Unit Economics

Unit economics define the profitability per user and overall path to sustainable business. This section models OROKAI's revenue and costs at the user level, identifies key profitability levers, and projects break-even scenarios.

Revenue structure per user (simplified model)

Basic Formula

Unit Profit = ARPU (Average Revenue Per User) - CAC (Customer Acquisition Cost) - CPS (Cost Per Service)

Where:

• ARPU = Average monthly revenue generated per active user
• CAC = One-time cost to acquire the user (marketing, onboarding)
• CPS = Ongoing monthly cost to serve the user (infrastructure, support)

Profitability achieved when: Unit Profit > 0 (over user lifetime)

ARPU: Average Revenue Per User

ARPU varies significantly based on user type and activity level.

ARPU Components (Monthly)

ARPU Sources:

• On-chain operations (swaps, bridges, migrations)
• Staking automation (auto-claim fees)
• Card transactions (spending)
• On/off-ramp (fiat conversions)
• Gas markup (all transactions)

Formula: ARPU = Σ (Activity_i × Fee_i × Frequency_i)

Where:

• Activity_i = Type of operation (swap, stake, card, etc.)
• Fee_i = OROKAI's fee for that operation
• Frequency_i = How often user performs that operation per month

User Segments & ARPU Tiers

Segment 1: Casual User (Inactive)

Profile:
├─ Signed up, did initial on-ramp
├─ Holds crypto but doesn't transact
├─ No card usage, no staking
└─ Maybe 1-2 swaps per year

Monthly Activity:
├─ Swaps: 0.1/month × $5 fee = $0.50
├─ Card: $0
├─ Staking: $0
├─ On-ramp: $0 (already onboarded)
└─ Gas markup: ~$0.10

ARPU: $0.60/month or $7.20/year

Frequency: ~40% of users (dormant/inactive)

Segment 2: Basic User (Low Activity)

Profile:
├─ Occasional swaps (testing waters)
├─ Small staking position (manual claim)
├─ Rare card usage
└─ Checks app monthly

Monthly Activity:
├─ Swaps: 2/month × $5 fee = $10
├─ Card: $200 spend × 0.3% = $0.60
├─ Staking: Manual (gas only) = $0.30
├─ On-ramp: $0
└─ Gas markup: ~$2

ARPU: $12.90/month or $154.80/year

Frequency: ~30% of users

Segment 3: Active User (Moderate Activity)

Profile:
├─ Regular swaps (portfolio rebalancing)
├─ Moderate staking ($10k-50k TVL)
├─ Card as secondary spending method
└─ Checks app weekly

Monthly Activity:
├─ Swaps: 8/month × $8 fee = $64
├─ Card: $1,000 spend × 0.3% = $3
├─ Staking (auto-claim): $50/month rewards × 8% = $4
├─ Bridge: 1/quarter (÷3) = $1.67
└─ Gas markup: ~$8

ARPU: $80.67/month or $968/year

Frequency: ~20% of users

Segment 4: Power User (High Activity)

Profile:
├─ Daily trader/rebalancer
├─ Large staking position ($100k-500k TVL)
├─ Card as primary spending method
├─ Active in affiliate program
└─ Uses AI automation features

Monthly Activity:
├─ Swaps: 30/month × $10 fee = $300
├─ Card: $5,000 spend × 0.3% = $15
├─ Staking (auto-claim): $500/month rewards × 8% = $40
├─ Bridge: 2/month × $5 = $10
├─ Migration: 1/quarter (÷3) = $7
└─ Gas markup: ~$35

ARPU: $407/month or $4,884/year

Frequency: ~8% of users

Segment 5: Whale (Institutional/HNW)

Profile:
├─ Multi-million TVL ($1M+)
├─ Frequent large transactions
├─ Card for business expenses
├─ Complex strategies (migrations, cross-chain)
└─ Dedicated account management

Monthly Activity:
├─ Swaps: 50/month × $50 fee (larger sizes) = $2,500
├─ Card: $20,000 spend × 0.3% = $60
├─ Staking (auto-claim): $10,000/month rewards × 8% = $800
├─ Bridge: 5/month × $20 = $100
├─ Migration: 2/month × $50 = $100
└─ Gas markup: ~$150

ARPU: $3,710/month or $44,520/year

Frequency: ~2% of users

Blended ARPU Calculation

Weighted Average ARPU (100,000 total users):

├─ Casual (40%): 40,000 users × $0.60 = $24,000/month
├─ Basic (30%): 30,000 users × $12.90 = $387,000/month
├─ Active (20%): 20,000 users × $80.67 = $1,613,400/month
├─ Power (8%): 8,000 users × $407 = $3,256,000/month
└─ Whale (2%): 2,000 users × $3,710 = $7,420,000/month

Total Monthly Revenue: $12,700,400
Blended ARPU: $127/month or $1,524/year

Note: This is GROSS revenue before affiliate payouts

CAC: Customer Acquisition Cost

Acquisition Channels & Costs

Channel 1: Affiliate Program (Primary)
├─ Upfront CAC: $0 (pay only on revenue)
├─ Ongoing cost: ~15% of user's revenue (lifetime)
├─ Effective CAC (amortized over Year 1): $195 per user
└─ Best for: Scalable, predictable growth

Channel 2: Paid Advertising (Google/Meta)
├─ Upfront CAC: $80-$150 per signup
├─ Conversion rate: 30-50% (signup → first transaction)
├─ Effective CAC: $160-$300 per active user
├─ Ongoing cost: $0 (one-time)
└─ Best for: Rapid growth spurts, geographic expansion

Channel 3: Content Marketing (SEO/Blog)
├─ Upfront CAC: $20-$40 per signup (amortized content costs)
├─ Conversion rate: 50-60% (high intent traffic)
├─ Effective CAC: $33-$80 per active user
├─ Ongoing cost: Minimal (content evergreen)
└─ Best for: Long-term sustainable growth

Channel 4: Partnerships (B2B/Integrations)
├─ Upfront CAC: Variable ($0-$50k per partnership)
├─ Per-user CAC: $10-$50 (depends on partner size)
├─ Conversion rate: 60-80% (pre-qualified users)
├─ Effective CAC: $13-$83 per active user
└─ Best for: Institutional/whale acquisition

Channel 5: Organic/Viral (Word of Mouth)
├─ Upfront CAC: $0
├─ Ongoing cost: Product quality + support
├─ Effective CAC: $5-$15 per user (support/infra only)
└─ Best for: Long-term, compound growth

Blended CAC (Target Mix):

Acquisition Mix (Year 1-2):
├─ Affiliate: 60% of users → $195 × 0.60 = $117
├─ Paid Ads: 20% of users → $230 × 0.20 = $46
├─ Content: 10% of users → $57 × 0.10 = $5.70
├─ Partnerships: 5% of users → $48 × 0.05 = $2.40
└─ Organic: 5% of users → $10 × 0.05 = $0.50

Blended CAC: $171.60/user

Note: This is one-time cost (except affiliate, which is ongoing %)

CPS: Cost Per Service (Monthly)

Ongoing costs to serve each user:

Infrastructure Costs (Variable)

Per Active User Per Month:

RPC/Indexing:
├─ Multi-chain RPC calls: ~10,000 calls/month
├─ Cost: $0.0001-0.0003 per call
└─ Monthly: $1-$3 per user

Data Storage:
├─ Transaction history, wallet state, analytics
├─ ~50 MB per user per month
└─ Monthly: $0.10-$0.30 per user

CDN/Hosting:
├─ App delivery, static assets
└─ Monthly: $0.20-$0.50 per user

Monitoring/Observability:
├─ Logs, metrics, traces
└─ Monthly: $0.15-$0.40 per user

Total Infrastructure (Variable): $1.45-$4.20 per user/month
Average: ~$2.50/user/month

Support Costs (Variable)

Customer Support:

Casual/Basic Users (70% of users):
├─ Rare support tickets (~0.1 ticket/month)
├─ Cost per ticket: $5 (automated + tier-1)
└─ Monthly: $0.50/user

Active/Power Users (28% of users):
├─ Moderate support (~0.5 ticket/month)
├─ Cost per ticket: $8 (tier-1 + some tier-2)
└─ Monthly: $4/user

Whale Users (2% of users):
├─ High-touch support (~2 tickets/month)
├─ Cost per ticket: $15 (tier-2 + dedicated)
└─ Monthly: $30/user

Blended Support Cost:
├─ 70% × $0.50 = $0.35
├─ 28% × $4 = $1.12
└─ 2% × $30 = $0.60
──────────────────────
Total: ~$2.07/user/month

Fixed Costs (Allocated Per User)

Fixed Monthly Costs (Total):
├─ Engineering/Product: $150,000
├─ Security/Audits: $50,000
├─ Compliance/Legal: $30,000
├─ Admin/Operations: $20,000
└─ Marketing (Brand): $50,000
──────────────────────
Total Fixed: $300,000/month

Allocated Per User (100,000 users):
$300,000 ÷ 100,000 = $3/user/month

At Scale (500,000 users):
$300,000 ÷ 500,000 = $0.60/user/month

Note: Fixed costs don't scale linearly; economies of scale improve margin

Total CPS (Cost Per Service)

Per Active User Per Month:

Variable Costs:
├─ Infrastructure: $2.50
├─ Support: $2.07
└─ Subtotal: $4.57

Fixed Costs (allocated):
└─ $3.00 (at 100k users)

Total CPS: $7.57/user/month at 100k scale
Total CPS: $5.17/user/month at 500k scale (economies of scale)

Segment-Level Profitability

Which user types are profitable?

Segment	ARPU (net)	CAC (Y1 amortized)	CPS	Unit Profit	Profitable?
Casual	$0.60	$14.30	$7.57	-$21.27	(loss leader)
Basic	$12.90	$14.30	$7.57	-$8.97	(marginal)
Active	$80.67	$14.30	$7.57	+$58.80	(profitable)
Power	$407	$14.30	$7.57	+$385.13	(highly profitable)
Whale	$3,710	$14.30	$30	+$3,665.70	(extremely profitable)

Insights:

1. Casual/Basic users are unprofitable in Year 1

   • But: They may convert to Active/Power over time (LTV matters)
   • Strategy: Minimize CAC for these segments (affiliate-first, not paid ads)

2. Active users are the sweet spot

   • 20% of users generate 30% of profit
   • Focus acquisition on this segment

3. Power/Whale users drive profitability

   • 10% of users generate 70% of profit
   • High-touch service justified (worth $30/month CPS for whales)

Profitability Levers

Lever 1: Increase ARPU

Strategies:
├─ Encourage higher activity (push notifications, gamification)
├─ Upsell premium features (auto-claim, AI strategies)
├─ Increase card usage (marketing, rewards)
├─ Cross-sell (if user only swaps, introduce staking)
└─ Launch new revenue streams (subscriptions, API access)

Impact:
├─ +10% ARPU → +$10.80/user/month
└─ Total profit: $103.3M → $116.3M (+12.6%) ✅

Feasibility: Medium (requires product development + marketing)

Lever 2: Reduce CAC

Strategies:
├─ Shift from paid ads → affiliate program (lower CAC)
├─ Improve content SEO (organic traffic)
├─ Referral incentives (viral growth)
├─ Partnerships (qualified leads at lower cost)
└─ Improve conversion funnel (reduce dropoff)

Impact:
├─ -20% CAC ($171 → $137) → -$2.86/user/month
└─ Total profit: $103.3M → $106.7M (+3.3%) ✅

Feasibility: High (operational improvements)

Lever 3: Reduce CPS (Infrastructure)

Strategies:
├─ Negotiate better RPC/cloud rates (volume discounts)
├─ Optimize RPC usage (caching, batch calls)
├─ Self-host critical infrastructure (vs SaaS)
├─ Automate support (AI chatbot, better docs)
└─ Scale fixed costs over more users (grow user base)

Impact:
├─ -20% CPS ($7.57 → $6.06) → +$1.51/user/month
└─ Total profit: $103.3M → $121.4M (+17.5%) ✅

Feasibility: High (engineering + scale)

Lever 4: Improve User Mix (Segment Shift)

Strategy:
├─ Target Active/Power/Whale users in marketing
├─ Qualify leads (discourage casual signups)
├─ Nurture Casual → Basic → Active (onboarding, education)
└─ Retain high-value users (dedicated support, perks)

Impact (shift mix from 40/30/20/8/2 to 30/25/25/15/5):

Before:
├─ Blended ARPU: $107.95/month

After:
├─ Casual (30%): 30% × $0.60 = $0.18
├─ Basic (25%): 25% × $12.90 = $3.23
├─ Active (25%): 25% × $80.67 = $20.17
├─ Power (15%): 15% × $407 = $61.05
└─ Whale (5%): 5% × $3,710 = $185.50
──────────────────────
New Blended ARPU: $270.13/month (+150%!) ✅✅

Total profit: $103.3M → $315M (+205%) ✅✅✅

Feasibility: Medium (requires targeted acquisition + retention)

Lever 5: Reduce Churn (Increase Lifetime)

Current Assumption: User lifetime = 24 months average

Churn Reduction Strategies:
├─ Improve onboarding (reduce early dropoff)
├─ Engagement features (notifications, insights)
├─ Loyalty rewards (token discounts, gamification)
├─ Network effects (affiliate ties users together)
└─ Switching costs (integrated into DeFi routines)

Impact:
├─ Increase lifetime 24 → 36 months (+50%)
├─ LTV increases proportionally
├─ More aggressive CAC viable (ROI still positive)
└─ Total profit grows as cohorts mature

Churn Rate Targets:
├─ Year 1: 30% (industry standard)
├─ Year 2: 20% (improving)
└─ Year 3+: 10% (mature, sticky users)

Feasibility: Medium (product + community building)

Sensitivity Analysis

How do key variables affect profitability?

Base Case (100k users):
├─ ARPU: $107.95/month
├─ CAC: $171.60 (Y1 amortized: $14.30/month)
├─ CPS: $7.57/month
└─ Unit Profit: $86.08/month → $103.3M/year total

Sensitivity Table:

Variable: ARPU (±20%)
├─ -20% ($86/month): Unit profit = $63.73 → $76.5M/year (-26%)
├─ Base ($108/month): $103.3M
└─ +20% ($130/month): Unit profit = $108.43 → $130.1M/year (+26%)

Variable: CAC (±20%)
├─ -20% ($137): Unit profit = $88.94 → $106.7M/year (+3.3%)
├─ Base ($172): $103.3M
└─ +20% ($206): Unit profit = $83.22 → $99.9M/year (-3.3%)

Variable: CPS (±20%)
├─ -20% ($6.06): Unit profit = $87.59 → $105.1M/year (+1.7%)
├─ Base ($7.57): $103.3M
└─ +20% ($9.09): Unit profit = $84.56 → $101.5M/year (-1.7%)

Variable: User Mix (shift to Power/Whale)
├─ Current mix: $103.3M
├─ Improved mix (+10% Power/Whale): $180M/year (+74%)
└─ Whale-heavy mix (double Whale %): $250M/year (+142%)

Variable: Scale (user count)
├─ 50k users: CPS $9.57 → Unit profit $83.08 → $49.8M/year total
├─ 100k users (base): $103.3M
├─ 500k users: CPS $5.17 → Unit profit $88.48 → $531M/year
└─ 1M users: CPS $4.57 → Unit profit $89.08 → $1.07B/year

Path to Profitability

Timeline & Milestones:

Month 0-6 (Launch):
├─ Users: 0 → 10,000
├─ Revenue: $0 → $1.1M/month
├─ Costs: High fixed + CAC investment
├─ Status: Unprofitable (expected)
└─ Burn Rate: -$500k/month (funded by raise)

Month 7-12 (Product-Market Fit):
├─ Users: 10,000 → 50,000
├─ Revenue: $1.1M → $5.4M/month
├─ Costs: Fixed improving, CAC scaling efficiently
├─ Status: Approaching break-even
└─ Burn Rate: -$100k/month → Break-even

Month 13-24 (Growth):
├─ Users: 50,000 → 150,000
├─ Revenue: $5.4M → $16.2M/month
├─ Costs: Economies of scale kicking in
├─ Status: Profitable ✅
└─ Monthly Profit: +$5M/month (30% margin)

Month 25-36 (Scale):
├─ Users: 150,000 → 500,000
├─ Revenue: $16.2M → $54M/month
├─ Costs: Strong economies of scale
├─ Status: Highly Profitable ✅✅
└─ Monthly Profit: +$25M/month (46% margin)

Year 4+ (Maturity):
├─ Users: 500,000 → 1M+
├─ Revenue: $54M+ → $100M+/month
├─ Status: Market Leader
└─ Annual Profit: $500M - $1B (50%+ margin)

Break-Even Analysis

At what scale does OROKAI become profitable?

Fixed Costs: $300k/month
Variable Cost Per User: $4.57/month (infra + support)
ARPU (net of affiliates): $107.95/month
CAC (amortized Y1): $14.30/month

Monthly Break-Even:

Fixed Costs ÷ (ARPU - Variable Cost - CAC) = Users Needed
$300,000 ÷ ($107.95 - $4.57 - $14.30) = $300,000 ÷ $89.08 = 3,368 users

Break-Even Point: ~3,400 active users

At 3,400 users:
├─ Revenue: 3,400 × $107.95 = $367k/month
├─ Variable Costs: 3,400 × $4.57 = $15.5k/month
├─ Fixed Costs: $300k/month
├─ CAC (amortized): 3,400 × $14.30 = $48.6k/month
└─ Profit: $367k - $15.5k - $300k - $48.6k = ~$3k/month ✅ (break-even)

Timeline to 3,400 Users:
├─ Aggressive growth: Month 4-5
├─ Moderate growth: Month 6-8
└─ Conservative growth: Month 9-12

Verdict: OROKAI can reach profitability within 4-12 months post-launch

Summary: Unit Economics Health

OROKAI Unit Economics Assessment:

Strong Blended ARPU: $108/month (healthy vs $50-80 industry avg)

Manageable CAC: $172 (recoverable in 2 months)

Low CPS: $7.57 (improves with scale)

Fast Payback: 2 months (CAC recovered quickly)

High LTV:CAC Ratio: 6:1 at Year 1 ($1,033 LTV ÷ $172 CAC)

Scalable: Economies of scale improve margin 30% → 50%+

Multiple Levers: Can improve profitability via ARPU, CAC, CPS, mix

Early Break-Even: Profitable at 3,400 users (~Month 4-12)

Risks:

• Casual/Basic users unprofitable (need to convert or avoid)
• High dependence on Power/Whale users (10% drive 70% profit)
• Affiliate costs permanent 15% drag (but enables growth)
• Churn risk (must maintain 24+ month lifetime)

Verdict: STRONG unit economics with clear path to profitability.

Scalability focus

Unit economics improve with scale – higher volumes drive down per-operation costs while maintaining quality and security standards.