Arbitrum DAO has invested millions into user incentive programs, yet struggles to maintain user retention, according to recent insights from a Web3 marketing studio.
Arbitrum (ARB) DAO has faced criticism regarding its user retention capabilities. On April 4, a marketing firm focused on crypto and Web3 revealed significant shortcomings in the network’s incentive strategies.
According to the agency, Arbitrum DAO has invested heavily in incentive programs aimed at boosting user engagement, total value locked (TVL), and transaction volume. However, these initiatives have shown a concerning trend: the gains realized were fleeting, with metrics dropping sharply after the programs concluded.
Amid these concerns, the firm highlighted critical issues such as insufficient off-chain marketing efforts, poor tracking of key performance metrics, and minimal analysis regarding the return on investment of these campaigns. A recent survey indicated that only 21% of protocols had an understanding of their customer acquisition costs.
“The gains were short-lived. Metrics dropped soon after the campaigns ended,” remarked the marketing firm on the effectiveness of incentive programs.
Notably, none of the survey participants reported awareness of their users’ lifetime value, a crucial metric for assessing marketing success.
Need for Enhanced ROI Tracking
To address these issues, the agency recommends that projects with funding establish defined performance metrics to ascertain which incentives prove most effective and to evaluate their return on investment. This approach was part of a recent Arbitrum DAO proposal, which ultimately did not pass.
Arbitrum initially launched a short-term incentive program, distributing 50 million ARB to active projects in January 2024. To ensure more sustained support, the community approved a long-term incentive pilot program.
Currently, Arbitrum’s total value locked has seen a decline from its peak of $3.454 billion on December 14, now sitting at $2.422 billion. The ARB token has also experienced a significant decrease, down 86.94% from its all-time high of $2.40 achieved on January 12.
