users.

Privacy was still niche in 2022, but a few years later Railgun achieved considerable revenue; OpenSea occupied mindshare before NFTs became the Next Big Thing. Pick a theme you firmly believe will grow, and invest in it patiently for the long term.

NBA Top Shot used league IP to make ordinary users willing to buy their first NFT; Polymarket leveraged social media tactics + election predictions + creative betting topics to reach a larger circle. If you go mainstream, it is still recommended to focus on 1–10 million users, keeping costs, feedback, and risk within manageable limits.

Consumer products need to be controllable in data, push notifications, and stability; PWA can be a transition, but not a long-term solution.

V. A "self-checklist"

Metrics: Are you focusing on retention/revisit/frequency/active structure, rather than just growth and revenue?

Motivation: Behind new users/payments, is it love for the product or expectation of returns?

Incentives: Have you introduced points/rebates/tradable assets that increase noise? Can you turn them off?

Users: Who are the core 100–1000 users? On which channels, in what scenarios, and with what pain points are they highly relevant?

Value achievement: How long does it take for users to feel "worth it" after opening the product? Can you cut that time in half?

Focus: Does the team make at most one change per week that improves the "toothbrush action"?

Channels: Are you putting resources into small, dense, high-signal channels, rather than just trying to go mainstream?

Organization: Is there a clear closed loop between product, growth, community, and support to handle feedback and data?

Conclusion: Fight instead of training, don't wait for the perfect combination before taking action

Finding signals is more like art than science. You can cultivate taste and judgment, but no one can accurately predict which song will top the charts. What really matters is: get your product in front of users as early as possible, calibrate direction through real friction; when you can consistently answer the growth × retention equation, PMF will naturally emerge.

—In consumer crypto, don't be fooled by growth and revenue. Reduce noise, focus, iterate daily, use high-match users + toothbrush-type actions + short TTV, and in a small, fragmented market, solidify retention before talking about growth.