Top 5 Metrics to Grow Your Blockchain
Your blockchain startup is a business like any other — if you’re looking to create value, you’ll need metrics that generate actionable insights, guide your decisions, and ultimately drive growth. So where should you start?
At Flipside, we’ve ingested and transformed over 50 public blockchains’ on-chain data for better analytics. We label every actor (centralized exchanges, users, validators, Dapps, etc.) and every transaction that happens on-chain, so blockchain organizations can gain the clarity they need to grow their network.
In this report we outline the 5 metrics that we found matter most for the success of blockchain platforms.
- Segmented On-Chain Volume
“The metrics I use to measure growth are the number of merchants that sign up to use Utrust as a method of payment, and the volume of transactions on our platform” – João Gomes @ Utrust.
Everyone tracks daily on-chain volume. That’s a given.
But the key to deriving actionable insights from this metric is to segment volume in terms of the different kinds of activity that are happening in your network.
For instance, if you are focusing resources towards growing a specific use case, seeing the proportion of volume going towards that use case over time is crucial to understanding which growth strategy is driving the right outcome.
Then you can compare that to the proportion that is going towards (1) chain operations and (2) base currency transfers.
The chart below, taken from Algorand’s Community Console, breaks down the total volume going to ‘Top Holders’ (accounts that hold at least 275,000 ALGO tokens) in terms of stakeholders. The right side of the bowtie reveals where these large accounts are sending their tokens to.
- Dapp Activity
Decentralized applications (Dapps) are what developers build on your platform, which in turn drives value to your network. Being able to track how many Dapps exist on your blockchain, and how much value they hold, is key to growing your network.
Like volume, it is common to count the number of Dapps active on a platform, but there is so much more to a healthy Dapp ecosystem. For example, it is also crucial to understand Dapps’ retention rate. That is, you want to know what percentage of addresses have remained active over time, so you can discern Dapps that are nothing more than short lived hype from Dapps that are driving long term value. With this knowledge you can reward developers based on the Dapps that prove to have a real use case.
This is the metric that your community cares about the most — we know this from the surveys we’ve done on social. So a good idea might be to make it public (view the Flipside Data Cooperative — a transparency initiative) so that your community can see the real volumes of flows to Dapps and the rest of your ecosystem, differentiating your chain from scams.
- Staking Metrics
(For Proof-of-Stake Chains)
“We look at things such as community growth, how much is being staked, and delegation.” – Maryam Mahjoub @ Cardano
How much of your token supply is currently being staked, and how that percentage is changing over time, are important metrics to understand the price movements of your token, as well as the health of your ecosystem as a whole.
It’s also important to track how much of a given chain’s transfer volume is dedicated solely to staking and operating the chain. If this proportion is too high, it could be an indication that the network is not yet succeeding in attracting developers who build Dapps, and users who transact on them.
At the same time, you want to ensure that your blockchain’s validators are being fairly rewarded fairly and have an incentive to keep contributing. This can be assessed by looking at the percentage of the staked balance each validator is receiving, and the percentage of the total blocks they processed, and determine if the two correlate.