To go mainstream,DeFi should simplify onboarding, reduce complexity and introduce “unified” gateways to popular protocols
By Ivan Manchev, Communications manager, AdEx Network
Can you believe that while your fiat USD is melting in your bank account, barely netting 0.1% annual returns, another form of USD is melting faces with an annualized yield between 5% and 20%?
Crypto stablecoins offer unimaginable dollar returns for the traditional fiat system and open awesome arbitraging opportunities for everyone. Apart from that, they also require a specific set of knowledge that keep them barely accessible to people outside decentralized finance.
In this article we’ll look at three DeFi hurdles for newcomers and how app developers can work to overcome them.
Explain Metamask to your grandma
Metamask wallet connect is an interesting phenomenon. If you spend long enough time in crypto, you won’t ever want to bother registering usernames and passwords for using apps anymore - and this is awesome. But let’s admit it - first encounters with seed phrases, wallets and Metamask can be really confusing for people who are just getting started.
When we created the AdEx ad platform we faced this problem too. AdEx Network is an advertising platform connecting publishers and advertisers willing to trade advertising space. Most of the advertisers we wanted to onboard didn’t have previous crypto experience. This is why we needed to come up with an easier login system that preserved the Ethereum wallets account system under the hood at the same time.
It took us some head scratching but we did it. Today you can sign up on the AdEx Platform using an email and password. When you create an account, the system creates a multisig Ethereum wallet address for your account - you deposit and receive funds on it. When you become confident enough to use Metamask, you can transfer the control of this wallet to another address - usually the one you use with Metamask. This showed us that perhaps the best way to attract non-crypto people to use dapps is to introduce similar onboarding systems that allow both sign up methods.
Protocols here, protocols there, protocols everywhere
Ever since the 2020 DeFi summer, decentralized finance protocols have surged - in less than a year, the total value locked in DeFi rose from $3 Billion to more than $60 Billion. There are more than 100 projects listed on DeFi Pulse and all of them bring different innovations and financial instruments. This is awesome, but it also leads to the second problem that prevents wider DeFi adoption: fragmentation.
At least a third of these 100+ projects offer different investment opportunities - AMMs, synthetic asset protocols, farms and staking incentives. But right now users mostly have to navigate to these platforms individually, often switch between different interfaces and approve contracts every time.
In the past, tracking portfolios was hell, too, but thanks to applications like Zerion people can now have an overview of their accounts.
The perfect gateway DeFi app should handle this without putting its users through a steep learning curve. What this means is that users should be able to connect their wallets once to instantly get access and approvals to all the protocols in the app. This will significantly reduce the onboarding time for new users.
The DeFi gateway app should further work under the hood to simplify the experience - it should take care of gas and remove the Metamask gas complexity and risks of failed or stuck transactions.
Finally - complexity
The more DeFi is advancing, the harder it gets to understand it. In the early days of DeFi (in which we still are), you have to have a specific knowledge set in order to be effectively profiting from this emerging space.
This knowledge set includes at least Ethereum smart contract basics mixed with understanding of financial theory and financial products, compound yield calculation and more.
But take traditional finance services - you don’t need to possess specific knowledge to use simple yield generating instruments - you just go to your bank and let it invest your money for you.
All DeFi apps designed for newcomers should be like that. Users don’t need to know what the “y” in yUSD stands for - they simply need to be able to arbitrage their fiat USD against it.
An optimal application should gather a bunch of DeFi protocols that offer different investment opportunities and create a solid investment portfolio including stablecoins, synthetic assets like tokenized stocks and token indices.
The best thing about this app? We are building it.
If the challenges before wider DeFi adoption are that obvious, why is no one building such a user-friendly app?
That’s what we asked ourselves too. For the past 4+ years, we have been working on AdEx Network and we gathered rich Ethereum development experience. We figured if nobody’s going to create this dapp, we’ll do it. And so we started building AdEx Wallet.
It is a single tool that simplifies the process of buying, investing and managing DeFi assets both for people just starting with crypto and for seasoned investors.
The AdEx Wallet is basically everything that I talk about in this article. You will be able to sign up for it with an email address and password but connecting your Metamask wallet directly will also be an option.
You’ll be able to send crypto to your AdEx Wallet address, but you’ll be able to purchase it with a credit card too - it will be auto-converted to a position of your choice, with optional staking for stakable tokens.
AdEx Wallet users will be able to choose between fixed rate yield staking, stablecoin staking, tokenized stocks, token indices and tokenized gold. Managing their portfolio diversification will be a matter of just a few taps.
AdEx Wallet will be live in Q3 of this year. It will be aimed at anyone who wants to reap the benefits of DeFi without getting a degree in blockchain and cryptocurrency but we’re positive that experienced crypto investors will love it too.
If you are curious about it, leave your email address on the wallet page, and we’ll let you know as soon as it launches.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.