This article is based on a HyperNest masterclass led by Roman Prokarenko, Head of Product at Mellow. It summarizes and organizes the key lessons from the session for Web3 founders.

For many Web3 startups, growth can look real before demand is real.

A token incentive, points campaign, or airdrop expectation can create activity very quickly. Users may connect wallets, make transactions, deposit capital, bridge assets, join communities, and return repeatedly.

But that does not always mean the product has product-market fit.

One of the core warnings from Roman’s masterclass was simple: bought users are often not real users. If people interact with a product mainly because they expect a reward, the team may be measuring temporary activity instead of genuine demand.

This is one of the hardest product-market fit problems in Web3. Token incentives can help create motion, but they can also make it harder to see whether users genuinely need the product.

Roman brought this perspective from his experience across Web2 growth, SaaS, performance marketing, analytics, NFTs, zkTLS, privacy, and DeFi. In the session, he shared a practical view on how early-stage Web3 startups should think about product-market fit, roadmap prioritization, incentives, analytics, and growth.

The message was clear: Web3 founders should stop building around hype and start validating real demand.

What Web3 Product-Market Fit Really Means

Product-market fit means that a product solves a real problem for a specific market, and users care enough to keep using it and commit value to it in some form.

For Web3 startups, PMF can look different depending on the product category.

For a DeFi protocol, it may show up through repeated transactions, sticky TVL, deposits, or fees. For an infrastructure startup, it may come through integrations, developer usage, API calls, or long-term partners. For a consumer crypto product, it may appear through retention, referrals, community activity, or repeated usage.

The exact metrics may vary, but the principle is the same: real product-market fit is proven by user behavior, not by hype.

A startup does not have product-market fit just because it has attention, followers, airdrop hunters, or short-term liquidity. It has product-market fit when users continue to engage because the product gives them real value.

Token Incentives Can Create Noise, Not Demand

Token incentives have played a major role in crypto startup growth. Airdrops, liquidity mining, points campaigns, and token rewards have helped protocols attract users and liquidity quickly.

But incentives can also create misleading signals.

When a startup pays users to interact with a product, it becomes difficult to understand whether people are using the product because they value it or because they expect a reward. This is especially dangerous for early-stage teams trying to understand whether they have product-market fit.

In Roman’s view, incentivized users are often not real users. They may be mercenary users who leave once the incentive disappears. This means the startup may be optimizing for the wrong signal: activity instead of demand.

For founders, the key question is not:

Can we attract users with incentives?

The better question is:

Would users still come back if the incentives disappeared?

If the answer is no, the product may not have real product-market fit yet.

Incentives Can Distort The Feedback Loop

The deeper risk is not only that incentives attract temporary users.

The deeper risk is that incentives can distort the product feedback loop.

A points campaign can make a product look active. A liquidity program can make TVL look sticky. An airdrop expectation can make users return. But if those behaviors disappear once the reward changes, the team may be learning from the wrong signal.

This is why Web3 founders need to separate the two questions:

Are users active?

And:

Are users active because the product is valuable?

Those are not the same thing.

The real product-market fit test is not how much activity happens during an incentive campaign. It is what behavior remains after incentives are reduced, removed, or made less predictable.

Can Crypto Incentives Ever Be Useful?

Roman did not argue that incentives will disappear completely.

His view was more specific: direct liquidity incentives are becoming less reliable as a core growth strategy.

In early crypto, incentives helped compensate users for the difficulty of using new products. Wallet setup was hard. UX was poor. Users had to spend time learning unfamiliar systems. Incentives helped subsidize that effort.

But the market has changed.

Users are more sophisticated. Airdrop farming is more competitive. Foundations and protocols know that mercenary capital often leaves quickly. Recent incentive campaigns have also created frustration when rewards feel too small, too complex, or too extractive.

Roman’s view is that crypto incentives may evolve into something closer to loyalty programs, gas rebates, access benefits, better pricing, special tiers, or other non-directly-financial rewards.

In other words, incentives may still have a role. But they should not be the foundation of product-market fit.

Product first. Incentives second.

Narratives Are Not Product-Market Fit

Crypto moves in cycles. One season, the attention is on NFTs. Another season, it is meme coins. Then prediction markets, restaking, AI agents, or another emerging category takes over.

These narratives can create huge momentum, but they can also be dangerous for builders.

By the time a narrative becomes obvious to everyone, it may already be too late to build around it. The best products are often not the ones that simply chase the current trend. They are the ones solving a real problem with clear user demand.

Founders should be careful not to confuse market hype with market need.

A strong narrative can help distribution, but it cannot replace a useful product. If a startup is only relevant because of the current market narrative, it may struggle once attention moves elsewhere.

What Users Do Matters More Than What They Say

Early-stage founders often receive positive feedback from investors, partners, friends, conference attendees, and community members.

This feedback can feel encouraging, but it is not always useful.

People may say they like an idea. They may say they would use a product. They may even say the roadmap sounds exciting.

But what they say is less important than what they actually do.

Real user behavior gives founders much stronger signals.

Do users return? Do they complete the core action? Do they deposit, transact, trade, stake, or integrate? Do they invite others? Do they pay in some form? Do they continue using the product without incentives?

These actions reveal much more than polite feedback.

For a Web3 startup, this is especially powerful because so much user activity is visible on-chain. Founders can analyze wallets, transactions, smart contract interactions, liquidity flows, repeat usage, and competitor activity.

This gives Web3 teams a major advantage compared to many Web2 products.

Use On-Chain Analytics And Product Analytics Together

One of the strongest points from the masterclass was that Web3 teams should not rely only on on-chain analytics.

On-chain analytics are important, but they are only one part of the user journey.

Most users still interact with crypto products through a website or app interface. That means founders also need to understand what happens before the transaction.

For example:

• Where do users come from?
• Which pages do they visit?
• Where do they drop off?
• What buttons do they click?
• Which steps create friction?
• How long do they spend before taking action?
• Do they return later?
• Do they start an action but fail to complete it?

This type of front-end product analytics can reveal problems that on-chain analytics alone cannot show.

A user may visit the app, connect their wallet, explore the product, and then leave before completing a transaction. If the team only looks at on-chain data, they may never understand what went wrong.

The best approach is to connect both layers:

on-chain behavior + front-end product behavior

Together, they give a clearer view of the full user journey.

Define The Conversion Event That Proves Demand

Roman emphasized that founders need to identify the action that actually matters.

Every product needs a conversion event: the behavior that proves the user received enough value to commit.

For a DeFi product, that may be a deposit, swap, borrow, repayment, LP position, repeat transaction, or retained TVL.

For an infrastructure product, it may be an integration, API call, developer activation, partner usage, or repeat usage by another protocol.

For a consumer product, it may be repeat sessions, referrals, content creation, community participation, or time spent.

Without a clear conversion event, teams may end up measuring surface activity instead of real demand.

The question is:

What action proves that users care?

If the team cannot answer that clearly, the product may still be before product-market fit.

Users Always Pay In Some Form

A useful way to think about demand is this: users always pay in some form.

They may pay with capital through deposits, fees, subscriptions, or transactions.

They may pay with attention by spending time in the product or consuming content.

They may pay with data by sharing information that helps the product create value.

If users are not paying in any form, there may be no validated demand.

This does not mean every early-stage product needs immediate revenue. But it does mean founders need to define what meaningful user commitment looks like.

The key is to identify a real form of payment or commitment.

Without that, a startup may only be measuring interest, not demand.

Start Narrow And Learn From Power Users

Early-stage startups usually do not have unlimited resources. This means they should avoid trying to build for everyone at once.

Instead, Roman recommends starting narrow.

Founders should identify the users who care the most. These may be whales, power users, early partners, integrations, or anchor clients. Their behavior can help reveal what the product is actually useful for.

Sometimes, the first serious users define the direction of the product. They request specific features, use the product in unexpected ways, or show the team where the strongest demand exists.

This is especially important when the market is still immature.

Rather than forcing the original idea, founders should observe where real usage is happening and adapt from there.

Do Not Fall In Love With The Technology

One of the common traps Roman called out is especially relevant in crypto: technical founders often believe that strong technology will create adoption on its own.

It usually does not.

A product can be technically impressive and still fail to attract a sustainable user base.

Roman gave the example of past Layer 2 conversations where teams compared throughput and TPS as if those metrics alone would decide adoption. But in practice, usage, distribution, ecosystem strength, UX, liquidity, and timing often matter more than raw technical capability.

Technology matters. But technology alone is not a marketing engine.

Founders still need to define:

• who the product is for
• what problem it solves
• how users discover it
• why users return
• what growth loop can scale

A beautiful technical system does not automatically become a business.

Define Your Acquisition Loop

A product will not grow simply because it exists.

Founders need a clear view of how users will discover, try, and return to the product.

That acquisition loop may come from:

• personal outreach
• partnerships
• integrations
• performance marketing
• communities
• ecosystem distribution
• events
• referrals
• developer adoption
• protocol-to-protocol relationships

The right loop depends on the product.

A DeFi vault product may grow through integrations, yield strategies, and distribution partners. A developer infrastructure product may grow through technical documentation, ecosystem grants, and protocol relationships. A consumer crypto product may need social loops, referrals, and community behavior.

The important thing is to define the loop instead of assuming growth will happen naturally.

Look For Asymmetrical Opportunities

Founders should not always try to compete directly with bigger or more established competitors.

If a competitor is already strong in a specific area, going head-to-head can become expensive and inefficient.

Instead, startups should look for asymmetrical opportunities.

This means finding weaknesses, gaps, underserved user segments, or use cases that larger competitors are ignoring.

In early markets, products are often not as similar as they first appear. Different teams may have different technical approaches, user groups, philosophies, or distribution advantages.

The goal is not always to beat competitors directly. Sometimes, the better strategy is to grow the category, occupy a unique position, and build where others are not focused.

Watch What Users Are Already Hacking Together

Another useful signal Roman mentioned is to look at what users are already hacking together themselves.

In DeFi, users often create their own workflows before products exist to serve them properly. They build tracking sheets, private chats, alerts, bots, dashboards, scripts, monitoring systems, and manual processes around the products they use.

These workarounds can reveal unmet demand.

If users are repeatedly building their own unofficial solution around a problem, that may be a sign that the market needs a better product.

Founders should pay attention to these patterns. Sometimes the best startup ideas are hidden inside user workarounds.

Build Defensible Features

Once a startup finds a real problem and a promising niche, it should invest in things that are harder to copy.

In crypto, anything that can be copied easily may not create a durable advantage for long.

Defensibility can come from:

• proprietary data
• integrations
• liquidity relationships
• distribution
• UX quality
• risk systems
• community trust
• partner networks
• operational execution
• product depth

The goal is not just to ship features. The goal is to build something that becomes increasingly difficult for others to replicate.

Do Not Marry The Initial Idea

One of the biggest mistakes founders make is becoming too attached to the original product idea.

In reality, the first idea is often wrong, incomplete, or too broad.

The goal is not to defend the original concept. The goal is to find what works.

This requires fast iteration, honest analysis, and the willingness to pivot when the data shows a better opportunity.

Founders should regularly ask themselves:

Is this the most impactful thing we can build right now?

If the answer is no, the roadmap should change.

A startup’s roadmap should not be treated as a fixed plan. It should be treated as a set of hypotheses that need to be tested against real user behavior.

The Token Is Not The Product

A common mistake in Web3 is treating the token as the center of the product.

Roman’s view is simple: the token is not the product.

In fact, a token can become a burden if it is introduced too early. It creates another layer of complexity around economics, incentives, governance, community expectations, and market pressure.

If the core product does not work, a token will not fix it.

Founders should focus on building a product that solves a real problem first. If the product works, there will be better opportunities to design and launch a token later.

Product first. Token second.

Good UX Is Still A Major Advantage In Crypto

Crypto UX has improved significantly, but it is still far from perfect.

Many products remain difficult to use, especially for users who are not deeply familiar with wallets, gas fees, bridges, signatures, and transaction flows.

This creates an opportunity.

A product does not always need to win by having the most advanced technology. Sometimes, it can win by making the experience simpler, faster, clearer, and more enjoyable.

Founders should pay close attention to onboarding, wallet connection, transaction flow, error messages, education, and interface design.

In a market where many products still feel complex, good UX can become a real competitive advantage.

Be Careful With Early Marketing Spend

Another common trap for early-stage startups is spending too much on visibility before the product is ready.

This often happens after raising a first round of funding. Teams feel pressure to look active, attend major conferences, sponsor events, buy booths, and create noise.

Roman’s advice was direct: do not rush into expensive visibility before you know what you are trying to learn or achieve.

A booth, sponsorship, or speaker slot can look impressive, but it may not create much value if the product is not ready, the target user is unclear, or the team has no specific goal.

For early-stage teams, direct conversations, targeted outreach, integrations, collaborations, and focused experiments may be more valuable than broad awareness campaigns.

Before spending heavily on marketing, founders should ask:

• Are we validating demand?
• Are we looking for users?
• Are we building partnerships?
• Are we closing integrations?
• Are we testing acquisition channels?
• Are we just trying to look active?

Without a clear goal, marketing spend can become a vanity exercise.

Product-Market Fit Checklist For Web3 Founders

Before spending heavily on growth, incentives, or token campaigns, founders should pressure-test whether they are seeing real product-market fit signals.

Use this checklist as a starting point:

• Clear problem: Are you solving a specific problem for a specific user segment?
• Real user behavior: Are users taking meaningful actions, not just giving positive feedback?
• Repeat usage: Do users come back without being pushed by incentives?
• Conversion event: Have you defined the core action that proves demand, such as a deposit, transaction, integration, API call, referral, or retained usage?
• On-chain analytics: Are you tracking wallet behavior, smart contract interactions, liquidity movement, and repeat transactions?
• Product analytics: Are you tracking the front-end journey, including drop-off points, wallet connection, clicks, and failed actions?
• Power users: Do you know who your most active users are and why they keep using the product?
• Retention: Are users staying after the first interaction?
• Willingness to pay: Are users paying in capital, attention, data, integrations, or another meaningful form of commitment?
• Roadmap discipline: Are you prioritizing features based on evidence instead of assumptions?
• Incentive independence: Would users still use the product if the incentives disappeared?
• Acquisition loop: Do you know how new users discover, try, and return to the product?
• Asymmetrical opportunity: Are you building where competitors are weak or where the market is underserved?
• Defensibility: Are you building something that becomes harder to copy over time?

If the answer to most of these questions is unclear, the startup may still be before product-market fit. That is not a failure. It simply means the team should focus on learning, testing, and narrowing the product direction before scaling.

Build For Product-Market Fit, Not Hype

The main takeaway from the masterclass is that Web3 startups need to build with product-market fit as the goal.

Not incentives.

Not narratives.

Not token speculation.

Not conference visibility.

Not vanity metrics.

Real product-market fit comes from solving a problem that users genuinely care about. It shows up in behavior, not opinions. It can be measured through usage, retention, repeat actions, payments, integrations, and other meaningful commitments.

For early-stage founders, the path is simple but difficult:

• Track real behavior.
• Talk to the right users.
• Focus on clear conversion events.
• Use both on-chain analytics and product analytics.
• Start narrow.
• Learn from power users.
• Find asymmetrical opportunities.
• Iterate quickly.
• Pivot when needed.
• Spend carefully.
• Build something users would still want without incentives.

That is how Web3 startups move from temporary traction to real demand.

And that is where sustainable startup growth begins.

At HyperNest, we partner with early-stage DeFi and Web3 founders to move from early traction to real demand. Through our Venture Studio model, we help teams validate their market, sharpen product direction, and prepare for sustainable growth. If you’re building in DeFi or Web3, apply to work with HyperNest.