Kiwi Co-founder: Insights on Building Consumer Crypto Applications

Chainfeeds Guide:

Cut through the fog of false signals to find real market validation.

Source:

Author:

Mac Budkowski

Opinion:

Mac Budkowski: The goal of startups is to find product-market fit (PMF), which is seen as the "magic key" to growth. However, in the crypto space, finding PMF is especially difficult because the environment is filled with false signals. For example, Farcaster launched its Pro subscription service and generated over $1 million in revenue within 24 hours, which seemed like a huge success. But a deeper analysis reveals that nearly half of the users had fewer than 100 followers, even though the service was designed for advanced users. Many people bought Pro not out of genuine product demand, but for speculation: the first subscribers quickly received an airdrop reward worth $600, achieving a 5x return in a short time. This phenomenon reveals a structural distortion in the crypto industry: you may achieve impressive revenue figures in a short period, but you cannot confirm that the market truly recognizes your product. Take the case of Kiwi: early users bought the Kiwi Pass, which appeared to be organic growth, but actually included support from friends, ideological alignment, and a desire to try something new. In the end, only a portion of users truly needed the product. This is almost unimaginable in the Web2 world, where revenue is usually considered the most solid metric, but in the crypto environment, even revenue can become a misleading vanity metric. Ethereum and all its L2 networks combined have about 45 million active addresses per month; even assuming one address per person, the global penetration rate is still less than 1%. This means that most users are very early-stage innovators and early adopters who are willing to try new products even with poor UX. But the problem is that these users are far less sticky than ordinary users—they might try your app today and chase the next hot trend next week. What's more challenging is that the crypto market is extremely diverse: developers, artists, researchers, VCs, speculators, philosophers, and traditional finance people coexist, with fragmented and often conflicting needs. For product design, it's hard to satisfy all groups without losing focus. Unlike the coffee market, which can accommodate many niche tracks, in the crypto world, choosing a direction that's too niche may mean you can't cover your costs. Truly large markets are still rare; apart from limited scenarios like stablecoins, speculative trading, and collectibles, there have not yet been applications that can accommodate massive numbers of users. As Marc Andreessen said, in great markets, the market pulls the product, but the crypto industry lacks this force. Therefore, signal distortion, frequent user migration, and a market that's too small all make finding PMF exceptionally difficult. Many people think PMF is equivalent to growth: 100,000 downloads in a week or tens of millions of monthly transactions seem to represent success. But in fact, the core of PMF is retention. If users just come into the store and leave, it doesn't mean the store is successful. Clubhouse, for example, exploded in popularity for a short time but quickly declined due to insufficient retention. This is even more true in crypto, where many projects rely on airdrops or market sentiment for short-term prosperity but fail to retain users. Market trends can also create illusions—building an NFT marketplace in 2020 might naturally attract users, but if you replicate the same model in 2025 after the hype has faded, the results will be completely different. In addition, token price volatility further exacerbates the retention problem. During the 2024 memecoin frenzy on Base, many users preferred to look for the next 100x coin rather than read long articles or in-depth content. This shift in attention causes users who should have stayed for their interests to leave as well. Moreover, there are a large number of zombie projects in the crypto world, where users' funds and energy are trapped, making them reluctant to switch to new applications. Ultimately, this leads to many projects having impressive short-term data but struggling to build a long-term stable user base, which is the true meaning of market fit required by PMF.