This is collaborative content from Andres A.marketing director of Weltrade.
For fintech companies, it is one of the most important KPIs: user retention. The more actively users return to an app, the more likely they are to create savings accounts, buy some cryptocurrencies, or even take out crypto-backed loans.
Therefore, the more a company benefits from doing this, the more DAU, WAU, and MAU it will have. However, to achieve high retention rates, companies should compete with each other, madly, to implement solutions that make their products more attractive to their users.
One of the results of this approach is the cloud-based synthetic Bitcoin mining that we have implemented at YouHodler.
The birth of the idea of synthetic mining
When I worked at YouHodler, we were looking for new tools to attract users while introducing them to cryptocurrencies. Actual Bitcoin mining requires huge investments in equipment and electricity; therefore, it is not suitable for mass market adoption.
We decided to make a simplified “synthetic” mining model. 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 ticked down. 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 like he was participating in real mining, which made him interested in the world of cryptocurrencies.
Why we decided to give satoshis
Giving away real money doesn’t make much sense at first glance, because, well, it has direct costs. But our goal was to give people a free starting point. It is common to have various fears before buying cryptocurrencies: someone is afraid of losing money, someone does not understand how everything happens technically. Synthetic cloud mining helped remove these obstacles. Even if a person got only several satoshis, he felt that a part of Bitcoin was already his.
These micro-rewards fostered curiosity – the desire to see what else was possible with the app: opening a savings account, trading cryptocurrencies, or taking out loans against existing currencies. It was impossible to spend satoshis outside the app because the amount was too small, but on the platform they created room for experimentation. Thus, users little by little began to recognize the value of our services.
The rise of key metrics and the first problems
When we first launched synthetic cloud mining, our metrics skyrocketed. Users logged in several times a day so as not to miss the end of each mining cycle. We started running ads promoting this new feature with catchy taglines like “Mine Bitcoin for Free” and “Try Crypto Mining Risk-Free.” Incoming user growth accelerated further, while CAC, the cost of acquiring a single user, decreased.
But problems arose. Payments that seemed insignificant turned out to be a huge cost when spread across thousands of users. Worse still, many new entrants stayed only for the free satoshis, showing no interest in any other products. This created financial stress and undermined the economics of the mining program.
Freebie-Hunters and their impact
It soon became clear that making synthetic mining too easy was creating a huge audience unwilling to take real action. These “gift hunters” created dozens of accounts to maximize their rewards. Our budget took a hit and we didn’t see any increase in conversion to paid products. Additionally, moderating and blocking fake accounts became increasingly difficult.
We realized that if we didn’t make adjustments to the mechanics to make access to more generous payouts at least more difficult, then cloud mining would still be popular among people, but not economically favorable for the company.
Tiered system: a solution to the problem
We decided that there should be an eight-level loyalty system, from Newbie to VIP. Each of these levels gave the user different mining settings, i.e. a limit on the number of “blocks” (sessions), the speed of each block, and the payout amount. At the Novice level, a user was only entitled to four blocks, each lasting eight hours. This slowed down profits considerably, reducing profitability for those just looking for easy money.
Exchanging currencies, opening a savings account or making deals, and then actively using other services would allow users to gradually upgrade to Silver or Gold. Consequently, your available mining volume would increase and waiting times would be shortened. And it worked as a psychological boost: “Do you want to mine faster and earn more? Then negotiate, apply for a loan and add real value to the company.”
Balanced economy and its effect on the audience
Immediately after we introduced the tiering system, strictly “gift” users decreased, but the remaining ones provided more value. We kept the appeal of a “free” mining feature and tied it to actual use of other products. Therefore, a huge churn of disinterested 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 “bloated.” Other good news for us included increasing transactions, increasing profitability and falling fraud. In other words, the system had corrected itself: while at new levels it was much easier (and more profitable) to mine.
The appearance of “Tapper” applications and how they differ
Then, for quite some time, fintechs were inundated with “tapper apps”, where everything was reduced to pressing a button and waiting for virtual rewards. The most striking example is Hamster Kombat, but not the only one: it surprisingly gained millions of users that it often struggled to monetize properly.
The thing is that rewards from such services usually remain in-game and are not converted into real money. Users play for fun, but there is usually only a weak link to financial products. This differentiates them from our cloud-based mining format: although the amounts were small, our rewards were tied to Bitcoin. Users understood that they could use the satoshis they earned on payment or savings services. This allowed us to create genuine value, not just an incentive to play.
The power of gamification in Fintech
Gamification turns tedious financial operations into engaging tasks. People love the feeling of accomplishment, and mechanics that include timers and rewards effectively stimulate activity. The key is to make sure the “game” doesn’t become an end in itself: simply tapping buttons for virtual rewards.
Our example showed that cloud-based synthetic mining can be sustainable if it is based on an economically sound system. Participation is high because people feel like they are actually “mining” cryptocurrencies despite their token amount, while the platform can guide them to use its core products. This delivers the desired business outcome: increased conversion to actual transactions and increased loyalty.
Lessons and future perspectives
Cloud mining speaks volumes about how new gamification mechanics, combined with well-thought-out product economics, can result in explosive growth in retention and reach. The distribution of microscopic portions of Bitcoin is fully justified in cases where those portions are integrated into the application ecosystem.
It is the key to success: the tiered system that balances “free access” with the need for real user participation. If a user wants unlimited mining, they must become a real customer: make some transactions and generate income for the company. That is why this gamification will be more than a “decoy”; It provides an obvious way in which each participant can become more experienced and active. Although new tapper applications and other formats continue to appear, only those that offer 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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