What Keeps Them Engaged?
Building Thriving Communities in Crypto
Note: This report presents research findings on how to build sticky crypto communities and retain users long-term, even amid price swings and market downturns. It is based on a large-scale social science study, funded by the Optimism Academic Grants Round. The study used a mixed-methods approach, including 26 interviews and a quantitative survey (111 participants) to examine the factors that shape group building in crypto. Huge thanks to Optimism, Beets, Balancer, and Conclave for participating in this study and for supporting the data collection process. The content presented in this article is forthcoming in an academic peer-reviewed journal.
Are you a community leader, a core contributor, or simply a curious mind eager to explore the role of social factors in a highly technical and financially-driven space? Then this report is for you!
Let’s dive in…
Abstract/Problem Statement
While crypto’s ethos promotes values for social change and a better world, the reality in crypto often revolves around price speculations and quick wins. What’s more, scamming in crypto seems to have become widely accepted as the new norm — akin to, ‘if you don’t scam, you’re the scam’. Such a short-term mindset, characterised by hyper speculation and gambling, can be draining and disillusioning. Even more concerning, it conveys the wrong idea of what ‘community’ means. But how can we spark change when everyone seems to be riding the same wave?
This study examines the factors that drive sustained group engagement beyond financial incentives. While financial incentives undoubtedly influence community engagement, this paper serves as a reminder that crypto has more to offer more than just monetary rewards. Using a large-scale study, we uncover several factors that explain why individuals remain loyal to specific crypto communities, but not others. According to the results, successful protocols manage to strike a delicate balance between technological innovation and social features founded in organisational structures, content sharing, and community size to cultivate an environment conducive to ongoing participation. For someone to become ‘fused’ with a protocol, the community needs to be ‘socially rewarding’ and reflect ‘a positive outlook’: community members need to feel connection, agency, and a sense that the community has a future.
TLDR:
- The degree to which individuals identify with a protocol influences their loyalty to the community.
- To keep people engaged, a community needs to be ‘socially rewarding’, i.e., it should facilitate forming meaningful connections and provide individuals with a sense of agency.
- Social reward, a positive outlook of the protocol, and the level of personal financial investment in the protocol are key predictors of identity fusion.
- Overall, the importance of social features tends to grow with increasing financial investment in the protocol.
- For most protocols, the ‘current community’ does not reflect the ‘ideal’ in terms of size, humour, content, and anonymity.
Identity Fusion Between Users and Protocols
First, let’s have a look at how much users identify with their communities. Identity fusion goes beyond objective group membership. It involves a deep connection to the group, referring to the value and emotional significance attached to the membership (Tajfel, 1981).
Although there were no major differences between communities in the level of identity fusion with their own community, there were clear differences in how they identified with other communities. Optimism community members tended to feel closely aligned with Ethereum, as did Balancer, while Beets members feel a high level of fusion with Sonic/previously Fantom. Members of Cod3x appear to see themselves as standing apart from the other communities on the most part.
Optimism members are ‘highly fused’*
Initial appeal: A protocol’s unique features are a major part of its attraction. Optimism primarily stands out in terms of its ideology and vision. “[The] vision and mission of impact over profit. […] giving back to the community that you’re a part of and helping to continue to grow along the way… that was definitely what attracted us. I mean, there’s not really much else until now”, one participant reflected on how he was attracted to Optimism’s ethos.
Current vs. ideal community: When comparing the ‘current’ to the ‘ideal’ community, participants feel Optimism could improve its contents on social channels by offering better education material and more humorous content related to crypto. Moreover, the ideal Optimism community should be larger, as this indicates protocol growth.
Interestingly, compared to the other protocols, Optimism members were most optimistic about the protocol’s future. This could be partly attributed to Optimism’s strong ties to Ethereum and, according to participants, its perceived highly decentralised organisational structure. While smaller protocols like Beets and Cod3x are heavily lead developer focussed, participants think that Optimism would still continue to grow even if some of their core contributors left.
Beets members are ‘highly fused’*
Initial appeal: Beets is perceived as unique for its professionalism and branding. “As much I’m about the numbers, pictures do matter, and design. And the aesthetic of Beets really stands out. [That is] how I landed in their Discord”, a Beets community member highlighted the protocol’s distinctive aesthetics. Other Beets users emphasised the protocol’s professionalism: “I started to look a bit, first lurk, to see what people were asking and how the core team members were responding. It gave me a very professional and genuine sense of why it [the protocol] was there. So I started to engage… and buy some of the tokens”.
Current vs. ideal community: Comparing the ‘current’ to the ‘ideal’ community, Beets members emphasise that while the content and sense of humour in the community should stay the same, the ideal community should be larger in size. However, there seems to be a trade-off at play: while users wish for the protocol to grow, they don’t necessarily want more people in the community as this could jeopardise the ‘authentic community feeling’. Larger group sizes typically don’t allow for each voice to be heard and could potentially obstruct the formation of closer relationships both between individual community members and between members and the team.
Finally, the ‘trust in the team’ factor ranked highest at Beets among all the protocols. Beets users appreciate the team’s honesty and transparency, and think the team is capable of delivering on their promises. However, participants recognise that being highly team-focussed, at the same time, poses a risk. Participants express concern about the protocols’ continued success if any of the top 5 team members left.
Cod3x members are ‘one with the protocol’*
Initial appeal: The unique features of Cod3x are largely defined by its high-profile lead developers and their perceived expertise: “Just from seeing the different shows on YouTube that they’re doing and just listening to the [lead developer] talk”, one participant pointed out, whereas another user added “he [lead developer] is a very charismatic individual, he is very, very knowledgeable in DeFi and I think that sort of has drawn others in so far”. Given Cod3x’s focus on its lead developers, most participants worry about the protocol’s future if they were to leave: “I think a lot of people like Bebis as a leader and it would affect the project if he left”, whereas another participant pointed out: “Without Bebis the Byte Masons wouldn’t really be the Byte Masons anymore”.
Current vs. ideal community: When comparing the ‘current’ to the ‘ideal community’, participants believe the ideal community should be larger and somewhat more anonymous. Similar to Beets, Cod3x members stress that the content shared on social channels and the community’s sense of humour should remain the same.
Key Drivers for Identity Fusion
The results reveal several key drivers — across all protocols — that significantly predict identity fusion. These include: social reward (consisting of ‘meaningful connection’ and ‘perceived agency’), a positive outlook, and personal investment level.
Social Reward
Social reward refers to the meaningful interpersonal relationships and the degree to which individuals feel their personal actions are integrated and reflected within the community, driving their fusion with the protocol. This highlights the importance of individuals feeling valued, finding like-minded people, and enjoying their participation in the community for user retention and predicting individuals’ level of attachment to the group (Figure 1).
Social reward includes the following features: ‘I have made meaningful friendships’, ‘my actions have consequences for the community’, ‘I have fun in the community’, ‘I would hang out with these people even if I didn’t make any profit’, ‘my presence matters to the community’, and ‘I would want to hang out with these people in real life’. One Beets participant reflected on the importance of meaningful relationships built within his community: “I have established relationships there. So now I kind of hang around […] I feel like I have a pretty deep relationship with these people.” He emphasised that, although only knowing each other from anonymous meetings and messages on Discord, his connections with certain community members have evolved into true friendships: “although the one guy is still like, totally anonymous, if I went to [his country], I would be like, ‘hey, dude, I’m coming to your town, and I’m walking around until I find you’”. Similarly, others expressed: “I liked a lot of the individuals that I was chatting with. I found a few similarly minded people there” (p13).
Overall, meaningful interpersonal relationships are crucial for keeping individuals engaged and active within the community. Social connectedness is thereby closely tied to how much individuals feel their presence matters to the group. Thus, for someone to develop a social identity, their self-perception is as important as how they believe others perceive them.
A Positive Outlook
A further significant predictor of identity fusion refers to ‘positive outlook’ of a project (Figure 2). While a long-term vision and a “building the tech of the future” mindset are crucial for community building, the performance expectancy of a protocol — referring to people’s belief in its success and ability to endure future market downturns — fosters a positive outlook.
Members stay connected to groups that they believe will succeed. The expectancy of group success is thereby closely linked to members’ attitude towards the group’s technical innovativeness and their future trajectory, which contributes to their willingness to remain loyal and invested in the group. To remain competitive, participants see it as a necessity to continuously improve the technology and develop new products: “part of the reason why I find it so interesting is that they’re always developing and they’re always putting out new things. So I’m just eager to see how it’s all going to work together” (p12), one user stated about why he likes Cod3x. A protocol’s long-term mindset is key to achieving this, as some participants emphasised: “I think we all centre around this mission of very long-term goal[s], and there’s a bunch of challenges every single day, [but the] group is very, very driven and is always there to figure out how we can work out these problems …”.
Investment Level
Moreover, people’s investment level significantly predicts identity fusion with the community they are invested in (Figure 3). This makes sense intuitively, as financial investment often brings with it emotional commitment — through time, energy, and active engagement — making highly invested individuals more likely to form strong connections with a project. Likewise, those who feel a strong community connection may be more inclined to invest further. This finding contrasts with participant interviews, where many emphasised that ultimately, financial motives alone drive people’s engagement with the community. However, our data suggests that the importance of social factors grows as financial investment increases. In communities where users have a higher financial stake, there’s a stronger emphasis on forming meaningful connections and fostering a sense of belonging, as seen in other projects like Ethereum, where social engagement becomes a key aspect alongside financial incentives.
Trust in the Team
Finally, having confidence in the team is essential, not only for attracting individuals to a community, but, more importantly, for maintaining their ongoing engagement on the platform. Interestingly, according to the results, the primary sources of trust are the team’s perceived professionalism and intelligence. Professionalism is thereby defined by factors such as ‘serious interest in DeFi’, ‘knowledge or expertise’, and ‘security measures’, as opposed to short-term objectives like driving up prices or generating hype.
Participants emphasised the importance of professionalism over hype, as highlighted by the following Cod3x user: “I think what sort of draws them in to the community is this big team of what seemed like very intelligent and knowledgeable people in this space with this very long term mindset and this really realistic way of looking at things and I think a lot of [this] community is less about hype, and fairly serious about DeFi”. Similarly, other users weighed the importance of a team’s expertise against short-term indicators of a protocol’s popularity, such as hype or price: “I can trust those guys, because you see everyone [else] making contests and giving away a lot of stuff, [there is] too much hype”, while another participant explained: “it’s about the team behind the project and what’s being built and not how the price reflects that”.
Interestingly, although trust in the team seems essential for community building, the ‘trust in the team’ factor did not significantly predict identity fusion. This may stem from the distinct function of trust in group formation. Trust in the team seems to function as a prerequisite for people to invest in a crypto protocol or start interacting with a community at all, whereas for someone to incorporate that community as part of their identity they need to feel valued, find similarly minded people, and enjoy their participation in the community.
Conclusion and Take-Aways
Based on our data, an archetypal blockchain protocol able to attract a stable community actively involves its users into the building and marketing process, informs transparently about updates, and rewards particularly engaged community members monetarily and with social status. It also has recognisable team members, who assist users in learning about the project and are responsive to questions. It attains steady growth to confirm a positive future outlook but does not attract hype and cultivates its increasing community with moderators. Finally, it features plenty of well-informed, stimulating discussions on technology, governance, and other topics relevant for growth and financial yields, but also offers opportunities for informal and humorous exchanges between community members.
Building strong social connections between users and protocols seems particularly relevant in crypto as, unlike in other social networks, crypto communities tend to evolve quickly and are often short-lived. Members are constantly faced with the choice between ‘staying or leaving’ their group to invest their resources elsewhere, for example, in a project offering higher financial returns. Interestingly, initial evidence indicates that ‘identity fusion’ plays a key role in alleviating some of the fundamental tensions between crypto’s ‘cooperation or defection’ dilemma by reducing actors’ responses to ‘greed’ — the urge to ‘free-ride’ on others’ cooperation in social dilemmas for short-term gains — and thus fostering group commitment (also see Simpson, 2006). Accordingly, the concept of ‘identity fusion’ provides a promising approach to boost user engagement and foster protocol growth.
However, due to the informal and volatile nature of crypto, achieving identity fusion is complex, requiring a delicate balance between technological innovation and social features as key driving factors. In the next article, we’ll explore blockchain’s “Goldilocks Zone” — the ideal conditions where user engagement can be sustained — , and unpack this delicate balance.
Stay tuned!
Key Takeaways:
- Identity: What does your protocol stand for? Unique protocol features are what draws people into a community. Attracting like-minded individuals, along with using distinct social cues and language, facilitate building identity.
- Professionalism over hype: A genuine interest in advancing DeFi outweighs short-term, profit-driven actions when it comes to fostering long-term protocol growth.
- Providing members with agency: Do your members feel valued and taken seriously? Seeing one’s personal actions integrated and reflected in the community is one of the strongest drivers for establishing a sense of belonging to a protocol.
- Positive outlook: Do individuals have compelling reasons to stay engaged with your protocol? A protocol’s vision — focused on “building the technology of the future” and “being in it for the tech” rather than purely for profit — reflected in its everyday practices, is what helps to reaffirm a promising outlook.
- Sense of humour: Casual ‘chit-chatting’ is just as important as serious tech talk! A shared sense of humour is a powerful bonding mechanism.
- Transparent and consistent communication: There’s nothing more frustrating than feeling abandoned. Honest, transparent communication is essential for establishing trust and providing reassurance.
References
Simpson, B. (2006). Social identity and cooperation in social dilemmas. Rationality and Society, 18(4), 443–470. https://doi.org/10.1177/1043463106066381
Tajfel, H. (1981). Human groups and social categories. Cambridge, UK: Cambridge University Press.
Tajfel, H. and Turner, J. C. (1979). An integrative theory of intergroup conflict. In The social psychology of intergroup relations, ed. W. G. Austin and S. Worchel, The social psychology of intergroup relations (pp. 33–37). Monterey, CA: Brooks/Cole.
