Good Enough
Hey there!
Joel’s note: Saurabh is back from a much-deserved break in Switzerland. Today’s piece reflects on how UX in crypto is slowly evolving to be ‘good enough’.
We often hear that there are two kinds of capitulations. Of price and time. Price capitulation typically precedes time capitulation. The current market phase we are in is probably a time-based capitulation. It is a seemingly dull phase where the market does not move, and people get bored. I’ve heard anecdotes of intelligent traders and investors moving to other industries in this phase.
Quite recently, some of the largest market makers began pulling back from having an active presence in crypto. Why? We discussed how volatility is a strong hook for everyone in our piece on volatility as a service. The chart below tracking BTC and Netflix's volatility should explain why people are second-guessing. With dampened volatility, the fun is gone, too.
Smart people making such switches makes you wonder whether continuing to build cool things in crypto is a mistake. But then, you can call it conviction only when it is tested in these challenging times. You return to the drawing board and consider what must happen to unlock the next growth phase. My time off helped me think about where we are, our pressing needs as an ecosystem, and whether we are doing anything about them.
When I returned from my holiday, the experience of going through Zurich airport was as bad as possible. A few flights landed around the same time, and some passengers with connecting flights missed their next flights. Some flights were delayed. But a friend who stays there and has been through Zurich airport many more times than me vouched for transfers at Zurich airport to be smooth.
It made me think about how the same infrastructure can create different experiences depending on the demand. This got me thinking about the UX in crypto. The user’s experience varies from how you create a new wallet to how much fees you pay for a transaction.
Expanding the user base means we need many visitors, of which we will retain a few. Just like the Zurich airport, although the current crypto experience is tolerable for natives, we need to improve the UX for visitors who are used to much smoother experiences.
We tolerate the experience because we are either sold on the core ethos (of decentralisation) or believe that going through the experience will make us some money. Only a few go through the pain of bad UX because they believe in the cause. The industry will likely remain a niche if the UX doesn’t improve. We cannot expect to grow the pie with just speculation as a hook. We need users who want to use the applications because they are as good or better than their Web2 counterparts.
We often think of a problem and expect a single answer that addresses the issue. I expected the same for the UX in crypto without realising that several teams in different areas are solving this problem at the micro level. The UX is changing one step at a time, right in front of us. I want to list four examples in this piece with the same underlying theme – better UX.
Apart from scaling and better infrastructure, there are four key areas where UX is drastically improving. I summarise the key trends enabling shifts in how developers think of making products more appealing to users below.
Enabling Swaps for non-EVM Chains
With over 30 million monthly active users, MetaMask has been one of the most popular wallets in crypto. The reason is that users can interact with EVM-compatible chains through it. It can be difficult for users to maintain multiple wallets to interact with several chains. To attract and retain users, MetaMask's parent company, Consensys, launched Snaps, an SDK that allows developers to access MetaMask’s features like wallet, transaction processing and smart contract execution.
Snaps can interact with non-EVM chains, create portfolio-management tools or interact with NFT marketplaces depending on developers’ desire and ability to use MetaMask in the mix of what they build. A recent example is Solflare using Snaps to let users manage their Solana token holdings directly via MetaMask. Starkware also uses Snaps to let users manage assets on Starknet through MetaMask.
Tackling Voter Apathy
Voter apathy in DeFi is real. Aave, one of the most well-known protocols, has ~600k votes (~4%) out of the circulating supply of 14.5 million. Often, DeFi governance is run by a few closely involved in developing and maintaining protocols – typically those with significant skin in the game.
This might be because there aren’t many incentives for the smaller token holders, or they can’t keep up with the governance of several protocols. While there’s not much to be done for the first issue, the second is being tackled.
XMTP (Extensible Message Transport Protocol) is a standard for Web3 messaging. Any app that integrates XMTP can allow all its users to send secure messages to all the users in the XMTP ecosystem. XMTP integrated Snapshot, allowing DAOs to effectively reach their members without collecting personal information.
Voter apathy is one of the biggest concerns for DAOs. But how does XMTP help solve it?
They have built tools that notify users when protocols have proposals going live. As a user, I’ve found it challenging to keep track of proposals across DeFi. XMTP allows me to choose which protocols I want governance updates for, and whenever a new proposal is submitted, I get a notification. I can then interact with the proposal without leaving the app. So far, it works with Coinbase Wallet.
NoCode Tools For Creators
OpenSea launched its Studio, which acts as a one-stop shop for creators. It lets them launch and manage their projects with features that let them tweak allow lists and upload metadata. Artists can either mint these NFTs in their wallets or let collectors mint them using their choice of payment (WETH/ETH or credit/debit cards).
Artists have to pay the gas fees to deploy the contract. Then, they can customise their collection settings such as editing details, links to your socials, uploading all the assets, and setting up a mint schedule and presale pages.
When I tried to create a collection, I had to upload one image with the collection's name and sign a transaction to deploy a contract through my wallet (this costs gas). It took me less than a minute. Once the contract was deployed, I could edit all the fields shown in the screenshot. Essentially, they have made minting an NFT almost as easy as uploading an image to Google Drive.
But what happens once you mint? You need curators to help distribute it. Zora came out with a solution for that on Wednesday.
When launching a collection on Zora, creators had to pay gas fees in the past. The new approach lets creators launch collections without minting them on-chain. (Minting is when an individual comes and pays a small amount to purchase an NFT from an artist). The first minter is incentivised in the form of a portion of the mint fee.
According to Zora, first minters shall receive 0.000111 ETH for each NFT minted from an edition where they were the first minters. It allows creators to focus on their art and solves for distribution to an extent by introducing a ‘finder’s fee’ for collectors or curators.
Changes in OpenSea and Zora help the supply and demand sides of NFTs. Reduced friction means creator or artist onboarding is much easier, which translates to more artists being able to create their NFTs. On the demand side, users are incentivised to find new artists. Overall, a more straightforward process to bring art on-chain increases the top of the funnel for NFTs.
Why care about UX?
Whenever I think of UX, I think of founders obsessed with their customers. The likes of Steve Jobs and Jeff Bezos come to mind. The iPhone was not the first to launch a touchscreen, nor was it the first to launch apps. But it combined all of these features beautifully to create an enjoyable experience for the user.
Touchscreen phones before the iPhone were clunky or too small and made the user work to get anything done on the phone. The iPhone’s touchpad was far superior, and the App Store made it easy for users to discover new applications.
Blackberry was all the rage before the iPhone launched. The following chart neatly illustrates what happened later. The iPhone epitomises what a seamless user experience can do to a product category.
Launching the iPhone was not enough of a signal for markets to notice. It took time for Apple to create a developer ecosystem around the iPhone. Scaling the App Store required several developers to build simultaneously. Second, the best product isn’t necessarily the one that sells the most. Although more iPhones were sold in October 2008 than Blackberries for the first time, the market needed assurance that Apple could do it consistently.
The iPhone was expensive when it launched. Not many could afford it. It required brokering bundling deals with mobile service providers like AT&T. As the effect of financialisation and the developer ecosystem kicked in, Apple’s iPhone entered a rapid adoption phase.
An example close to crypto for what happens when UX is made better is Friend Tech (FT). Crypto natives traded JPEGs based not only on their merit but also on who created them. FT eliminated the JPEGs and allowed users to trade shares of influencers. FT appealed to not just crypto natives but Web2 influencers since it became one of the easiest ways for them to monetise. It remains one of the few crypto apps used by non-crypto natives.
Risedle built a bridging feature allowing users to send crypto assets using the recipient’s X (formerly Twitter) handle attached to their FT account. FT’s success so far can be attributed to its simplicity and gradually improving UX. It has generated ~$20 million in fees since its debut in August 2023.
An improved UX does two things that make or break companies. It attracts more users at the top of the funnel and helps retain more users. We will likely see all these siloed UX improvements converge to create a much smoother overall experience for users who try out crypto applications in the next cycle.
I will leave you with a picture that shows why I don’t mind waiting a few hours in long queues at Zurich immigration any week of the year.
Until next week,
Saurabh