Study finds 80% of crypto users quit blockchains within 90 days

Research conducted by Flipside indicates that blockchain networks struggle to retain casual users, with four out of five low-engagement accounts becoming inactive within three months.

The study sheds light on the harsh reality of blockchain ecosystems, revealing that user retention is alarmingly low. Data from Flipside, analyzing user behavior across networks like Solana, Ethereum, Arbitrum, and Avalanche, demonstrates that the majority of users lose interest quickly unless they were already highly active initially.

Flipside delved into how wallets behave over time, categorizing users into low-value (scores 0-3), medium-value (4-7), and high-value (8+) based on their on-chain activity levels. Monitoring each group monthly for six months, the study revealed the stark decline in user retention.

The retention cliff

The data unveils a clear trend: low-value users drop off rapidly within the first month, with retention rates falling below 5% after six months. In essence, 95 out of every 100 of these wallets disappear within half a year.

6-month retention rates across blockchains, segmented by score bucket | Source: Flipside

Medium-value users experience a sharp decline early on before stabilizing, while high-value users exhibit a gradual decrease, losing only 5-8% of their numbers monthly.

Retention rates vary among blockchains, with Ethereum and Avalanche showing strong retention for high-value addresses, maintaining 35-38% active after six months. Solana lags behind, and newer chains witness steep drop-offs, suggesting misleading early growth numbers.

The metric trap

The report highlights a common issue in crypto where chains prioritize inflating user numbers, leading to short-lived engagement. Real sustained activity stems from a small fraction of addresses, emphasizing the importance of quality over quantity.

“If we zoom in on the retention charts, you can see it extremely clearly: only a handful of addresses are contributing any sustained activity or liquidity volume across the major chains studied.”

Flipside

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The dilemma arises as blockchains aim for rapid adoption by focusing on user counts, although many users are transient. The report advocates for targeting high-quality users from the outset to foster genuine growth, even if it means slower initial progress.

Retention curves across all analyzed blockchains | Source: Flipside

Flipside’s research advises blockchain networks to shift focus from low-value users, as short-term incentives may boost metrics but fail to drive long-term engagement.

“It’s a hard pill to swallow, but the protocols that embrace this reality will outperform those that waste their incentives on addresses that won’t adopt them. The data clearly indicates that focusing on quality user acquisition and retention — rather than inflating address counts — represents the most sustainable path to ecosystem growth.”

Flipside

The report suggests that blockchain developers should design tokenomics and reward systems that promote prolonged participation, emphasizing sustained interaction over one-off actions for long-term growth.

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