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Here’s a crazy idea: What if we used Web3 tools to engage with Web3 products?

source-logo  blockworks.co 03 October 2023 16:38, UTC

Anyone who has participated in the crypto market for more than a year or two is well aware of its cyclical nature.

The next time the market changes its mercurial mind, such individuals may find themselves to be designated as the friendly neighborhood crypto expert. “Each cycle, you have new users coming into the space,” Kain Warwick says, adding that those new users often find out about crypto from someone they know.

When the curious onlooker turns to their trusted crypto-native friend to ask how to join in the next wave, they will need guidance onboarding to an accessible and safe platform, the Synthetix founder says.

“You want to tell them to go on-chain and download MetaMask,” he says, “but then you’re kind of like — this person is going to lose all their money.”

On the Lightspeed podcast (Spotify/Apple), Warwick explains that during the past crypto boom, the “safe place” for the novice was — at least in theory — a centralized exchange like Binance or Coinbase. These users wouldn’t have to worry about losing their private keys or getting “rugged” by unknowingly signing a malicious transaction on a non-custodial wallet.

Of course, any former FTX user will likely express different feelings about the purported safety of such a solution. “Over a long enough time horizon,” Warwick says, “they will absolutely lose their money on any centralized exchange. It’ll get hacked or blow up or steal all the money or whatever.”

Warwick recounts giving his own mother some wrapped bitcoin (wBTC). But after setting up a MetaMask wallet for her, he decided, “You know what? Honestly, just put it on Binance. It’ll be easier.”

Where will new users flow?

Warwick asks where the next round of new users ought to begin their experience. “Do they flow on-chain? Or do they flow into centralized databases, like Binance?”

The industry has not yet been able to persuade a “meaningful percentage” of new participants to “use crypto tech to engage with crypto,” Warwick observes.

“It’s kind of insane that we’re still using Web2 tech,” he says. “We’re still using databases and closed-source software and proprietary systems to interact with crypto.”

This remains the case, Warwick says, because of problems with usability, safety and onboarding friction. He suggests the solution is to provide an option that uses DeFi for the application engine, but “abstracts away all the complexity and lets people on-board.” He hopes that instead of turning to centralized exchanges like Binance, users can turn to services like Infinex, a front-end application for decentralized trading powered by Synthetix.

“They can’t rug you,” he says.

“You can onboard easily. You put a username and password in and an email in.” If a user loses their password or email, he explains, the social recovery system will enable them to recover their funds.

“They don’t need to worry about someone stealing the funds,” he says. “It’s transparent. The funds are on-chain and they can do all the things they want to do. They can trade all the different assets they want to trade.”

“It’s a much safer solution to be using,” he says, noting, “this is just something that has not existed.”

If centralized exchanges had integrated NFTs in the past cycle, for example, Warwick suggests a lot fewer people would have lost them. “Right up until FTX collapsed,” he adds. “Then they would have lost a lot of them.”

NFT collectors were essentially “forced to be on-chain,” Warwick says, and “they just didn’t have the knowledge.”

On “day zero,” when a new user joins the crypto space, sending them to the “wheat thresher” of non-custodial wallets “is just not an okay thing to do,” Warwick insists.

“We need a better, safer place to send them.”