How to steer crypto back to Earth
Idea: Centralize back-end, decentralize front end & say hello to the user
I sincerely hope that everyone’s getting better post-FTX. If you need time off, please go ahead. There’s no need to scroll through Twitter daily or even continue to read this piece.
I wrote the skeleton of this piece some time ago. Its core idea was about testing decentralized application interfaces with everyday consumers. I’ve decided to publish it despite some initial hesitance (felt like a bad time) because these kinds of post-crash winters get folks more reflective. Good time for talking about problems and solutions.
I’ll try to make this piece optimistic, and as Knower gracefully put:
Ethereum didn’t break, a business based out of the Bahamas did. Crypto isn’t dead, only some bad actors are.
Let’s dive in.
Imagine how web3 applications will look like in 10 or 20 years. Ad durations on a “web3 Youtube” might no longer be determined by upper management, but instead, by creators and audiences. I.e. a future where updates to everyday applications are driven by millions of users.
This vision is exciting — and you could superimpose the same concept onto various existing applications (ads on Spotify, privacy on Gmail, and so on). But to reach it, web3 applications need to heed the preferences of users. For example, no amount of back-end innovation can compensate for a bland and tiresome interface that deters users from participating in governance.
And in fact, failing to understand what users want has long been among web3’s biggest criticisms. Referencing Moxie, I’m going to lay out some points (you can read his full post here).
1) Users want speed. They want bugs fixed quickly. New updates ASAP. And decentralized applications can never change as quickly as centralized ones. Anything genuinely decentralized is typically slow.
2) Why would users run nodes when there’s no direct monetary incentive to do so? Debatable, and I touched on this in my Bitcoin Magazine piece, too.
3) Users won’t bother to participate governance. Who wants to vote on a change to the TikTok app while scrolling through TikTok?
Until now, Moxie’s points haven’t been adequately rebutted. And remember: these aren’t periphery web3 problems. They’re problems at very heart of web3!
Which brings us to the main idea in this article: testing web3-looking applications with today’s everyday users. I’ll quickly clarify what that might look like:
Step 1: Create centralized application that interacts with users like a decentralized application
So for example, developers could build an application resembling a “web3 Youtube”, with features like allowing users to participate in governance. How might this look like? Well, imagine the typical survey pop-up we’re all used to…
“Which of these wellness brands have you seen online video advertising for recently?”
“Should we reduce average video ad durations from 8s to 3s? Your monthly profits will fall by 80%”
and change the options accordingly.
Step 2: Get a variety of everyday users to use it for some time, and see how they respond.
Let’s say that you’re the researcher spearheading this “testing project”. You’ve hit the nail on all the basics. For instance, you’ve already determined the amount of money it takes to get folks to vote in theory (the amazing @ethanbdm and @ahall_research, Professors at UChicago and Stanford respectively, address this in their a16zcrypto piece).
It’s now time to see if these systems work in real life. So you get fifty everyday people — not tech or finance bros, but instead a variety of everyday users (your American grandma, an Asian teenager, etc.). And then you observe.
Observing everyday users interacting with decentralized-looking applications will be awesome.
We might better-appreciate a number of things, such as:
What does it take to get people to vote? Is voting leading to the optimal outcome?
We might also run into a couple of existential crises, such as:
Crap, gamers require an absurdly high monetary incentive to vote because gaming companies are already receptive. Wait… why are voting incentives for currencies higher during times of crisis?
And lastly, in a space where back-end decentralized infrastructure is continually developing and changing, having centralized back-ends and decentralized-looking front-ends will make testing a lot more feasible.
A caveat: Obviously, not every decentralized application can be tested with typical/non-specialized consumers. It doesn’t make sense to pay a TikToker to contribute to governing a decentralized derivatives trading protocol.
However, testing with everyday consumers will be useful for most applications. And if it isn’t applicable to most applications, then that’ll convey that crypto is still rather self-contained. (Can’t have half the industry be liquidity pools now, can we?) Win-win.
In conclusion, I just have two points to drill:
web3’s proposition to the user isn’t as direct as web2’s. In web2, the consumer became a creator. Everyone loved this. But in web3, users become governors and many might hate this. In the words of Bloomberg’s Max Chafkin: "
The idea that they’d want to get into a complicated financial transaction, with a nuanced risk/reward calculus… sounds fun to a few galaxy-brained VCs—and pretty much to no one else.
web3 won’t follow the same trajectory as web2 — where front-end concerns are somewhat left till the very end. So we need to begin engaging everyday users ASAP.
It’s normal to feel jaded this year with all the craze in crypto. All I can say is 1) crypto is still trying to solve a very genuine problem of centralization and 2) more people are agreeing that centralization is indeed a concern. I choose to trust that time, tech, and focus will take care of the rest.
Thank you for reading. As always: I’m just a twenty-year-old typing and learning, so thoughts and feedback are always welcome. I’m wrong plenty, anyways. You can reach me @ramwithouthorns.
Take care everyone, and till next time:
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Good to do a follow up piece, on next steps after this testing