Despite the development of increasingly advanced and numerous decentralized apps (dApps) on the platform, research suggests that Ethereum has a serious user retention problem.
As it turns out, people are less likely to stick with the blockchain than they are with the average Web2 mobile app.
According to research by Token Terminal , between August 2015 and September 2023, the average retention rate for Ethereum users was just 16.3% after a month. After a year, that figure falls to as low as 7%
Looking at different Ethereum-based dApps, although specific retention rates diverge, the overall pattern is repeated across the board.
For instance, the dropoff rate for the decentralized exchange Uniswap was even worse than for Ethereum as a whole. On average, just 5% of Uniswap users were still using the platform a year after first signing up, Token Terminal data shows.
Ethereum’s high user churn contrasts with the retention rates observed among standard mobile apps. According to Geckoboard , on average, mobile apps have a 30-day retention rate of 42%. For the best-performing apps, that figure rises to 66%.
But what are Ethereum dApps doing wrong? Could a poor user experience be holding the network, and a move to blockchain-based apps, back from greater adoption?
Of course, there are some great Web3 dApps with an exceptional user experience. But to date, the most popular Ethereum-based applications have been designed for web browsers, or as standalone pieces of software.
In contrast, mobile apps have changed the way people access digital tools. And some of the most popular Web2 applications today are designed to be mobile first.
Thanks to Apple’s App Store and Google Play, downloading new apps to a smartphone is almost always simpler than installing new software on a computer or configuring a new browser extension.
In addition to offering a more streamlined onboarding experience, people find it easier to integrate mobile apps into their daily routines once they download them.
For developers, there is no better way to build an active user base than making an application accessible from a device that most people carry around in their pocket.
So, maybe Web3 apps don’t have a user experience problem as much as they have a mobile problem.
In defense of blockchain developers, mobile ecosystems have hardly welcomed them.
For example, in the US, Congress deemed Apple’s developer guidelines hostile enough to warrant investigation by the House Subcommittee on Innovation, Data, and Commerce.
At issue are App Store guidelines that impose a 30% levy on gas fees tied to NFT transactions.
Major blockchain developers, including Coinbase and Axie Infinity, have long objected to the policy, which they argue invalidates their business model and makes it nearly impossible for them to offer their apps in an iOS-friendly format.
In the case of Coinbase, Apple’s policy forced the firm to suspend NFT transfers for its iOS wallet users.
Meanwhile, to comply with the App Store guidelines, Axie Infinity had to dramatically redesign its platform for iPhone users, who can only play a “lite” version of the game without NFT functionality.
For Android users, on the other hand, Google only recently moved to embrace blockchain integrations and in-app NFTs.
Despite recalcitrance from mobile ecosystem gatekeepers, slowly but surely, Web3 is going mobile.
With new, mobile-focused Ethereum apps being developed all the time, alongside advances in blockchain-focused hardware , the greater integration of Web3 applications into mobile devices and networks looks almost inevitable.
And once everyone can easily access tools and services built on Ethereum from their smartphones, perhaps the blockchain’s dismal track record for user retention will improve.