As I continue diving deeper into the Ethereum and Web3 space, one thing has become clear. The most successful ecosystems don’t just grow, They create feedback loops that feed themselves. These aren’t just marketing tricks or token gimmicks. They’re structural patterns in how value, users, and developers flow through the EVM world.

Let’s break down the major Web3 growth loops I’m seeing play out across the Ethereum Virtual Machine (EVM) ecosystem, and why they matter as we build toward a more decentralized future.

1. Incentives → Onchain Activity → Revenue → More Incentives

It starts with protocols offering incentives, airdrops, points, yield, you name it. This attracts users who bring liquidity, generate volume, and create transaction fees. That activity translates to protocol revenue, which then fuels more incentives.

Example protocols:

Friend.tech- turned social activity into trading volume
Blast - incentives tied to onchain TVL and usage
LayerZero - multi-chain points system rewarding real usage

Why it works: Early user behavior is gamified, but the underlying activity helps bootstrap liquidity and adoption.

The challenge: If incentives dry up and the product doesn’t provide real value, the loop breaks. We're seeing smarter protocols tie rewards to useful actions like contract deployments, long-term staking, and meaningful governance participation.

2. Developer Growth → App Deployment → User Demand → Tooling Upgrades

This loop is all about infrastructure investing in builders. L2s like Base, Arbitrum, and Optimism are pouring resources into grant programs, and simplified onboarding for devs. More devs means more apps, which drives user demand, leading to more feedback and better dev tools.

It’s a loop:

Better tooling → More devs
More devs → More dApps
More dApps → More users
More users → More demand for tooling

Why it works: Ethereum’s modularity makes it easy for developers to innovate, and each new app brings its own gravity.

3. Community Ownership → Governance → Product Improvements → Retention

This loop leans into the ethos of Web3: users as owners.

When users have tokens and a voice in governance, they’re more likely to stay, contribute, and improve the product. As the product gets better, more users stick around, strengthening the community and the value of governance tokens.

Examples:

Uniswap – protocol changes led by community proposals
ENS – DAO steers the direction of a critical naming layer
Gitcoin – public goods funding refined through governance

Why it works: It turns passive users into active participants, giving people a reason to care beyond speculation.

4. Composability & Interop → More Use Cases → More Adoption → More Composability

Ethereum’s modular stack is starting to look like a real interoperable engine. L2s are connecting to restaking protocols (EigenLayer), modular DA layers (Celestia), and cross-chain bridges (LayerZero). This creates a “plug and play” world where apps can mix and match tools to serve users.

The loop:

More modular tools → More powerful apps
More apps → More users
More users → More incentive to innovate at the infra layer

Why it works: Builders don’t have to reinvent the wheel. They can build faster, safer, and more flexibly.

5. Identity → Activity → Reputation → Opportunity

We’re entering a new loop around onchain identity and reputation. As users create, transact, and interact, they leave behind a trail of proof, mints, social posts, governance votes, and more. This data builds reputation, which in turn unlocks more opportunities. Access to jobs, drops, collabs, and higher trust.

Protocols leaning into this:

Farcaster – social graph onchain
Lens Protocol – portable social identity
Zora – creators earn reputation through minting and curation

Why it works: In a decentralized world, your wallet is your resume. The more you do onchain, the more you earn trust and access.

Final Thought: Sustainable Loops > Flashy Campaigns

What excites me most is watching the shift from hype-based growth to loop-based ecosystems. These loops, when done right, aren’t about short-term traction, They're about building systems that feed back into themselves and compound over time.

Ethereum’s EVM ecosystem is turning into a living organism, with incentives, builders, and users all playing interconnected roles.

And if you’re building in this space, or learning, these are the loops worth watching.

If you would like a even simpler version of this, DM me on X sam orth - I enjoy using real life analogies making Web3 more approachable.

Web 3 Growth Loops: What I am seeing In the EVM Ecosystem