Layer3's Signal Aims to Quantify Web3 User Engagement, Shifts Focus to On-Chain Activity
Layer3 introduces Signal, an on-chain attention index, to provide a reliable metric for evaluating Web3 project user acquisition efficiency, potentially impacting investment and listing strategies.
Executive Summary
Layer3 has launched Signal, an on-chain attention index designed to measure the efficiency of user acquisition for Web3 projects. This new metric aims to bridge the gap between social-based attention metrics and reliable on-chain data, potentially influencing how exchanges discover projects, project teams measure marketing ROI, and investors make decisions.
The Event in Detail
Signal is an on-chain relevance index that captures whether a protocol or project truly attracts on-chain participants. Unlike traditional metrics that can be influenced by social media hype or manipulated data, Signal focuses on actual user actions, such as whether users are “willing to pay for these interactions with gas or their real identities.” Layer3, as an active on-chain task platform, developed Signal based on data accumulated over three years, encompassing real interaction records from 3 million active users, over 200 million completed tasks, and 60 million verifiable credentials.
Market Implications
The introduction of Signal could lead to a shift in how Web3 projects are evaluated, with greater emphasis on genuine user engagement and less on superficial metrics. It introduces a new way to evaluate projects based on actual on-chain activity and user engagement, rather than just social media hype. This shift may impact investment decisions and listing strategies on exchanges, as projects are evaluated based on the efficiency of their user acquisition.
Expert Commentary
According to Layer3, Signal aims to identify protocols gaining real user engagement and action, rather than just chatroom topics. The index captures whether a protocol or project truly attracts on-chain participants by assessing if people are actually taking action on-chain and what's being accomplished.
Broader Context
The launch of Signal aligns with a broader trend in the Web3 space toward more holistic metrics for assessing product success and ecosystem health. While metrics like Total Value Locked (TVL) and Daily Active Users (DAU) have been used, they can be limited or manipulated. The rise of Sybil attacks, for example, can create a false sense of engagement. Signal aims to address these issues by focusing on verifiable on-chain activity, potentially offering a more reliable indicator of a project's true value and sustainability. The move also reflects concerns about the sustainability and environmental impact of cryptocurrencies, pushing for more sustainable and environmentally friendly practices in the industry.
