Starting a Business in the Consumer Cryptocurrency Space: Things No One Tells You

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

Original Author: Mac Budkowski

Source: kanfa

Compiled by: Zhou, ChainCatcher

Due to the length of the original text, the editor has compiled it while trying to maintain the author's original logic.

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

1. Why do signals become 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. It sounds like PMF, but a closer look at the data reveals that nearly half of the purchasers had fewer than 100 followers, which does not match the "heavy user targeting." One reason is speculative motivation—early buyers received about $600 in airdrop returns the next day, a 5x return in 24 hours. The result is: money comes in, but verification may not. In the crypto environment, such external incentives can make the dashboard look bright at any time, but contribute little to the product's intrinsic value.

2) Goodwill payments do not equal real demand

Kiwi initially required a $10 NFT pass for purchase, which naturally led to a batch of paying users, including celebrities. However, a retrospective analysis found that a significant portion of these users were motivated by friend support, value alignment, or a lack of concern for spending online money. In other words, paying does not equal retention, let alone hitting core value.

3) Cyclical dividends are a double-edged sword

If you were running an NFT exchange in 2020, you might have been naturally carried along by the wave; however, repeating the same path in 2025 would be a completely different environment. When your curve rides on external hype (rather than the product's intrinsic value), the faster it rises, the faster it may fall.

4) Attention is hijacked

The crypto world is filled with numerous zombie projects, where founders exit the community, yet users cling to Discord and token narratives, unwilling to shift their attention. Adding to this is the influence of token market conditions on human nature: during the meme coin frenzy on the Base chain in 2024, the usage of many knowledge/tool products declined—given the same 15 minutes, would you read a decentralized long article or look for the next 100x? Most people would choose the latter.

2. Why is consumer crypto itself more difficult?

1) Small market, low penetration

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

2) Complex demographics, conflicting preferences

Developers, speculators, artists, researchers, and TradFi people are distributed across different L1/L2, leading to naturally conflicting feedback: some want technical depth, some want artistic aesthetics, and some want light entertainment. The more you try to satisfy everyone, the easier it is to lose focus.

3) Early adopters love to switch to new things

They are willing to try new things under poor UX, which is a benefit; but they will also turn to shinier new gadgets the following week, which is a cost. A high trial rate does not mean high stickiness.

3. The correct understanding of PMF: Growth × Retention

PMF is not just about growth; it is also about retention. If users enter the store and leave without returning, the faster the growth, the faster the market burns—download and revenue numbers can be misleading; revisit rates, next-day/week/month retention, and active structure are the true indicators.

Twitch achieved 16 million downloads in four months early on, yet the founder still said there was no PMF; the reason was simply that retention was too low.

4. Executable strategies: From "noise reduction" to "focus"

Points, referral rewards, tradable tickets, predictable airdrops… all can lead people astray. In the phase of seeking early signals, try to avoid these. Kiwi once experienced a surge in registrations due to "a certain influencer claiming there would be an airdrop," but long-term users were very few, ultimately leading to a direct shutdown.

Use karma/leaderboards/public acknowledgments to incentivize quality content and continuous contributions; use clear content guidelines and minimal governance rules to eliminate low-quality and exploitative behavior. If necessary, check on-chain history to distinguish between newcomers who haven't read the rules and farmers.

Telegram/Discord group chats are easier for getting casual feedback than emails. Collect issues based on a three-tier structure of creators/commenters/lurkers, and address features accordingly:

Content insufficient → Create 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, solving a clear small pain point. Focus resources on this single action: daily usage → daily feedback → daily iteration. Flashy pages and long-tail features that do not affect core value should be cut if possible.

Make users feel the value instantly: comment previews, key point excerpts, charts/memes, etc.; retain in-depth long articles, but design the entry and reward curves to be more user-friendly. Immediate satisfaction + long-term value are not in conflict.

Instead of convincing your mom to use a DeFi aggregator, start with seasoned traders who make 5 transactions a day. High match → high retention. Offline ETH conferences, hackathons, professional podcasts, ENS/Gitcoin communities are all high-density crowds; acquiring customers is expensive, but the signals are clean.

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

Privacy was still niche in 2022, yet Railgun generated considerable revenue a few years later; OpenSea filled the mental space before NFTs became the Next Big Thing. Choose a theme you firmly believe will grow and invest in it patiently over the long term.

NBA Top Shot used league IP to entice ordinary users to buy their first NFT; Polymarket leveraged social media strategies + election predictions + creative betting topics to reach a larger circle. If you venture outside your circle, it is still advisable to focus on user bases of 100,000 to 1 million, keeping costs, feedback, and risks within manageable limits.

Consumer products need to be controllable in terms of data, push notifications, and stability; PWA can serve as a transition, but it won't work long-term.

5. A "self-check checklist"

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

Motivation: Behind new/paid users, do they like the product or expect returns?

Incentives: Have you introduced points/referral rewards/tradable assets that could increase noise? Can they be turned off?

Users: Who are the core 100-1000 users? What channels, scenarios, and pain points are they strongly correlated with?

Value realization: How long does it take for users to go from opening the app to "feeling it's worth it"? Can it be shortened by half?

Focus: Is the team making at most one change each week that can enhance the "toothbrush action"?

Channels: Are you allocating resources to small, dense, high-signal channels, rather than blindly expanding outward?

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

Conclusion: Practice through battle; don’t wait for the perfect combination to take action.

Finding signals is more of an art than a science. You can cultivate taste and judgment, but no one can accurately predict which song will top the charts. What truly matters is: getting the product in front of users as early as possible to calibrate direction through real friction; when you can consistently provide answers on the growth × retention equation, PMF will naturally surface.

------ In consumer crypto, don’t be misled by growth and revenue. Reduce noise, focus, and iterate daily; with high-matching users + toothbrush-like actions + short TTV, establish retention in a small, fragmented market before discussing growth.