The entire crypto market has of its value, and things are generally not looking so great. While a lot of people in crypto argue that this was caused by a cocktail of causes — such as the Russian-Ukraine war and rising interest rates, there is a reason why Web3 is simply not as resilient as we would like it to be.
These same issues affected traditional finance, and the world did not slip into a worldwide global recession. The problem with Web3, it seems, is that the entire ecosystem is still somewhat exotic.
Users have to read blogs and watch videos to learn how to safely use a crypto wallet. They have to download special extensions to connect with certain markets. And through all of this, they still run the significant risk of losing all their money through a hack. Most people don’t want to go through all this. That is the primary reason why Web3 adoption – while encouraging — is still extremely low.
The problem is that Web3 has a buggy UX across all interfaces. It is so complex that most people would just rather not use it. Now, one may argue that this is a design problem that can be fixed with better emphasis on design but that is not entirely true.
Yes, some of these problems can be fixed by better design, but this problem pervades all Web3 products. It doesn't matter whether it is a business worth hundreds of millions or one worth just tens of millions. All dApps have the same problem. Hence, this isn’t an issue that one can leave at the doorsteps of faulty design and call it a day.
Web3’s UX problem is not a design issue. Instead, it's a network issue. Most Web3 products are built in such a way that necessitates annoying complexities like the omnipotent 12-word seed phrase. Most Web3 products can literally not be built in a better way, and that is not a problem of design, it is one of the underlying technologies powering these dApps.
It follows that to improve the UX of Web3, the entire full stack of Web3 development must be improved. In short, Web3 products and the network they are built on must be built differently. While there is no wholesale solution to this problem, there are certain innovations that can start this process.
Solving The Seed Phrase Problem
One often overlooked UX problem of Web3 is the question of the seed phrase. People don’t want to always have to remember a 12-word string of passwords to have access to their accounts. Despite its unwieldy nature, the seed phrase model has continued because it is the only sustainable way people can get access to their accounts.
The reason this model is vital is that an account on a DeFi network is merely a key, and the data on it is the key’s entry in a thousand different asset smart contracts. Hence when users lose the phrase, they have lost access to the key, and that means they have lost access to the key’s entries — which means they have lost all their stuff.
That problem can be solved if instead of being a key’s entry on a ledger, accounts are actually digital containers for assets. If the container has logic that supports multi-factor control and recovery, users won't have to bother about keeping a 12-word seed phrase. They would simply be able to sign in to the “container” through multiple avenues — including emails and regular passwords.
Personalizing Web3
When you want to use a dApp like Metamask, you have to connect your Web3 wallet. That connection is supposed to be your “login”. That is quite different from the Web2 model where users can personalize their login experience.
For example, people can currently login into their accounts with Apple, Facebook, and Google using passkeys, which means they never have to use a real password.
A similar innovation can be created in Web3. Blockchains could have an on-ledger identity that has multi-factor features. These on-ledger identities could be on the crypto wallet and could be used to connect to its on-ledger counterpart instantly. The main innovation of this feature is that users will be able to create multiple accounts on the same wallet since they can have different personalities. What this means is that users will be able to “log in” to different networks using different personalities.
They will also be able to keep certain data on each account, which means that if a dApp asks for information concerning that account, it can be immediately provided through the wallet and then forgotten.
A New Way For Assets To Exist
A blockchain is basically a way to keep track of the movement of assets from one place to another. However, the EVM dApps today actually have no idea of what an asset is.
Instead, the idea of assets is usually implemented as balance entries in smart contracts requiring complex messaging channels that tell different smart contracts what the “current balance” on a smart contract is.
In essence, what we know as balances are not the dApps themselves telling us how many assets they have, but they are just reading the balances on independent smart contracts that the dApp has to trust.
In short, there are no "assets" anywhere – just balances all through. In most cases, this is enough to complete basic and somewhat complex transactions. However, this complexity means that scalability is very difficult and that hackers can hack balances by manipulating the current balances on a smart contract. That is what precisely happened in the
A Complete Wallet Connect
Users of DeFi today are completely confined to connecting to DeFi dApps through a mobile wallet. To connect through a desktop, they need to run a browser extension wallet that a) does not travel with you and b) is extremely insecure.
A better solution might be to create a secure link between the wallet on the mobile phone with the desktop browser through a one-time QR code. That way, the desktop browser can easily connect to the wallet on the mobile without having to download an extension each time users want to connect to DeFi dApps.
Transaction Manifests
Outside the general unwieldy UX of DeFi dApps, there is also the question of the massive technical barrier to competently using a dApp. For example, if a user wants to sign a smart contract and wants to be sure of what is in the contract, they need to have the technical know-how to read the source code of the smart contract. That means they must be able to understand code. Most people simply can’t do that, and an overwhelming majority do not want to learn how to read code so that they can keep their assets secure. Rather than do that, most people would simply not bother about DeFi solutions.
The real problem with not understanding smart contract language is that users can unintentionally sign faulty smart contracts that would drain them of their tokens. Unfortunately, this in Web3. A better way would be to have a wallet that natively understands the assets on the platform and can let users, define the set of outcomes that must happen in relation to assets if the transaction is signed.
That list of outcomes could be called a transaction manifest. The reason why this approach is not used in transactions is that most blockchains are not built to understand assets - they are not asset-oriented. A network that would be able to implement this has to contain logic that understands what an asset is. Most networks don’t. And that is why it has been very difficult to get around this problem by just creating transaction manifests.
Are These Innovations Possible?
The good thing about these five technologies is that they are not only feasible but are also currently being created and improved on. One such network being built with these principles is Radix — specifically the Babylon mainnet upgrade.
The future of DeFi technology rests on whether the developer community will implement these innovations, or redesign blockchain dApps to have even better UX. That is the only way DeFi can ever get massive adoption. Watch to learn more about these five game-changing technologies that will radically improve Web3 user experience.
