If you think about it we’ve come a long way since defi summer of 2020, almost had an entire cycle at this point, onboarded a variety of users and through NFTs even are reaching the broader culture base of humanity. We are now experiencing a new wave of defi innovation and experiments within NFTs, trying to scale and adjust our products and tools to onboard users to the future of finance and the metaverse.

The other day, A friend of mine was just talking about inflation and how the best banks in his country gave around 1-2% in returns on savings. And when he added the inflation, the real rate was well in the negative. I offered him a few alternatives as to how he could buy index funds or ETFs and DCA into for a year and then maybe the stock market will have done its correction by then. As a final option, I also suggested crypto, the likes of luna providing around 20% and even the safest choices giving around 6-8% which is a few multiples that you’d find in CeFi institutions at the moment. So then he asked me, “Where should I get started with crypto?”

So where does someone who has no idea what wallets are, what a CeX is or what Defi is get started in crypto?

The usual steps let’s assume you are interested in returns on a CEX would involve:

1] Logging onto any exchange available in your country

2] Adding KYC (if mandatory)

3] Connecting Bank Account

4] Depositing Money and getting this changed into your choice of stables (at this point we have so many, that getting confused about this is natural, but since most exchanges seem to prefer USDT pairs for volume more we use that)

5] Checking the terms on the returns on the exchange, seeing if flexible or not and then depositing in it. [In the case of Binance there are a few direct products which they deploy onto venus, or some other defi they’ve made available, In the case of FTX you’d have to look at lending and borrowing rates and take a call]

Going a step ahead, What are the steps for someone interested in Defi?

1] The First step would be to pick the desired product that you might be interested in

2] Check the chain that the product is on and if the chain allows direct withdrawals from CEX

3] Choose a wallet [anyone who’s been in crypto long enough advising a newcomer wouldn’t fail to mention the advantages of using a cold wallet over a hot wallet]

What wallets to use? While most EVM compatible chains metamask would be the choice of product, Solana would require phantom, Polkadot something else (but moon river being EVM compatible allows usage of MetaMask), Tezos would require Temple or Kukai. (Note: Yes I’m aware that most chains don’t have any notion of defi product so they shouldn’t probably be considered)

Then comes a point where you explain to them how any wallet they make has 12 phrases that they might need to store somewhere secure, Not tell this to anyone (of course), loss of this seed phrase would also result in loss of access to funds.

Note: At this point, a question worth asking definitely is, for people who say “not your keys not your funds”, we definitely haven’t made managing keys any better in the last 5 years and it’s gotten so complex that even the most veteran of crypto users simply find it as a cumbersome pain-point they choose to overlook because of the money at stake.

4] So now comes the stage where you transfer funds from the CEX to your wallet, please advise them to take caution and double-check or triple-check the address lest they send the money to a wrong address resulting in loss of funds again. [There now seem to be more ways to lose money in crypto than making them.]

5] Check if funds are received.

6] Go to choice of website, Choose to connect network, Convenient if ethereum.

If not ethereum, educate them about RPCs, make them go to chainlist.org, and add the RPC of the desired target network.

7] Once on the website finally deposit your money, but again have token approval, transactions to deposit money also inform them about another transaction for any removal.

What if the CEX doesn't allow direct withdrawal to the network?

1] First deposit to any of the networks (while a lot of people might choose ethereum here, most normal first-time users are simply “priced out of ethereum”).

2] Choose one of the several bridges (honestly we just might need a bridge aggregator at this point).

3] Deposit from the bridge to the target chain.

Now you also have to experience the hell of the funds being withdrawn from one wallet and having to wait on the other end where the funds haven’t appeared. You experience a few minutes of hell if bridging large amounts of money for the time the money is being bridged and doesn’t appear on either end.

What about exit? Do all the steps done until now in reverse.

There are a few direct onboarding services which avail you the option of directly getting fiat on-chain but haven’t picked up enough steam (or are unavailable in most countries).

UX in DeFi

While we spend our time forging the next set of products, the next set of “ponzis” as we like to call all of them, the next wave of defi, I think we at the same time aren’t paying enough attention to making UX easier.

The next 1000 wave of users, the next 100 thousand, the next million, the next billion users for Defi will only come when defi is accessible.

So do we have accessible defi today? Can you recommend a product which is painlessly easy to access? I don’t think so.

I think seamless onboarding on-chain should almost be classified as a public good.

What alternative world would you see if this doesn’t happen? Something I’ve been worried about which might not necessarily be a bad thing for most but doesn’t exactly posit the ethos of defi is that if good tools of access are absent then CEXes will start integrating access to these products through their frontend become the one-stop-shop to defi access and will onboard the next wave of users and it’ll only be the veterans and the fogies of crypto left being onchain (also the CEX would pocket a slight fee).

Decentralization at its most basic level is about a choice, it’s not about having to use the CeX that is bad, it’s the inability to opt for an alternative that makes it bad.

Forget about Decentralization, Anyone who creates a product has to make sure that all parts leading up to the usage of the product are easy and well oiled. Otherwise, history has then and again shown that there will be some competitor, someone who creates a product offering “this well oiled seamless usage” as a product. “Your margin (of inefficiency) is my opportunity”.

Wallet Safety is one of the sectors paid the least attention to within the user design space of crypto. Better wallets have certainly led to better designs maybe, but not more secure or recoverable ones. We like to make fun of every bored ape owner that has lost his ape, but perhaps the BYAC owner class represents the most normie class of users in crypto and those are the users we are trying to onboard next.

While we might have a long list and threads about wallet safety, maintenance of hot wallets, securing seed phrases by not typing into random websites, not going on malicious websites, we do not question the design of the way we operate with wallets today and that might be crucial moving forward. The easiest abstraction here which would even appeal to regulators is to outlaw defi usage on-chain and make CEXes the only way to use the products thereby also securing KYC requirements. NFT marketplaces seem to be more and more commonly launched by CEXes these days exactly because it is easy for them to cater to users and NFTs seem to have found a PMF with normies more than defi has (perhaps NFT resonates with most people because of its mimetic nature). We are a long way from good custodial solutions.

I hope we see more experiments in social recovery wallets or even custodial wallets with user control (which is less centralized than the CEX owning the wallet). Fiat on/off-boarding and Wallets have been ignored for long enough in our conversations, but perhaps they are the crucial legos to unlock the next billion users of our products.