This is a contributor content by Andrew A., Chief Marketing Officer at Weltrade.
For fintech, it is one of the most crucial KPIs-user retention. The more actively users return to an app, the more likely they create savings accounts, buy some cryptocurrency, or even take crypto backed loans.
Therefore, the more a company profits by doing this, the more DAU, WAU, and MAU it has. Nevertheless, for achieving high retention rates, companies should compete with each other, out of their minds, in order to implement solutions to make their products more appealing to their users.
One of the results of such an approach is Synthetic cloud-based Bitcoin mining we have implemented in YouHodler.
The Birth of the Synthetic Mining Idea
When I was working at YouHodler, we were looking for new tools to attract users and at the same time introduce them to cryptocurrencies. Real Bitcoin mining requires huge investments in equipment and electricity; thus, it is not suitable for mass market adoption.
We decided to make a simplified “synthetic” model of mining. From the user’s point of view, it looked like this: they opened the app, tapped “Start Mining,” and then waited a few hours while the countdown ran. At the end of this period, they received a small amount of satoshis. No computing resources were required-everything was virtual. Meanwhile, the user felt as though they were taking part in real mining, which got them interested in the cryptocurrency world.
Why We Decided to Give Away Satoshis
Giving away real money doesn’t make much sense upon first glance, because, well, it has direct costs. But our point was to give people a free starting point. It’s usual to have a number of fears before buying cryptocurrency: someone is afraid of losing money, somebody doesn’t understand how everything happens technically. Synthetic cloud mining helped exclude these obstacles. Even if a person got only several satoshis, they felt that already a piece of Bitcoin was his.
These micro-rewards fostered curiosity-a desire to see what else was possible with the app: opening a savings account, exchanging cryptocurrency, or taking out loans against existing coins. It was impossible to spend satoshis outside of the app because the amount was too small, but on the platform, they created room for experimentation. Thus, users gradually recognized the value of our services.
The Spike in Key Metrics and Early Problems
When we first released synthetic cloud mining, our metrics went through the roof. Users signed in multiple times a day so as not to miss the end of each mining cycle. We began running ads touting this new feature with catchy slogans like “Mine Bitcoin for Free” and “Try Risk-Free Crypto Mining.” Inbound user growth accelerated even more, while CAC, the cost of acquiring a single user, shrank.
But problems cropped up. Payouts that had seemed insignificant proved a heavy cost when spread over thousands of users. Worse, many new entrants stayed for the free satoshis only, without showing interest in any other products. This placed financial stress and undermined the economics of the mining program.
Freebie-Hunters and Their Impact
It soon became obvious that making synthetic mining too easy was building an enormous audience that was not willing to take real action. These “freebie-hunters” created dozens of accounts to maximize their rewards. Our budget took a hit, and we saw no increase in conversion to paid products. In addition, moderating and blocking fake accounts became increasingly hard.
We realized that if we didn’t make adjustments to mechanics to make access to more generous payouts at least harder-then cloud mining would remain popular with people, just not financially friendly for the company.
Tiered System: A Solution to the Problem
We decided that there should be an eight-tiered loyalty system, going from Newbie to VIP. Every such level granted the user different mining settings, namely a limit on the number of “blocks” (sessions), each block speed, and the amount of payout. At Newbie level, a user was entitled to only four blocks, each for eight hours. This considerably slowed down earnings, reducing profitability for those just looking for easy money.
Exchanging currencies, opening a savings account, or making deals, then active use of other services would gradually let users move to Silver or Gold. Accordingly, their available mining volume would go up, and wait times would shorten. And it worked as a psychological driver: “Want to mine faster and earn more? Then trade, take out a loan, and bring real value to the company.”
Balanced Economics and Its Effect on the Audience
Immediately after we introduced the tiered system, strictly “freebie” users fell, but the remaining brought more value. We preserved the appeal of a “free” mining feature while tying it to real usage of other products. Thus, a huge churn of uninterested users was no longer a red flag-what mattered was that those who had stayed were committed and became more loyal.
Our DAU fell from that peak, but only because our user base was no longer “inflated.” Other good news for us included transactions rising, profitability increasing, and fraud falling. In other words, the system had corrected itself: whereas at new levels it was much easier to-and more profitable to-mine.
The Emergence of “Tapper” Apps and How They Differ
Then for quite some time, fintech was flooded with “tapper apps,” where everything boiled down to pressing a button and waiting for virtual rewards. The most striking example is Hamster Kombat, but not the only one-amazingly, it gained millions of users which it often struggled to monetize properly.
The thing is, rewards in such services usually stay in-game and do not convert to real money. Users tap for fun, but usually there’s only a weak link to financial products. This sets them apart from our format of cloud-based mining: even though the amounts were tiny, our rewards were tied to Bitcoin. Users understood that they could use the satoshis they earned in payment or savings services. This allowed us to create genuine value, not just a gaming incentive.
The Power of Gamification in Fintech
Gamification turns tedious financial operations into engaging tasks. People love the sense of achievement, and mechanics involving timers and rewards effectively boost activity. The key is to make sure that the “game” does not become an end in itself-just tapping buttons for virtual rewards.
Our example showed that synthetic cloud-based mining can be sustainable if it’s built on an economically sound system. Engagement is high because people feel they are really “mining” cryptocurrency despite the symbolic amount of it, while the platform might guide them to use its core products. This delivers the desired business outcome-increased conversion to real transactions and stronger loyalty.
Lessons and Future Prospects
Cloud mining speaks volumes about how new gamification mechanics, combined with well-thought-out economics of the product, can result in explosive growth of retention and reach. Distribution of microscopic portions of Bitcoin is totally justified in cases when those portions are woven into the ecosystem of the app.
It is a key to success-the tiered system which balances “free access” with the need for real user engagement. If a user wants unlimited mining, he needs to become a real customer: make some transactions and provide revenue for the company. That is why this gamification will be more than a “lure”; it provides an evident way in which each participant can become more experienced and active. Although new “tapper” apps and other formats keep cropping up, only those offering real value-not just a game-will survive in the long term.
Read Also: Empowering Communities: The Social Impact of DePIN
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