The Power of Fat Protocols and the Importance of User Activation in App Retention

The Power of Fat Protocols and the Importance of User Activation in App Retention

In the world of technology and innovation, there are certain concepts and strategies that can greatly impact the success and longevity of a product or service. Two such concepts are the idea of "fat protocols" and the importance of user activation in app retention. While these may seem like unrelated topics, they actually share some common points and can be connected in a meaningful way.

Let's start by understanding what is meant by the term "fat protocols." In the traditional internet stack, value is primarily distributed among the applications layer, with protocols playing a relatively thin role. However, in the blockchain application stack, this relationship is reversed. Value concentrates at the shared protocol layer, with only a fraction of that value being distributed to the applications layer.

This shift in value distribution is significant because it allows for the replication and storage of user data across an open and decentralized network. Instead of individual applications controlling access to disparate silos of information, the data is shared openly, reducing barriers to entry for new players and creating a more vibrant and competitive ecosystem of products and services.

But simply having an open network and a shared data layer is not enough to promote adoption. This is where the concept of a protocol token comes into play. The protocol token is used to access the services provided by the network, whether it be transactions in the case of Bitcoin or computing power in the case of Ethereum. This token serves as an incentive for users to participate in the network and helps drive adoption.

The combination of shared open data with an incentive system creates a new category of companies with fundamentally different business models at the protocol layer. Early adopters, recognizing the potential value of the protocol, build products and services around it, further increasing the value of their tokens. This feedback loop, driven in part by speculation, leads to the growth of the protocol and attracts financial capital.

Now, let's shift our focus to the importance of user activation in app retention. Recent data shows that the average app loses a significant percentage of its daily active users (DAUs) within the first few days, weeks, and months after installation. On average, an app loses 77% of its DAUs within the first 3 days, 90% within 30 days, and over 95% within 90 days.

The key to success lies in getting users hooked during the critical first 3-7 day period. This is where the product description, onboarding flow, and activation triggers play a crucial role. The top apps are immediately useful to users, resulting in repeated usage in the first week. The drop-off in usage happens at a similar speed as average apps. Therefore, the focus should be on activating users in the early stages, rather than bombarding them with spam-like notifications.

Sending numerous email notifications with subject lines like "We Miss You" is unlikely to significantly improve app retention. Instead, the focus should be on improving the onboarding flow, describing the product effectively, and implementing triggers that drive ongoing retention. By targeting the first few days of usage, particularly the first visit, app developers can bend the retention curve and improve user retention.

In conclusion, the combination of fat protocols and user activation in app retention highlights the importance of creating value at the protocol layer and engaging users in the early stages of app usage. To leverage these concepts effectively, here are three actionable pieces of advice:

1. Focus on building a strong and valuable protocol layer that incentivizes users to participate and adopt the network. This can be achieved through the use of protocol tokens and an open and decentralized data layer.

2. Pay attention to the onboarding flow, product description, and activation triggers in your app. These elements greatly impact user retention, particularly in the critical first 3-7 day period. Create a seamless and valuable user experience to increase engagement and usage.

3. Avoid spam-like notifications and instead, target the first few days of usage to bend the retention curve. Implement strategies that drive ongoing retention, such as personalized recommendations, rewards, or exclusive content.

By understanding and implementing these strategies, companies can create a more vibrant and competitive ecosystem of products and services while improving user retention and engagement. The combination of fat protocols and user activation is a powerful force that can drive the success of technology and innovation in the modern world.