Article by Just Another Crypto Analyst
Starting out in crypto is hard. Until we make it seamless for everyday users, mainstream adoption will never happen. Sure, people will own bitcoin through an ETF or in their Coinbase account, but decentralized finance will not take off until we fix the fundamental flaws inherent in the system.
The funny thing is, we all know what the problems are and yet we have struggled to adequately solve them. This article will spell out what I believe needs to change in DeFi so crypto adoption can truly become mainstream.
One Wallet for Everything
When interacting with DeFi, it all starts with your digital wallet, and their ease of use isnât getting any better. How many wallet addresses do you have? Better yet, how many Ethereum addresses do you have? This is the #1 problem right now for regular users, so imagine how hard it is for new users! Even though crypto wallets have come a long way there is still a lot of work that needs to be done to simplify how we interact with DeFi.
#1 Wallets Have One User Interface for All Chains
Wallets need to get to the point where it doesnât matter what chain you are using. It doesnât matter if itâs going to be only one chain in the future or many; how wallets interact with users needs to be seamless. It is still too difficult to figure out what chain to use for what dApp and where to find the right RPC to connect to the chain. The userâs experience should be simply to click one button and all the complicated stuff happens in the background.
#2 Users No Longer Bridge Assets
Bridging isnât going to disappear, but having users do it manually can be replaced with streamlined transfer options. If Aave is giving a higher yield on the Arbitrum chain than on Avalanche, then I should be able to transfer my funds from Avalanche to Arbitrum in one user interface. The bridge still happens, but the process is seamless for users. We are tired of 'bridge shopping' to see which bridges connect to specific chains with a specific asset we have: âOh no, you have USDC and not USDC.e, that will be an extra 1% liquidity fee to exchange it!ââââthis is bullshit and we all know it.
#3 No More Gas
Competition between L1 chains and the proliferation of Layer 2 protocols has been a good thing for crypto users. Ethereum is still the worst when it comes to gas prices but eventually, upgrades to network architecture starting with EIP-4844 (proto-danksharding), should drastically decrease these fees. Eventually, gas costs will be so negligible that dApps will pay gas on usersâ behalf as an incentive to use their products.
#3.5 Allow Users to Use Different Tokens as Substitute for Gas
How many times have you bridged assets to a new chain only to realize you donât have tokens to cover gas fees on the new chain? You then have to bridge the gas token in order to do anything. How about if dApps just took a small amount of the token you wanted to trade and swapped that into the gas token? This is one of the quickest ways to ease frustration for new users â in fact all users!
#4 Wallets Must Not Allow Unlimited Access to Your Tokens
There may be a reason why this practice was initially adopted but oh my has it caused more harm than good. Back in the day, when you did anything on a dApp, you had to give that dApp unlimited access to the token you wanted to use.
One example: back during DeFi summer, I was degening into all the Polygon dApps to make a quick buck. I found âPolyGardenâ, which RugDoc initially said was safe, so I threw in a $100 worth of USDC and didnât care if I lost it. When the pools went live, the developers switched the contracts and hard rugged everyone (aka stole everything). I did what I was supposed to and revoked the PolyGarden token contract so it couldnât interact with my wallet anymore. However I did not revoke the USDC contract so later on, when I moved $4,000 in USDC out of a Curve pool into my wallet, it disappeared. The PolyGarden developers were executing transactions that would check the wallets they had access to for a USDC balance and would withdraw it instantly if found. Poof, $4,000 gone because I had made a mistake a few weeks prior.
Luckily, wallets are improving by auto-generating a token approval limit to the amount you are wanting to transact. But the safest practice is to still revoke contracts after use, just in case an exploit happens. This is a fix that is urgently needed before the layman is ready to jump into crypto.
Safety Mechanism for Stolen Funds
Crypto still has a major problem with assets being stolen through hacks and phishing attacks. If we want to stay with the ânot your keys, not your cryptoâ mantra, then there needs to be a way to safeguard your funds. Whether this is through insurance funds or community raises for exploits, users need to know their crypto is safe.
Think about it, someone new to crypto types in âAaveâ in Google and the first thing that pops up is âAaave.comâ. How would they know that Aave is not spelled with three a's? So they click on it and connect their wallet and poof, the money is gone. Or how about dApp exploits where all users are screwed and you hope they have a treasury to give you something back? We canât keep saying that crypto is risky and you should have known better. Again, that is bullshit. Why would users enter a world where they can lose their money instead of throwing it in a Blackrock ETF or to Coinbase â where they at least have legal recourse to get the money back?
Wallets Are Linked to Identity and There Are No More Passwords
Letâs stop with this stupid notion that you need a seed phrase as the only backup to your crypto. No, I am not going to hammer the seed phrase into steel cards and install a fireproof safe in the backyard. Sure, this may work if the single wallet idea comes around. How about instead, we link it to your identity? To you as a person. Think WorldCoin for a second (please donât get out your pitchforks) â they are onto something. The company scans your eye to give you a unique identity on the blockchain. Unless you lose both your eyes, this identity canât be hacked or lost. Maybe this isnât the long term solution, but having a digital identity that is linked to you and only you is much easier then remembering 20 passwords that are probably saved on your computer or are all the same anyway.
Meme Coins Lose Steam
Meme coins have a place in crypto, just like meme stocks have a place in the stock market by putting a value on culture. The problem is when meme coins hold valuations in the billions (DOGE and SHIB) yet donât have utility or provide any tangible value.
It is hard for non-crypto users to take crypto seriously when DOGE is in the top ten of all crypto coins. The meme stocks GameStop and AMC went very high but eventually came down; not until meme coins similarly lose steam and market cap will crypto be taken more seriously.
Taxes
This is more for my fellow Americans but I am guessing that many people have the same problem. If you are a DeFi user, chances are that you are using dApps and chains that are not accounted for by the leading crypto tax companies. I already hate doing my taxes because the government knows everything already so why donât they just tell me how much I owe? Crypto tax companies are getting better but it still takes hours to go over your transactions because these companies werenât tracking new Layer 2s or the new meme token of the day. If it is a pain in the ass for people who know how to read chain explorers, then imagine how hard it would be for inexperienced people.
Are We Gonna Make It?
We are entering the start of the bull market and new chains are popping up left and right. The fixes Iâve recommended will go a long way in making it easier for new users to come into DeFi and actually see cryptoâs benefits â without the steep and sometimes painful learning curve. I hope that crypto wallet companies, dApps, and chain developers are listening and making changes in time to capture new users and benefit from the bull market. Crypto and DeFi are the future; we just need to make sure we help rather than hinder early users.
Author Bio
Just Another Crypto Analyst is a crypto native writer who shares what he has learned over the years to help others. You can read more of his writing on Medium.
Editor and Designer Bio
trewkat is a writer, editor, and designer interested in learning about web3, with a particular focus communicating this knowledge to others via IndyPen CryptoMedia.
This post does not contain financial advice, only educational information. By reading this article, you agree and affirm the above, as well as that you are not being solicited to make a financial decision, and that you in no way are receiving any fiduciary projection, promise, or tacit inference of your ability to achieve financial gains.
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