A cohort-based survival model represents users as monthly cohorts that decay at archetype-specific rates, separating long-term holders from yield tourists rather than applying one flat churn rate. It captures the reality that different user types hold, redeem, and exit on entirely different timelines.
Output is sensitive to the archetype mix in your funnel, not just total growth. Acquiring mostly yield tourists produces a very different survival curve than acquiring long-term participants at the same headline rate.
How it works
Every month's new users form a distinct cohort, and each cohort ages under its own archetype-specific retention curve. The live user base at any point is the sum of surviving members across all prior cohorts, each aged by months since they joined. That is fundamentally different from a single flat churn rate, which assumes someone who joined three years ago is as likely to leave next month as someone who joined last week.
The model defines two to four archetypes. A long-term holder cohort might retain 85% through month twelve and stabilize near 70% through year three. A yield-seeking cohort might retain 60% through month three, then collapse below 20% by month six as incentives wind down. Each archetype also routes redemptions differently, and separating those behaviors produces materially different demand and supply dynamics than a blended rate would.
How we approach it
We parameterize retention curves from empirical data on comparable protocols wherever it exists. On-chain retention metrics, wallet activity survival curves from DeFi protocols, and Web3 lifecycle studies provide calibration anchors. Where comparable data is missing, we use conservative assumptions and flag the archetype-mix sensitivity explicitly in the sensitivity analysis rather than hiding it inside an average.
Common mistake
Using a single average churn rate from aggregate protocol statistics. Aggregate churn is a blend of the underlying archetypes, accurate for no individual segment and misleading for the whole. When yield-seeking capital dominates early growth, as it often does during incentive programs, an averaged rate dramatically overstates the durability of the early base and understates the redemption pressure that arrives when incentives end.
See Tokenomics Design Services for how this applies in practice.
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