By Parker Jay-Pachirat
Compiled by: TechFlow
introduction
The evolution of consumer crypto applications, enabled by L2, alternative L1, infrastructure, and UX/UI advances, marks a transformative era for blockchain technology. In recent months, it has become increasingly clear that for consumer crypto to succeed, it is imperative to leverage familiar user behaviors and provide them with better incentives, rather than simply porting existing Web2 applications to the blockchain or reinventing the wheel.
Most users are reluctant to abandon platforms like Instagram or TikTok for decentralized alternatives, focusing more on convenience and familiarity than novelty. However, crypto and blockchain have the ability to enhance existing user behaviors, making them more engaging, rewarding, and engaging.
In this article, I will explore how projects such as PuffPaw, BlackBird, TYB, and SkyTrade embody this potential, combining real-life activities with decentralized technologies in various ecosystems. As these applications continue to mature, they may seamlessly integrate crypto into daily life, merging digital and real-world experiences.
The rise of consumer crypto
Consumer crypto is coming to the fore. The emergence of L2 solutions like Base and alternative L1s like Solana are enabling faster and cheaper transactions. Additionally, innovations in UX/UI like account abstraction, chain abstraction, embedded wallets, and intents are making it easier than ever to access and use crypto. These design and infrastructure advances are setting the stage for a new era of crypto consumer adoption.
Over the past year, social finance applications such as Friend.Tech, Farcaster, and Fantasy.Top have emerged as consumer applications that have received much attention. These platforms have brought the topic of "consumer crypto" to the forefront of the industry, with Fantasy.Top, Friend.Tech, and Pump.Fun briefly entering the top 15 protocols for 24-hour fee generation at the end of May (DeFiLlama). These applications all provide unique innovations in terms of on-chain interaction, gamification, or value creation.
However, breakthrough applications face challenges
Despite this, these breakout apps have faced challenges in achieving long-term user engagement, retention, and growth. In July, I discussed the rise and fall of Friend.Tech. Data showed that the majority of users driving activity and transactions on the platform were primarily driven by short-term gains and farming opportunities. This suggests that Friend.Tech’s core product and value proposition did not resonate with a broad audience, as evidenced by the high churn rate.
“Friend.Tech had a breakout year in 2023. A week after launch, the protocol surpassed Uniswap and Bitcoin in terms of 24-hour fees generated, and within a month was in the top 5 fee generating protocols. Thereafter, activity dropped drastically. Daily fees fell from $345,000 in May 2024 to $3,000 in June 2024, a 99% month-over-month decline. During the same period, the platform’s volume and daily active traders fell 99% and 98%, respectively.” — Parker Jay-Pachirat, ON–242: Onchain Social.
@msilb7/ friend.tech at Base Event, Dune Analytics (August 7, 2024)
Likewise, Farcaster's daily broadcast dropped 50% from its all-time high after experiencing significant bot churn in July 2024:
“The decline in [Farcaster] activity can largely be attributed to bots and airdrop farm users [leaving the platform]… Changes to the $DEGEN tip distribution and the Warpcast algorithm are potential explanations.” — Gaby Goldberg, ON–242: Onchain Social.
Fantasy.Top also saw a drop in net trading volume. While the platform saw strong activity between April and May 2024, it is now seeing only faint signs of activity.
L: @pixelhack/ farcaster, Dune Analytics (August 7, 2024), R: @dereek69/ Fantasy Top Volume, Dune Analytics (August 5, 2024)
What's missing?
Why did these apps fail to sustain growth after their initial success?
In recent months, we have come to realize that for consumer crypto to succeed, it is necessary to leverage familiar user behaviors and provide them with better incentives, rather than simply porting existing Web2 applications to the blockchain or reinventing the wheel.
Most users are unwilling to abandon platforms like Instagram or TikTok for decentralized alternatives. Users care more about convenience and familiarity than novelty. They are also less likely to adopt new technologies simply because of their novelty or experimental value. However, crypto and blockchain have the ability to enhance existing behaviors that users are familiar with, making them more engaging, rewarding, and engaging. This is exactly where consumer crypto comes in handy.
The best consumer apps will leverage real-life user behavior
Over the next five years, successful consumer crypto applications will not require a dramatic change in user habits. Instead, they will enhance familiar behaviors through gamification, incentives, and utility driven by crypto and blockchain technology.
A particularly promising group within this space will focus on user behaviors and experiences in real life (IRL). These applications will connect to real-world activities, rather than just being isolated online experiences. I call this category “Consumer x DePin” (decentralized physical infrastructure) or “Consumer x IRL.”
Parker Jay-Pachirat: “Cryptocurrency is the only financial tool that can facilitate cultural financialization, coordination, and community mobilization in real time.
Traditional incumbent assets can’t do this, they are too slow – highly regulated, gated and outdated.”
Why is IRL so important?
(1) Many consumer activities still have a face-to-face component, even when they are conducted online. Examples include shopping, apartment hunting, job applications, and flight bookings.
(2) Millennials and Gen Z are increasingly seeking authentic, direct experiences, as reflected in the rise of running clubs, singles parties, and in-person speed dating events (especially in cosmopolitan cities like New York).
High Yield Harry: "I'm High Yield Harry's mum. Unfortunately there was a stampede at this running club earlier this evening. He will be greatly missed and we are heartbroken by his loss."
Emerging groups: Four projects to watch
A new crop of consumer crypto projects are entering the market that embody these best practices. These projects are innovatively leveraging blockchain and crypto, introducing new financial incentives, gamification elements, and engagement methods to cater to mass-market consumer behaviors. Below, I’ll highlight four early projects.
(1) PuffPaw: Vape-to-earn (V2E) on Berachain
PuffPaw is pioneering the first decentralized physical infrastructure network (dePIN) on Berachain, bringing vaping on-chain. Their main mission is to motivate people to quit smoking. To begin with, they will offer a variety of cartridges with different nicotine concentrations to meet a wide range of user preferences.
The global e-cigarette market is valued at $28.17 billion in 2023 and is expected to grow to $183 billion by 2030, at a CAGR of 30.6%. The number of e-cigarette users has increased dramatically, growing 280% from 2012 to 2022. However, the industry faces significant challenges and inefficiencies for both distributors and consumers, including high costs and high consumer prices due to lengthy supply chains.
PuffPaw: vape 2 earn on Berachain — puffpaw.xyz
PuffPaw aims to solve inefficiencies in the industry by leveraging its extensive experience and resources. The founding team has over a decade of experience in the e-cigarette and pharmaceutical industries, giving them a strong competitive advantage in the e-cigarette market. Their jointly owned company, Pegasus, supplied more than 76 million e-cigarettes to one of the world's largest tobacco companies last year. In addition, they own multiple e-cigarette brands and operate manufacturing and distribution warehouses in North America and Europe, covering the e-cigarette market in all five major regions.
How does it work? In the PuffPaw ecosystem, each physical e-cigarette is considered a node. To participate in PuffPaw games, users need to have a node license, which is in the form of an e-cigarette. The mining efficiency of each node is determined by a rarity system, and there are different levels. Users can choose from a variety of flavors and nicotine concentrations, and each user has a unique daily smoking limit, which affects their game results. Rewards are verifiable on-chain, and each cartridge acts as a token miner.
PuffPaw draws inspiration from GameFi, SocialFi, and DePin. They will be launching a node presale soon, and everyone is welcome to follow the latest developments through their website and Twitter.
(2) BlackBird: Dine-to-earn on Base
Blackbird is a loyalty and rewards platform on Base that facilitates direct connections between restaurants and their customers.
The U.S. restaurant and food service industry is projected to generate more than $1 trillion in total sales in 2023, up 11% year-over-year, exceeding 2019 levels and outpacing the growth of the S&P 500. Restaurants account for 5% of U.S. GDP and 45% of household food budgets. Yet 80% of independent restaurants close within their first year, and 80% fail within five years. By 2023, 43% of U.S. restaurants are still burdened with COVID-related debt, and profit margins have fallen from 20% to just 4% in two decades. The growing impact of technology has seen digital sales as a percentage of total sales rise from 9% to 21% between 2019 and 2024.
Traditional models of operational excellence and best practices are no longer sufficient to support economic sustainability and growth. Restaurants must now adapt to new operating models that focus on customer segmentation, engagement, and retention.
Blackbird: Eat 2 times and earn money on Base — blackbird.xyz / @jhackworth/ blackbird, Dune Analytics
How it works: Blackbird is revolutionizing the hospitality industry through the decentralized Blackbird platform, facilitating direct connections between restaurants and customers, enhancing engagement, loyalty, and payment experiences. Users can check in at partner restaurants in real life and earn rewards while dining. Powered by the $FLY token, Blackbird provides restaurants with comprehensive insights into customer behavior while providing customers with discounts, rewards, and exclusive offers. Recent innovations on the platform include Flynet, an L3 on Base, and Blackbird Pay, which enables seamless bill settlement.
A key advantage for Blackbird is its founder, Ben Leventhal, who co-founded Eater and Resy (the latter sold to American Express for $200 million in 2019). Leventhal’s experience and connections give Blackbird a solid foundation in its target market: restaurants and their customers. Blackbird has partnered with many top restaurants and popular New York City dining spots, such as Nami Nori, Rule of Thirds, Upside, Canal Street Market, and Sweet Rose Creamery.
(3) TYB (Try Your Best): Engage-to-earn on the Avalanche subnet
TYB is an Engage-to-earn platform that allows D2C e-commerce brands to engage directly with consumers and reward them for performing valuable actions.
Direct-to-consumer (D2C) brands are often not as “direct” as they seem. In recent years, these brands have seen their customer acquisition costs rise dramatically. The growth channels they have relied on for the past 5-10 years, such as Facebook and Instagram, have become saturated and expensive, with cost per thousand impressions (CPM) rising at an annual rate of 20% to 25%. This inflation means that acquiring a new customer can cost 5 to 25 times more than retaining an existing one, resulting in customer acquisition costs (CAC) exceeding customer lifetime value (LTV) and a decrease in the number of loyal customers.
Currently, customer relationships are mediated by advertising-centric discovery platforms, and brands rely heavily on third-party platforms such as Instagram and TikTok for marketing, communication, and engagement. This reliance is not only economically inefficient, it also hinders brands’ ability to effectively target and connect with key customer segments.
TYB: Engage 2 Earn on Avalanche Subnet — tyb.xyz
How it works: TYB is an Engage-to-earn platform that aims to solve industry pain points by providing D2C skincare, fashion and lifestyle brands with a direct sales and marketing channel. TYB reduces reliance on advertising platforms, and customers can earn rewards for their favorite brands by participating in challenges such as product testing and content creation. This approach provides brands with valuable insights into user behavior and segmentation, improving customer lifetime value (LTV), retention, sales and engagement. At the same time, TYB allows brands to manage all aspects of communication, interaction, marketing and social channels, and track user information on-chain. For consumers, TYB provides a more engaging and rewarding brand experience, and users can earn substantial rewards such as discounts, special offers and exclusive items through feedback and content creation. This model is particularly effective in the beauty and skincare industry, as customers in this field are highly loyal and often make repeat purchases.
TYB has attracted a wide range of partners, many of which are highly sought-after brands. It is one of the few blockchain loyalty platforms to offer “no-code” integration, a feature that simplifies the process of technology integration and reduces costs. TYB focuses on a niche market, targeting D2C e-commerce brands in the skincare, health and lifestyle, fashion, and food and beverage industries. This specific market positioning distinguishes TYB from competitors, which often take a more broad-based market strategy. TYB was founded and led by former Outdoor Voices CEO Ty Haney, whose deep understanding of the D2C space brings an advantage to the platform. Her extensive network and experience attracted premium brands like Topicals, one of Sephora's fastest-growing skincare brands.
Last week, TYB launched a community with Glossier, marking the platform’s biggest first-day launch yet.
(4) SkyTrade: Airspace Rights Platform on Solana
SkyTrade is an airspace rights tokenization platform and trading market for property owners, real estate companies and traders. It provides an on-chain market for low-altitude airspace.
Airspace rights refer to the right to buy and sell the airspace above a development property under zoning laws. Traditionally, the airspace rights market has been opaque and difficult to access, which has limited economic efficiency. In common law jurisdictions, landowners own rights to the airspace above their property. The total addressable market (TAM) for this market is as high as $30 trillion, with locked-in airspace rights in Manhattan alone valued at over $500 billion and central London at £52 billion. Additionally, the drone industry, which requires airspace rights for transportation, is expected to be worth $450 billion.
Airspace rights are also critical to the expansion of commercial drone deliveries. Drones cannot legally operate without permission to use private airspace. Drone deliveries have the potential to reduce traditional delivery costs by approximately 90% over time. Major retailers such as Walmart and Amazon are rapidly expanding drone delivery services. For example, Walmart currently serves more than 2 million households and plans to cover 90% of the U.S. population with drone deliveries, leveraging its extensive real estate portfolio. To achieve this goal, access to low-altitude airspace must be obtained from airspace owners.
SkyTrade: Airspace Rights Platform on Solana — sky.trade
SkyTrade aims to revolutionize this process by putting airspace rights on the blockchain.
How it works: Through the SkyTrade platform, users can register their properties, claim airspace, and participate in the buying and selling of tokenized airspace rights. Drone operators are able to lease airspace for specific time periods, forming a dynamic and easily accessible market for airspace utilization. Although still in its early stages, SkyTrade has already established strong potential for the airspace market, with more than $30 million in airspace rights transactions completed on its platform to date.
in conclusion
In summary, the evolution of consumer crypto applications, enabled by L2 solutions, L1 alternatives, and innovative UX/UI features, marks a transformative era for blockchain technology. While early SocialFi applications face challenges in long-term user retention, the key to the future lies in creating unique blockchain-driven experiences that enhance users’ daily behaviors.
Notably, we are beginning to see this trend emerge across a variety of ecosystems and platforms, highlighting the cross-chain potential of these applications. Projects like PuffPaw, BlackBird, TYB, and SkyTrade demonstrate the potential to combine real-life activities with decentralized technologies, providing novel incentives and opportunities for engagement. As these applications mature, they are expected to play a key role in integrating cryptocurrencies into everyday life, creating a seamless fusion of digital worlds and real-world experiences across different blockchain ecosystems.
