Web3.0 Marketing Playbook #1 | Bootstrap the Initial Liquidity for a New DeFi Startup

FOMO is a one-time event, whereas product adoption is a long-lasting commitment. 

Before we officially start, let's take a step back and think about one question: what do DeFi farmers want?

When evaluating the marketing strategy, we can simply look at the big picture and then discover the wants of users. Therefore, we build up the user journey map by eliminating users’ concerns before moving to the next step.

• Actual net earnings

-APY/APR on your actual position -Rewards in stables or natives token -Enough of a buffer to avoid liquidation -Time and efforts consumed -Gas fees and swapping fees

• Ease of use & UI/UX

-Straightforward navigation -Smooth onboarding flow (wallet, swap, bridge, porfolio tracking)

• Risk

-Contract security -Rug-pull -Bank run risk

• Trustworthiness

-Protocol narratives -Market and potential -Team background -Open source code

• Backers/investors

-Reputation of VC -Ecosystem resources

• Market traction

-Visibility of project -Partnership and accessibility

• Tokenomics

-Token distribution & emission -Token utility -Token liquidity

Phase 1

Main task: Building content assets and social assets from day 0

Finding the product-market fit is always the key to building a new product. If you’re looking for true protocol/product users, content marketing and community building will be the best leverage when doing effective marketing under an affordable budget. You can imagine all the docs, files, and even instant communication in your community are selling your product to the public, then how would you prefer to do the introduction?

Content Marketing

Crypto is a typical content-driven space. Identify how users get value from your product, which is yield in DeFi space. Adding a hook to explain how your protocol maximizes users’ yields by taking a bold claim response to likely skepticism. Once value props are set, it’s important to elaborate the mechanics behind the scenes and know your users understand where the yields are coming from. All in all, Twitter and Medium are the major platforms you can leverage your writing skills to impact the DeFi community effectively.

Acquisition channels: Twitter, Gitbook, Medium, Youtube

Community Building

Community assets can help drive awareness, adoption, and retention. Building a clear, systematic, and rewarding community guild is key in the early stages. Manage the seed/early members and lead them to produce organic UGC content. Besides, Founder is the best community manager; talks to the users, answer their questions, figures out the user demand, executes, and improves.

Acquisition channel: Discord, Telegram

Security Protection

Security is the paramount factor when it relates to DeFi. Getting a third-party secuirty company to audit the code is a basic move. Multi-sig of the smart contracts also leads to decentralized and lowers the concern of rug-pulled. Launching a bug bounty program helps involve the border DeFi community in security efforts, particularly in cases involving white hats.

Security Company: Trait of Bits, OpenZepperlin, Quanstamp, Certik, etc

Community audit platform: Core4rena, Sherlock

Bug bounty platform: Github, ImmuniFi

Once laid the solid foundation of content and social assets, it’s time to move to the next stage: get the word out.

Phase 2

Main task: Executing the Acquisition strategy

Partnership Synergize

Fostering key relationships with many prominent projects throughout the space can help you gain a lot of advantages, including but not least new users, visibility, and credibility. It usually comes with protocol/product level features (collateral support, LP tokens usage) so that you may drag users directly from the existing user pool that has been tested out by your partners.

Frankly speaking, that’s the priority acquisition channel in crypto. Some projects choose to conduct the public sales with CEX/DEX launchpad before launching so that the token can be partially distributed and generate buzz, however, this may be linked to CEX/DEX listing and MM on the secondary market for overall ideal effects. When it comes to projects that are about to debut without a token, leveraging the partnership/integration would be an effective weapon.

Reference: Benqi on Avalanche

Viral campaign/UGC Management

Finding the gem(alpha) in crypto is the universal meme and good marketers should make good use of this. Expectations can be manipulated. Early adopters campaign, OG NFT, testnet users, and initial LP are on the top of the reward list when building a brand-new community. There’re many ways (e.g. meme contests, content challenges, trading competitions, ambassador programs) to incentivize the community to follow your social, interacted with protocol, and even referral their friends to join the game.

NFT Platforms: POAP, Project GalaxyCommunity Platform: Gitcoin, Layer3

Influencer Marketing Strategy

Compared to web2, web3 and crypto are way too niche at the current moment. Instead of the TV and billboards, users rely heavily on the content creators on Twitter and Youtube. Working with legit influencers in the sectors (NFT, DeFi, GameFi, CEX) your project specialized would accelerate your awareness, create valuable content for targeting audiences from the third-party dependencies, then enhance brand assets overall.

Geographically, English-speaking countries/regions would undoubtedly gain ground, while regional countries such as China, Russia, Japan, and Vietnam are among the most active cryptocurrency users. Implementing the KOL strategy can be hugely effective - add so much value to the TVL at the very beginning.

SEO Optimization

Google search consists of a significant part of where those users are coming from. It’s typical crypto users’ behavior that they would do their own research over Google. It’s important what kind of Brand image you would to provide with them and how compelling the message is conveyed through Google indexed.

Solution: keywords optimization, reputable media coverage, own-media operation

Until now you should have a clear launching strategy ready for the show.

Phase 3

Main task: Trigger the positive usage cycle

Attractive APY for product adoption and arbitrage opportunity

APR/APY is variable, however for DeFi users, it's a significant signal. Many projects launch aggressive liquidity mining programs to kickoff and inject three-digit APY for assets pair to bootstrap initial liquidity. However, it’s worth considering the balance between emissions and rewards to avoid a death spiral once the liquidity mining ends.

Reference: Benqi on Avalanche, Aave on Polygon

The protocol leverages bAsset rewards to catalyze a positive usage cycle: subsidies incentivize new stablecoin deposits, lowering the borrowing rate, which incentivizes more bAsset-collateralized loans, and enables more bAsset rewards to be collected.

Building TVL foundation

TVL is the no.1 metric in DeFi and having a steadily growing TVL chart suits long-term projects because you know exactly where your users are coming from and gradually raise the numbers. Building TVL (say $10m for a new project) can bring greater opportunity and trust from the broader audience, thus leading to a healthy circle. There’s also some useful tracking websites, DeFi yield charting, and wallet management to foster growth during the new users’ onboarding journey.

Integrations: DeFillama, Coindix, Debank, Zapper.

Keep Shipping

Launching is just the beginning and it’s important to deliver a roadmap following up to enhance the hype, ranging from product features, token ignition, and partnerships to community grants. Integrating the launching strategy with good metrics into a good narrative to earn more collaboration opportunities. Rather than simply hearing about the launch, the community is hoping for a successful story. At this point, a large amount of traffic and users usually flood in.

Promotions: flash news, content creator release, mention/featured in the media

Closing Thoughts

Web3 is a profit-focus space and DeFi has always competed for APY, but how to offer competitive, safe, and sustainable yield farming products in the market decides how much liquidity you can bootstrap.  FOMO is a one-time event, whereas product adoption is a long-lasting commitment.

Cheers!