Everyone's obsessed with one question: what metric should I follow for my project? Well, even we had to learn the hard way that solely tracking Total Value Locked (TVL) might not be the best strategy, especially when the market turns bearish.

So here's a collection of metrics to consider:

1. Collection Rate (CoR): Forget about Click-through rate (CTR); CoR, coined by yours truly, is the new metric to watch. With onchain publications flourishing, the idea of collecting is making a comeback. Mirror.xyz started it, but CoR takes it further by tracking the direct monetary impact of your content. Instead of directing users to a web page with another "Collect" button, take them straight to the end of the tunnel and ask for their money, nicely.

1. Net HODLR Score (NHS): For all the Brits reading this, it's not what you may think. The Net HODLR Score measures how many of your new users are holding or staking your token versus dumping it. Announcements often rave about the percentage of tokens locked up after a Token Generation Event (TGE), but how do you measure this? 👀

   Simply use tools like Glassnode and HodlWave alternatives to easily track the desired asset's Net HODLR Score.

1. quality Daily Active Users (qDAUs): qDAUs are almost synonymous with Farcaster's true metrics, moving beyond vanity metrics like Twitter impressions. Introduced with active badges (later replaced by power badges), qDAUs help distinguish legitimate users from spammy accounts. To qualify for an active badge, a user had to meet several criteria: a complete profile (display name, bio, profile picture), a connected Ethereum address, at least 100 followers, an account older than 7 days, and at least one inbound reply and reaction in the last 30 days.

Projects looking to harness a more genuine audience can take advantage of Farcaster's qDAU metrics and use them for growth via channels to see who's actually a power user and big believer in the project—something Laura and I have specialized in when tracking Farcaster engagement.

1. Monthly Active Developers (MAD): Developers are a critical metric to track in the web3 space. With over 20,000 active developers, resources are limited, and not every network gets equal attention. If you're an ecosystem lead or working in developer relations, tracking the number of monthly active developers can help you understand the level of active development on your network.

1. Transaction volume: Transaction volume is often a more revealing indicator than TVL or the number of Unique Addresses. While TVL might show $5 million during a bull market, equivalent to three times the value in ETH during a bear run, transaction volume measures the actual number of transactions over a specific period. This metric provides a clearer picture of your project's current momentum and user engagement.

1. Transaction Value Enabled (TVE): One metric that you hear very rarely of is TVE. A web3-specific metric, TVE measures "the aggregate monetary value of transactions facilitated by a protocol over a given time period", per Chainlink. TVE is calculated by summing the USD value of each transaction that passes through a protocol during a specified period. For example, if someone borrows $50 worth of ETH on Nostra and a Chainlink Price Feed is used to determine the price, the TVE of the transaction would be $50.

   So, what's the difference between TVE and Total Value Secured (TVS)?

   While TVS provides a snapshot of the value secured by main web3 infrastructure at a specific moment, TVE is a flow metric that captures the value of activities over time. This makes TVE an advanced metric that offers more meaningful insights into the Web3 ecosystem, reflecting ongoing economic activity rather than a single point in time.

1. Referral Rate (RR): You can use the Referral Rate to measure the effectiveness of your referral program by calculating the percentage of users who recommend a protocol's products or services to others. Widely used by trading, insurance, and staking platforms, referral programs have been known to significantly boost trading volume and overall revenue.

   For instance, platforms like GMX and InsurAce employ 10-30% revenue sharing from referred users, demonstrating the powerful impact of a well-executed referral program.

   In the web2 space, the global industry standard for referral rates is 2-3%. However, we're currently conducting an upcoming case study to provide more accurate numbers for the web3 space. Help us create the first industry-standard expected referral rate in web3 by filling out this anonymous form with your metrics.

1. Lifetime Wallet Referral Value (WRV): Often referred to as Customer Referral Value in the web2 space, calculating Lifetime Wallet Referral Value involves a few key steps. First, determine the value transacted of a referred wallet, which can include trading, staking, borrowing, or locked asset value. For networks, it might also translate into the mining value accumulated in a wallet based on user activity.

   How much revenue will referrals bring to your protocol? Here’s the formula illustrated:

Wallet Referral Value = [Single Transaction Value of Referred Wallet x # Times Referred Wallet has Transacted on the Protocol] – Average Cost of Referral Incentive

If you wish to calculate this on an annual or quarterly basis, use the following formula:

Net [Annual] Revenue from Referred Wallets = Total Revenue from Referred Wallets – [Annual] Cost of Referral Program

For example, for a protocol with $1,000,000 in total revenue from referred customers and $350,000 in annual referral program costs, the net annual revenue from referred customers would be: $1,000,000 – $350,000 = $650,000.

1. Wallet Lifetime Value (WLTV): Yep, I've just made LTV more web3.

   Wallet Lifetime Value (WLTV) = [Average Transacted Value of a Wallet x Transaction Frequency of a Wallet] – Wallet Acquisition Cost

   Let's break down the calculation of Wallet Lifetime Value (WLTV) with a practical example. Suppose a wallet has an average transacted value of $10,000, an annual transaction frequency of 3 on a specific protocol, and an average acquisition cost of $5,000. The WLTV would be calculated as follows:
   
   [10,000 x 3] – 5,000 = 30,000 – 5,000 = $25,000.

   Engagement timelines in web3 can be much shorter wallets transacting on emerging protocols more during periods of hype. For DEXes like Uniswap, calculating transaction frequency on an annual or quarterly basis is valid since it is a go-to platform for token swaps.

1. Wallet Referral Success Rate (WRSR): This key metric helps you understand the longevity of referred wallets. It measures the percentage of referred wallets that remain active after 6 months. You can calculate this for the overall referral program or for each referrer wallet to determine the quality of the affiliate.

   Wallet Referral Success Rate = (Number of Active Referred Wallets After 6 Months / 
   Total Number of Referred Wallets) × 100

For those wondering why we haven’t included metrics like the unique number of addresses, TVL, impressions, or likes, it's because these metrics don't fully capture how valuable the protocol is to the community or how seriously the community is invested in the project.

Collect our newsletter & if we reach 10 collects (it's FREE), we'll write the Decalogue of Flawed Growth Metrics Used by Web3 Marketers.

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