Onboarding Users, Not Just Holders: Scaling DeFi for Mass Adoption - Andrew Koller

Transcript

[Music] Hey everyone. Um so I yeah I'm going to take a little step back from technology um and talk about onboarding users uh especially from the centralized exchange perspective where uh quite frankly we've seen a lot of crap um and I've been at Kraken for 6 and a half years so it feels like an absolute eternity in in crypto but um we have seen a lot of ups and downs a lot of people get wrecked a lot of um interesting noob questions and So yeah, this is kind of aimed at just how do we get a lot of the things that

we're we always think about when we're building applications or or building anything around DeFi. Um but we don't really talk about enough. Um I think as as we're building these products, like I said, everybody's has this on their minds, but you know, it's really hard to get this in practice when we're all somewhat in a little bit of a bubble. Um we make apps the same way and we kind of don't really break that cycle. So again, this is just a little bit of perspective on on how uh Kraken sees this or like some of the weird stuff that we get outreach to. Um so a little bit about me. Like I said, six and a half years at Kraken. Um it'll probably be the place that I still work when uh when I die. Um I don't really want to leave, but I've done a ton of stuff here. Um joined in

uh the early days when it was only a handful of us engineers. Uh and then uh kind of bounced around everywhere. uh worked on the hot and cold wallets, made um the parach chain auction system. So I got to go talk to to Gavin after and then uh now uh running all the onchain stuff at Kraken. So that involves our um L2 which is inc. And then any other kind of onchain products that that we make there. Uh so yeah, the current state of DeFi and uh all the people that you know again reach out to us um about like what can they do with crypto, what kind of utility do they have? uh doing research for this I connected uh with a few on our customer support team and saw some chats around like how people are asking

these questions again it's it's very very interesting uh and some things that we take for granted uh a lot of other you know users don't so let's get let's make sure we're always in the sunshine and rainbows and and pizza and stuff and get out of the the trenches and the the scams and and all that um so what do we A lot of our users are, you know, of course getting into this for the memecoin meta, uh, betting, gambling, which isn't bad. Uh, people should have freedom of choice to be able to do those things. But then when they jump out of that, u you know, there's a lot of rehashed ideas, reskins, forks. It's okay if you put your own flavor on it.

That's totally fine. Uh, but it's, you know, it's a lot of the same stuff that we're seeing. And then we have to educate users on like, okay, this is actually the same protocol that came from this one and this one and this one. And so it's this promised land of real utility, which is kind of a meme, right? Everybody wants to do a token. Maybe the utility is only governance. Um, but you know, it's a little stale on on how our users view uh a crypto if it's just governance. So, of course, if you have that real utility, hopefully blending some kind of real world use case, you're in long-term success. And we really want it to Oops.

We really want the um the people being, you know, actual users and not not the holders, right? U we actually have people that have reached out and have used protocols where it looks like there's a high TVL, but it's really like five people that own like 90% of the supply and something and then something weird happens and then we have to educate on, you know, what it means to actually have TVL versus users. and then we tell them to go read a block explorer next time and they're like what the hell is a block explorer? So we do we definitely are in some kind of bubble uh with you know how we view our technology or how we build and then another parallel is holding fiat idally uh it's not really the same

as being in an economy. I mean it kind of is because we have to buy you know everything our goods and pay mortgages but if you're just holding you know fiat idle and you're not earning like any kind of savings or something that's you're not really participating in anything. And then an interesting data point I wish I had the actual number is u a lot of people in the US a lot of my peers and you know extended family don't really know what to do with their money. obviously know nothing about DeFi, but they don't know what to do with their money beyond like a 3 or 4% savings account. That's like how you grow wealth to the average um kind of normie. But um of course, as we all know, there there's a ton more opportunities that you can you can jump into uh with

DeFi. So, some of the barriers to mass adoption, this is a I absolutely love this tweet. um try to read all of it I guess but like the the gist is you know come on chain create a sex account uh buy some ETH withdraw to your EUA write down your words get a ledger get to FA all these different forks of protocols blah blah blah blah blah add the RPC and then the fi finality is like we need to fix this by a lot um there's a reason why Kraken supports or or invests in something like a 400 500 person support team uh with a lot of rotating you know people in that because it's uh quite frankly it's kind of hell out there, right? Like there there's just so much that people don't know how to manage this and so it

honestly scares people to just want to stay on a centralized exchange which isn't bad for for us like you know people then are going to trade and we're going to make fees on it. Uh but of course our promised land is to make sure that the masses are are using this and able to benefit from what makes crypto crypto right? So yeah, the UI UX comp complexity um we're trying to internally retire the name wallet uh and and think like okay let's let's just not use the word anymore you know account whatever maybe something magical but there's gas fees associated with it of course there's bridges all of this is way too technical um majority of our users have no idea

what any of that is again it just scares people and this is a fun data point um you know, when you're thinking of your applications and UI and UX is only 20% of our 15 million accounts have ever withdrawn from Kraken. That's it. Um, so I don't know that that's pretty major, right? Like we get these support tickets, people ask us like what what can I do with my crypto? I just bought this. I want to trade it for this on chain. We tell them about it and then they just kind of get scared and they stay on the exchange. Um, so a lot a lot of work to do. There's all the the support tickets and and you know things around scams,

rugps, hearing on the news that somebody got wrecked, um, one of their friends got wrecked, whatever it is. Uh, we have to educate them on that. Um, too many chains. I'm guilty of that. Uh, we launched one at Kraken, but of course there's so much awesome work going on to to abstract everything. I think the point though is kind of building these applications that don't really have like a launch app button. Um because there's another I wish I included it, but there's another tweet I saw recently where it was like you go to a company's Twitter, you see the link tree. Okay, now there's a link to their website and then now there's a link to launch the app. It's all these different jumps to get to just where you're actually using the crypto. Um, and maybe we don't take a step back enough and and think about

like, okay, instead of it being launch app, why isn't it just login? Uh, make it feel like something in web 2. And then 7702 of course solves a lot of these problems. Um, bundling transactions, spend limits, pass keys, all that good stuff. But you know there's again thinking like in in the web two sense when we're building any kind of application if we're doing like a ride share app um or whatever it may be and you want to split the bill then why not have something with 7702 that's bundling like okay it splits it 50/50 each get a notification each sign and then it like um requests the app. I think yeah there's a lot lot that can be done there. Um, so what does true

onboarding look looks like? Uh, especially, yeah, this guy chilling on a beach and then it's thinking like web 2. The seamless intuitive user first. Uh, I think unis swap is doing an awesome job with their their roll out recently where you don't really have to think about, you know, what chain you're on. You're just kind of selecting the asset and it's like abstracting it. I think that there's still more to go, but it is starting to abstract it, make it intuitive. Um, you know, again, think outside of our crypto bubble a little bit. It's it's hard, but I I I hope maybe Kraken can open source. Um, of course, with everybody's identity protected on some of these support tickets so that people really see how how bad it is out there. Um, I think I

have some repeated bullets here, but the main thing is uh the web 2 style onboarding is is what we got to think about. So, building for utility, not just speculation. Um, here's another one recently. This was like a summary of the DeFi summer days and where were people having hits of dopamine when they're using DeFi. So there's, you know, the example of early Pancake Swap, Trader Joe LPing on Avalanche, LPing on DeFi Kingdoms. Um, I was I was told to not make this analogy because like doctor's office is kind of, you know, not fun a lot of times, but like if people are sitting in their doctor's office, a lot of people are playing like whatever, Clash of Clans, some weird mobile game, and then

why not tie that into crypto, right? It's it's always about like thinking the user first, not our technology first. I know that that might be a bad thing to say, but stepping back from technology, user first. They're sitting there playing a game. Let's let's hit their dopamine. let's have fun with it and make sure that they're incentivized to u maybe make some money or just have fun with their crypto again, right? And then there's another example of GLP on GMX in the early days. Uh and of course he was asking for like you know where is dopamine yield sources. We can make yield fun. We absolutely can. Let's put like we can put some kind of gaming into it.

So again like DeFi use cases that solve real world problems. Uh remitt remittances and savings remittance that's an awful word to say remittances. Um, that's like of course just like sending money, but that's such a simple use case that we get outreach on is like how do how do I send to my family and people don't know even how to like add a withdrawal address or you know what they do with crypto. Um, success stories from emerging markets. I think we're very, you know, again, maybe in a little bit of a bubble and privileged in in the west and uh it's very easy for us to get bank accounts or to use this stuff, but time

and time again we see um support tickets from the Kraken side about how much this enabled them to do something in some you know emerging uh country. And then sustainable yield versus pon ponzanomics. I love the ponzenomics. It's fun, but um what's going to keep people uh not giving us support tickets of, you know, having to uh justify or explain why they got wrecked or or the price dropped or something, then it's it's definitely incentivizing that sustainable yield. Uh you know, people doing good strategies on chain uh that's going to be responsible uh with some risk of course uh with people's funds. And then we're really passionate about this dopamine topic at Kraken. Uh

so I can't emphasize enough making crypto fun again. Uh thinking from the user uh first perspective and I don't know uh the dopamine topic on crypto can probably go on for ages but um there's not enough of it. And then how can crypto tech provide a better experience for non-money apps? Uh this is like we kind of do something uh on on chain at Kraken. somebody's a junior developer, um, a fun experiment is to ask them to design like a web 2 application that they would normally make with like a GraphQL database, um, some Reddis cache or something. So, they design the whole thing and then it's like, okay, take every component and replace it with some

kind of web 3 tech. Uh, a lot of cool things spawn from that. um which often has like the user uh experience first and then also blending in some of those real world use cases like you know social uh restaurant apps what have you and then ecosystem design I think this is more yeah real world stuff uh so the things that we use daily um I don't know I'm sure a lot of people vape but this is an awesome uh I think little experiment right I think bear chain um did this and that's uh incentivizing people to vape and not smoke. And then um Blackbird is another which is kind of

like a restaurant application that's um uh definitely look it up. It's really cool, but it incentivizes people to kind of have this like chain of reputation and trust on uh giving reviews to restaurants instead of it just being like a Yelp review of I don't know the sauce was bad and therefore you give it one star, right? there has to be some kind of incentive and quality behind like the pe the content that people are putting out there. And then um again these reputation systems like we have crack and verify and uh rethinking your applications from the user first is okay what's the web two way of doing social it's like likes and up votes but then there's all kinds of new like social graphs that we can create where you know you have the reputation of somebody is

taking the reputation on another and another and another and this big chain that I don't think we've tapped into yet on um kind of reworking how we're getting good quality content uh to users. And you know our issue here at Kraken is this um education piece. Uh so like more learn to earn uh things with your applications uh more incentivizing content creators gaming uh more gamified onboarding and quests bounties and simulations. Uh I think there's a lot of bounties in the the L2 space especially in quests but um there can always be more of it. And then this one's kind of controversial is not everything can be

solved by Discord. I don't really have an answer to this, but I think Discord is extremely played out. Um, a fun analogy we had internally was like Taylor Swift doesn't need a Discord to have like a community. So, how can we create like those applications that feel like they have use cases in the real world that I don't know might attract swifties or get some kind of uh um reputation that doesn't require just like making a Discord and having the same playbook in Crypto over and over and over again. Um yeah, block explorers, like I said, we've had many tickets where people need their handheld to navigate block explorers. I think that's also something we take for granted. um we know how to navigate them. The average user does

not. So, how do we uh abstract this block explorer uh a little bit more? And this is kind of a cheesy analogy, but like if you're buying something, you don't have to query like a DB manually with SQL to see like has your order shipped. Um it feels like that to the average user right now is like, okay, what happened to my crypto? Well, go navigate these blocks like find out what you did with the contract. Um, so yeah, there's a lot of work to do there with displaying to your users like how your their transactions are actually behaving. Um, okay, I think I'm near the end here. Vision for mass adoption. We have a very simple call to action of just, you know, making apps

simple. Um, for our support ticket sake, please. And then um what success looks like in DeFi, blending these uh real world use cases, have it be in everyday life. Um and then um there's a repeated bullet there. Again, you don't have to query DB to find out if an order is shipped. But that embedding um DeFi into everyday life. I don't have any like Inc. announcements today. I I wish I did. There's some stuff around the corner. But uh this also involves um in our unique perspective is embedding DeFi and you know onchain opportunities within the core Kraken products. Um there's a lot more to share there soon.

So again I I wish I had more to show off with that but we will be embedding a lot of that into the core Kraken like ecosystem. So hopefully that gives um a little bit of inspiration for how we're going to simplify onchain interactions and make it feel very web 2. So, we don't want to on board just wallets. We need these people. And to close this out though, um when I keep saying like real world use cases or web 2, um it's like thinking like the old old system, not really blending in with it. Um but obviously taking a lot of inspiration from it, switching out buttons that that say launch app to login, just little simple things like that go a long way to really help like the average person. Uh and this is a

quote from the SEC commissioner um previously I think I don't know if she's there anymore uh Caroline Krenshaw um just that bolded part why are we spending so much energy linking it to the existing financial system I would say that about all um you know like web two type things like we want to be like an average application um but maybe still trying to blend into it too much um it's more just kind of like taking inspiration like we can still create the separate world that we all love and know with crypto of the decentralization, but we don't have to replicate um and actually like merge in with with web 2. And finally, because we're Kraken, um I like to close with

apologize to no one. Build transparently. Crypto and Ethereum has always had PMF from day one and build simply. That's it. [Music]