By Zhen Yu Yong, CEO and Co-Founder of Web3Auth
There are endless theories about what exactly is holding cryptocurrency and DeFi back from true mainstream adoption, even as the industry continues to expand into the hundreds of billions. However DeFi differs from traditional economic fads and markets, it is exactly the same in terms of the obsession with trend forecasting and growth forecasting in varying and increasingly arbitrary proportions. It’s easy to get excited about the idea that “the decentralized finance sector is currently just 0.1% of its peak potential,” as reported in Cointelegraph, but what exactly that means – or how one might measure the “maximum potential” – is typically fuzzy.
All of these forecasts and trend forecasts have a very specific mad enthusiasm, which permeates DeFi and crypto even in its most bearish markets. This is not a criticism. It is indeed exciting. An unfortunate side effect, however, of this excitement and enthusiasm among true believers (and, periodically, even skeptics) is either unintended avoidance or vast over-complication of the mass adoption problem and its potential solutions.
When you’re immersed in DeFi and watching it grow as it is, it’s easy to overlook your own myopia. But DeFi’s recent growth has yet to translate into mass adoption. Blockchain technology is totally opaque to the vast majority of people, and crypto types, if you will, are considered a slightly weird subculture and regularly derided as jester bros (or worse) on Twitter.
But the solution to this is actually quite simple. It’s not Matt Damon or Kyle Lowry shilling for Crypto.com and BitBuy in Super Bowl ads. It’s not even Coinbase’s viral bouncing QR code, which enough people have scanned to temporarily crash the website. If anything, the number of crypto ads during the Super Bowl and the Coinbase crash demonstrate that sensitization is not the problem. People are aware. They are even curious!
The problem is UX. Overall, the crypto wallet and DeFi UX product fall short. It doesn’t matter if everyone scans your QR code if you can’t keep them there afterwards.
Inside infrastructure, UX, use case feedback loop
Truly useful and intuitive UX in this space starts with the underlying infrastructure. The basic infrastructure is what allows the UX to improve. Scalability allows users to not have to wait for each interaction and allows more interactions on the cheaper blockchain, so more people can use it. It is the experience from the infrastructure to the user.
But for now, you need to know which blockchain you are interacting with. You need to know exactly how to interact with him. There is an endless amount of jargon and a general assumption and expectation that users will just to know. It is a huge stumbling block to integrating progress.
We need an industry-wide push to strengthen our infrastructure, speed up the onboarding process, create protections against theft and loss, and make day-to-day key management less of a nightmare. Efforts to improve and increase the scalability of platforms are ongoing and that is exactly what needs to happen.
This equation is simple: as technical barriers decrease, use cases will increase and more people who were not using DeFi applications before will be attracted. Imagine decentralized Twitter, decentralized Google Maps, or anything already intuitive with no-heads. It’s a beginning.
From an information theory perspective, the adoption of crypto quickly coordinates the various participants in an ecosystem. This works in DeFi because you don’t need a central entity coordinating the issuance and burning of currency. He works in the art and real estate space to establish uniqueness and social consensus around digital property.
But these are still niche cases. People already have banks and cash. Most people would rather hang something on their wall than own an NFT. This is where the real and obviously smart use cases of decentralized technology should come in: supply chains and political elections are two examples.
Two keys to true UX improvement
UX-ing our path to mainstream adoption depends on two crucial improvements.
The first is better key management. The single point of failure must disappear. We need intuitive connections that don’t rely on one overly long phrase that will take all your funds with it if lost or stolen. It’s a terrible system and it’s weird that we’ve come this far. It’s time to phase out key phrases.
The second is genuine FIAT readable for crypto onramps. I am not anti-FIAT. There is value in FIAT core currencies based on the underlying promises used to manage the assets. There is also value in decentralized economic ecosystems, especially now that cryptocurrency is more efficient than standard currencies.
We will convince people to embrace crypto when we create on-ramps that make crypto truly attractive and easy to buy and manage as part of a larger asset portfolio. The UX has to be rock-solid for that to happen, and PayPal’s crypto portal is a good start here. Eventually, you will be able to use a credit card to purchase any crypto item and not have to go through KYC. It’s the basic infrastructure (as well as the coming FIAT-crypto legal rails) improving on UX, and that’s key to the future).
Everything is aimed at improving the end-user experience. Improving UX, strengthening our infrastructure, and leading the way to mainstream adoption is ultimately just one thing. And that’s the only thing that could get us over the moon of mainstream adoption.
About the Author:
Zhen Yu Yong is the co-founder and CEO of Web3Auth (FKA Torus). Prior to Web3Auth, Zhen was an ETH researcher specializing in scalability and state channels. He led Peace Bridge funded by both the Ethereum Foundation and ETC Cooperative. He lives and works in Singapore.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.