Web3 users are identified not by their real names or personal information but by pseudonymous identities.
These identities are typically represented by their wallet’s public address or Web3 domains resolved to the public address. Users use their identities to interact with Web3 apps and platforms while maintaining a certain level of privacy.
Many Web3 proponents, like angel investor and former Coinbase CTO Balaji Srinivasan, have speculated that these pseudonymous identities will be the future of digital identities.
That means, user identities are changing. This represents a step in a positive direction as it aids the internet’s transition toward a more privacy-centric ecosystem.
However, pseudonymity presents a major challenge for Web3 marketers. While web2 platforms easily allowed marketers to assess and use user data and target marketing campaigns, the same is not possible with Web3’s pseudonymous identities. Further, the existing marketing tools are mostly of no use in the Web3 ecosystem.
However, Web3 wallets offer an alternative avenue for marketers to reach their audience in the Web3 space.
In this article, we’ll look at what Web3 wallets are, their types, the insights you can get from them, and the campaigns you can set up with that information.
What are Web3 Wallets?
Web3 wallets, also known as blockchain or cryptocurrency wallets, are user accounts that help users store and manage their digital assets and identities on the blockchain.
They also serve as a bridge between the users and the blockchain and enable them to interact with various apps on-chain. Some of the most common examples of Web3 wallets include Metamask, TrustWallet, Ledger, Trezor, and Zerion.
Web3 wallets are composed of a cryptographic public and private key pair. The public key can be shared with others to receive funds but the private key is kept confidential and used to approve transactions and login to dapps. You can think of them as analogous to a bank account number (shareable) and your internet banking ID and password (not shareable), respectively.
To conduct a transaction using a wallet, you must authorize it using your private key. Once authorized, the transaction is verified by network participants and publicly recorded on the blockchain.
Now that we’ve understood what Web3 wallets are and how they work, let’s look at the different types of wallets to better understand how they fit the Web3 marketing ecosystem.
What are Custodial Web3 Wallets?
Custodial Web3 wallets are digital wallets whose private keys are controlled by a third-party. Wallets provided by centralized exchanges like Kraken and Binance are some of the best examples of custodial wallets.
Since the user doesn’t have access to their private keys, they don’t have access to their funds and can’t approve any transactions outside of the wallet provider’s platform. That means, they can’t login to other dapps or interact with them using a custodial wallet. And we’ll explain why this matters in the later sections.
What are Non-Custodial Web3 Wallets?
Non-custodial wallets give users full control over their private keys and therefore their assets. So, when you use a non-custodial wallet, you are the only one who can access and manage your assets. Examples of non-custodial wallets include MetaMask, Trust Wallet, and Ledger.
Apart from being categorized as custodial and non-custodial wallets, we can also categorize Web3 wallets into hot wallets and cold wallets.
Hot wallets are connected to the internet and are convenient for frequent transactions. Both custodial and non-custodial wallets can be hot wallets. But they are more vulnerable to online threats.
Cold wallets, on the other hand, aren’t connected to the internet and provide an extra layer of security against online threats. They’re ideal for storing large amounts of cryptocurrencies that aren’t needed for daily transactions. Ledger and Trezor are some of the most popular cold wallets.
What Type of Wallets Can Web3 Marketers Gain Insights From?
Custodial wallets only contain deposit and withdrawal data associated with the exchange as users can’t interact with any other dapp or login to it with them. So, Web3 marketers can’t get any user insights from these wallets.
In contrast, a non-custodial wallet is controlled by the users. More often than not, users must use a non-custodial wallet to access and use a Web3 platform. And every transaction they conduct with their wallet is stored immutably on a public ledger.
For marketers, that means, if they can assess this data related to user activity, they can gain important insights into user behavior on the internet without requiring to know any of their personally identifiable information. Marketers can thus create user personas, target marketing campaigns, and attract more users with less churn.
But how exactly is that possible? Let’s take a look.
What do Web3 Wallets Reveal About Users?
Web3 wallets don’t provide granular user profiling akin to traditional marketing tools due to their pseudonymous structure. But the good news is that you don’t need ‘microtargeting’ to set up a campaign that will resonate with your target audience.
Web3 wallets still yield sufficient information to discern patterns and detect trends, and offer valuable insights to create marketing campaigns. And we’ll look at some of the insights you can get from Web3 wallets if they’ve interacted with dapps.
Preferred Protocols and Dapps
Understanding the protocols and dapps that a user frequents, and analyzing their activities within these platforms, offers valuable insights into their interests and preferences.
These insights help you develop targeted marketing campaigns, collaborations, and products that align with your users’ interests.
Let’s say you have to create a campaign to improve the liquidity on your decentralized exchange.
You analyze the wallet address of all the liquidity providers on your platform and notice some recurring patterns:
- Some users frequently interact with other DeFi protocols like Convex, Curve, and Balancer. This could mean they’re interested in maximizing yields by providing liquidity across multiple platforms.
- Others have purchased memecoins like PEPE, acquired loans from Blur Blend and purchased NFTs on the Blur Marketplace. This shows that they want to diversify their investment portfolio and participate in community-driven initiatives.
Now, to effectively market to both types of users and improve the liquidity of your decentralized exchange, you can use a wide variety of Web3 marketing strategies.
For instance, you can form strategic partnerships with these DeFi protocols and implement cross-platform initiatives that incentivize users to participate in liquidity provision on your exchange.
The tokens someone holds can serve as indicators of the type of Web3 user they are. For example, users who exclusively hold memecoins are willing to take more risks and are passionate about the internet meme culture.
On the other end of the spectrum, users with diverse holdings of DeFi and liquidity pool tokens are more likely to be seasoned crypto investors seeking to optimize their returns.
Understanding these distinct user profiles aids in tailoring marketing and engagement strategies that resonate with each group’s specific interests and preferences.
Analyzing the transaction timing of wallet addresses helps you identify when users are most active and plan the ideal time to launch campaigns or schedule social media posts.
This leads to better engagement and conversions and ensures that your content reaches your audience when they’re most active.
Analyzing the frequency of user transactions provides valuable insights into their level of engagement and activity on your platform. This helps you decide the type of campaigns you should create to engage your users effectively.
If your users have been engaging consistently with your platform for a long time similar to the image below, they are likely to be more familiar with your platform and its offerings.
So, they’ll be more receptive to adopting and utilizing advanced functionalities, and will respond positively to exclusive offers, incentives, and loyalty programs.
But if your users interact sporadically with your platform despite being familiar with how it works, you’ll have to create re-engagement campaigns to boost the transaction frequency.
Lastly, if your users’ transaction history looks like this, they’re likely newcomers who need educational content and tutorials to improve their understanding of your platform’s functionalities.
Gas Fees Paid
Gas fees are the payments users make to compensate for the computational energy required to process and validate their transactions on the Ethereum blockchain.
These fees fluctuate based on the level of network congestion — a highly congested network with increased demand leads to higher gas fees. This is because users vie for limited space within the blocks for their transactions to be processed.
Studying the gas fees your users pray provides insights into the user’s financial capabilities and indicates the level of interest and engagement in a project.
For example, some projects like the Time’s limited NFT collection generated so much demand that a user incurred 22 ETH in gas fees despite the collection itself being valued at only 1 ETH.
Wallet Balance Over Time
Analyzing cryptocurrency wallet balances and their changes over time also provides valuable insights into user behavior patterns and helps you create targeted campaigns.
Wallets displaying a high balance indicate the substantial investment capacity and willingness to engage in yield farming, liquidity provision, or the acquisition of blue-chip NFTs.
Contrastingly, wallets with dramatic fluctuations signify that their users have a higher risk appetite and are actively involved in high-risk, high-reward activities like trading.
Campaigns You Can Set Up With Insights From Web3 Wallets
Now that you know unique insights you can obtain from Web3 wallets, let’s look at how you can harness them to set up effective Web3 marketing strategies.
User Acquisition Campaign
Clipper, a decentralized exchange, presents a unique solution to mitigate the pervasive issue of impermanent loss often encountered on many DEXs. However, despite its innovative approach, the marketing team at Clipper faced challenges in consistently attracting new liquidity providers to their platform.
This is where Raleon’s user insights helped. After analyzing user data associated with the wallet addresses that interacted with the platform, the marketing team found that their users also traded NFTs and interacted frequently with Galley, an NFT DEX.
So, they entered a partnership with the platform and set up Action Prompts, pop ups that are triggered by certain events on a website or platform.
For example, if a user traded NFTs on Galley, they’d get a pop-up asking them to try out Clipper.
And if a user traded memecoins on Clipper, they’d get a pop-up asking them to check out Galley and trade NFTs.
Whenever a user visited their website, they’d get personalized offers based on their on-chain and Web2 behaviors. As a result, the number of liquidity providers increased by 20.3% in just a week.
This was made possible thanks to Raleon’s user insights and attribution engine which combined on-chain and off-chain user behaviors into a coherent user journey map.
Community Engagement Campaign
ETH Barcelona is the first Ethereum conference based in Spain. It’s a community-led project that brings together Web3 builders, leaders, thinkers, artists, and creators who celebrate the values of decentralization.
To keep all the participants engaged throughout the 3-day conference, ETH Barcelona used Raleon’s Embedded Quests. Once users connected their wallets and chose if they were a Solar or Lunar punk, they could start completing quests and earning XP points and generate personal NFTs as rewards.
Get Deeper User Insights With Raleon
Web3 wallets offer useful insights on user behavior, preferences, and activities in the crypto space. But they can’t help you create detailed customer journey maps and attribute users’ on-chain conversions to off-chain activities.
This is where Raleon comes in. Its attribution tool connects on-chain and off-chain activities back to a single user so you get a clear picture of the customer journey without compromising their privacy.
Try out Raleon today to create targeted user profiles and personalized campaigns for your brand.