Assessing User Quality Using Aggregated, Not Isolated, Data
When creating a sustainable on-chain ecosystem, it doesn’t make sense to optimize any single user action. What’s needed is context – a way to quantify not just everything users are doing, but how and why it matters. One promising approach to achieve this is to aggregate user behaviors into five core categories:
- Transaction Activity, ranging from spot trades to smart contract interactions.
- Token Accumulation in the medium-to-long-term, and other “investment” behaviors.
- DeFi Engagement for activities like staking, lending, and liquidity provision.
- NFT Activity such as minting, trading, and utility-driven interactions.
- Governance Participation to quantify DAO or protocol governance contributions.
Crucially, these metrics should not be treated equally. A better approach is to weigh and combine them using a Bayesian model to generate a single top-line "score." Unlike traditional scoring systems that rely on static thresholds or simple averages, this lets us incorporate both prior knowledge (what we expect from an "average" wallet) and new evidence (actual activity observed on-chain). These dynamic, multi-variate scores are much harder to game and therefore more likely to reveal accurate, actionable insights.
What the Data Tells Us About 2024
The above approach provides a fresh perspective on each chain’s user activity through 2024. Let’s zoom in on some of the more surprising findings.
Solana (the top light blue line that peaks at ~2.75) attracted a huge share of high-quality users between February and mid-March, but engagement quality has fallen since. Interestingly, this downslide coincided with SOL’s first price and trading volume spike of 2024, and has continued through the current memecoin mania. Repetitive actions have diminishing returns when assessed using a Bayesian model, meaning multiple token swaps yield smaller score improvements than engagement across multiple types of activities, for any given wallet. This suggests most Solana users are currently engaged in a narrow range of on-chain activities that aren’t contributing to Solana’s multi-sector growth.
As for Ethereum supporters (the bottom orange line that begins at just above 1) who expected this year’s ETH ETFs to be a game-changer, the numbers paint a different picture. Ethereum’s low and stable user score through H1 2024 suggests that this year’s bullish developments did not spur broader ecosystem participation such as DeFi activity and protocol governance.
It’s also worth noting that Axelar (the dark blue lines that begins at 2.5) had the most active users across the broadest range of on-chain activities relative to its total user base, according to the data. While Axelar is currently much smaller by TVL than the legacy chains dominating today’s headlines, this is an intriguing signal that warrants closer inspection — and would have been missed if we were looking at market cap or trading volume alone.
Predictions for 2025
With that said, what does each chain’s user quality track record tell us about next year?
For starters, it’s clear that Solana faces significant challenges and opportunities entering 2025. The chain’s trajectory depends on its ability to retain its massive casual user base and expand their range of on-chain interactions. Failure to do so could result in a significant slump once memecoins cool off — although data from early 2024 suggests the chain has a large contingent of quality users that will endure regardless of what happens short-term.
2024 demonstrated Axelar’s ability to attract a concentrated user base engaged in diverse, sustained on-chain activities, rather than speculative surges. Now, Axelar’s challenge will be upscaling its ecosystem without diluting the quality of its user base. This may involve prioritizing high-profile partnerships to unlock new audiences while creating more newbie-friendly onramps across its dApp ecosystem.
Ethereum’s fragmentation has shifted many active users to its faster, cheaper L2 ecosystem, and so we may see mainnet activity increasingly consolidate around core features protocol staking and governance. These activities are critical for the broader EVM ecosystem, but this trajectory may be penalized by scoring systems that reward diverse on-chain engagement.
A Better Way to Define, and Drive, On-Chain Growth
Web3 has spent too long chasing the wrong metrics and failing to view the data in aggregate. In 2025, the winners will be those who find multivariate ways to measure — and act on — what matters most: user quality.
By incorporating new scoring methods into their dashboards, on-chain intelligence platforms can provide more meaningful insights to investors and industry observers. At the same time, Web3 builders can use these scores to clarify top priorities and drive user engagement and value creation. Ultimately, this will help the entire industry shift away from hype-driven narratives to data-backed strategies that unlock the full potential of Web3 in 2025 and beyond.
Conclusion
The data-driven approach to assessing user quality on-chain provides a fresh perspective on the Web3 ecosystem. By combining multiple metrics into a single "health index" score, we can identify which chains are truly thriving and poised for long-term growth. As the industry moves beyond the hype, reliable, data-driven signals of success are no longer optional — they’re essential.
FAQs
Q: What is the purpose of aggregating user behaviors into core categories?
A: Aggregating user behaviors into core categories provides context and helps quantify not just everything users are doing, but how and why it matters.
Q: What is the benefit of using a Bayesian model to generate a single top-line score?
A: A Bayesian model incorporates both prior knowledge and new evidence, making it harder to game and more likely to reveal accurate, actionable insights.
Q: What does the data suggest about Solana’s user engagement quality?
A: The data suggests that Solana’s user engagement quality has fallen since its initial spike in February and mid-March, with most users engaged in a narrow range of on-chain activities.
Q: What does the data suggest about Ethereum’s user engagement quality?
A: The data suggests that Ethereum’s user engagement quality has remained low and stable through H1 2024, with no significant increase in ecosystem participation.
Q: What does the data suggest about Axelar’s user engagement quality?
A: The data suggests that Axelar has the most active users across the broadest range of on-chain activities relative to its total user base, with a concentrated user base engaged in diverse, sustained on-chain activities.
