To defeat centralization, the crypto user experience has to be easier: Synthetix founder
When people have to choose between entering centralized or decentralized services, “you want the doors to be the same size”
PeachShutterStock/Shutterstock modified by Blockworks
FTX, the notorious bankrupt crypto exchange, had some good things going for it.
It was widely popular for its ease of use and friendly onboarding process, with plenty of trading options to choose from in a smooth interface.
Just one small thing stood in the way of its long-term success. Everybody’s funds were lost.
Many crypto services have failed in one way or another, resulting in losses of customer funds; QuadrigaCX, Mt. Gox, and Bitfinex, to name a few.
But don’t forget other more mainstream establishments, like banks, that also collapsed and left customers reeling: Silicon Valley Bank, Silvergate, and First Republic, or further back in time, Washington Mutual and Wachovia.
In many of these cases, some or all client funds were recovered, but a sudden loss of access to one’s money is, at the very least, a harrowing experience.
It all boils down to one issue: centralization.
Anyone in the crypto scene hears the word multiple times a day, but it truly is the key problem with financial custody, applying to all sorts of institutions, whether they exist in the regulatory mainstream or the far reaches of DeFi.
Despite their advantages, decentralized offerings — where users retain control of their funds and can benefit from the transparency of an open environment — have struggled to catch on.
The reason? They’re just not that easy to use, according to Kain Warwick.
Not a great way to onboard users
“Even through this whole cycle, [we] really haven’t been able to compete with centralized services,” Warwick says.
Warwick suggests that in a bullish cycle, “when you get a whole bunch of new people pouring in, the easiest way that they can be onboarded is the way that they’ll likely be onboarded.”
For a big part of the last cycle, “that was FTX,” Warwick says. “That was the easiest way to onboard someone.”
“It turns out, that was not a great way to onboard new users.”
Warwick says centralized approaches persist due to performance and ease of use advantages as most decentralized offerings lack “user experience parity” with centralized competitors.
Instead of building an authentically decentralized service, he says, “we just wrap these layers of centralization on it and people get wrecked because of it.”
In the next bullish cycle, Warwick says, “people are not going to suddenly wake up and care about centralization as they’re pouring in the door screaming with their hair on fire.”
“They’re not gonna stop and just be like, wait a second, this thing feels a bit sketchy. This is a centralized service, right?”
“That’s not gonna happen.”
“You want the doors to be the same size”
Hoping that the average person will care about decentralization will not work, Warwick insists. When people face a choice between entering centralized or decentralized services, “you want the doors to be the same size,” he says.
“We got to a point in the last two or three years,” Warwick says, “where the decentralized services were close enough to feature-parity with the centralized services.”
Uniswap, for example, he says, is a decentralized exchange that, in many ways, is arguably better than centralized alternatives. “The permissionless nature means it’s faster.”
“And faster in a bull market is an incredible advantage.”
The Uniswap service is so good, Warwick says, that people are willing to go through the onboarding friction of setting up a wallet and buying ether (ETH). That’s because the product “was 10X better than the alternatives.”
If onboarding friction can be minimized, a decentralized service becomes more compelling to the average user, he says. “Just type in a username and password and you’re on Celsius.”
“You can give them all your assets and you’re done. It’s hard to compete with that.”
Warwick is optimistic that the onboarding barrier is fading and the user experience, once onboarded, is now competitive. “We already have feature-parity in terms of the infrastructure that we’ve built.”
“I think we can actually compete with a database to an extent that the average user is not going to care about the difference,” he says.
With decentralized, non-custodial and transparent services, the industry now finally has “a trading experience that competes with finance and FTX, in particular,” he says.
And it provides one unique benefit, Warwick adds.
“We don’t steal your money, which, it turns out, is a pretty powerful feature.”
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