I have spent some time working on projects in the crypto sector. Here are some of the things I have learned so far.

Users Will Make Mistakes

The DeFi sector is still new for everyone. We are all learning, and experimenting. As a result, users have no experience in the DeFi sector. It means that they will make mistakes. For instance, they may fail to connect the platform to their wallet, they may not have enough tokens, they may not have the right tokens, they may deposit too much of a specific token, and more.

You need to design a platform that not only tells them when something goes wrong but why things went wrong. DeFi is complex, and a message that simply states “error” is going to deter users from signing up.

The Future is Multi-Chain

The launch of the Ethereum blockchain led to the launch of the DeFi sector. However, its founders have since split up due to disagreements over the future of the blockchain. Buterin stayed with Ethereum, Hoskinson founded Cardano, and Woods created Polkadot.

All of these platforms offer different approaches to the same problem, and they all excel in different ways with the solutions they offer. Some blockchain networks that have launched since Ethereum now feature EVM compatibility. This means that it is easier to port existing DApps into these blockchains. A good example of this is the Binance smart Chain.

Various Layer 2 solutions have also been developed for Ethereum to aid with security. These solutions offer the same security as Ethereum without the same level of congestion. Interesting things are happening when it comes to inter-blockchain communication, such as with Cosmos, which aims to connect all blockchains.

Thus far, other blockchains designed as competitors and complementary to Ethereum have proven their mettle. At the end of it, no single blockchain will emerge as a winner. Instead, it is likely that a handful of networks will evolve to fill specialized niches in the DeFi sector.

The DeFi Ecosystem will be Fractal

A fractal system is complex and non-linear. It is interactive and has the ability to adapt to changes in the environment. Such systems are characterized by the potential to self-organize. A good example of this is living organisms, which over time evolve to fulfill niches in the ecosystem and the general environment.

However, while they evolve, and adapt, fractal patterns contain similar patterns at any level of magnification. You can take a small slice of the pattern, and still have a near-identical version of the whole.

When designing for DeFi, similar problems tend to be seen repeatedly at all levels. The best way to deal with these issues is to embrace them. DeFi solutions will always evolve and create new problems at every level. While progress will continually be made, there will never be a perfect solution.

Degen Strategies are Fun and Addictive

In DeFi, degens are traders whose main interest is risky, niche crypto projects that are often unaudited. They focus on meme tokens, joke projects, and other risky platforms, often with a close association with pump and dump schemes.

Those who engage in degen strategies often find them to be fun and addictive, which is why they do it. With the DeFi sector, developers have taken note, and come up with needlessly complex protocols that degens can be hooked on.

These types of degen protocols promote creativity in a relatively young sector and promote the entire industry in general. Through rigorous experimentation, and trial and error, sometimes a winning protocol emerges from the madness.

Complex Degen Strategies are Not Newbie-Friendly

While it is okay to design protocols for degens, which have complexity built into them, it is worth keeping in mind that newbies will be lost. That goes against the ethos of DeFi, which is to provide a financial system open to everyone. For the DeFi sector to grow there needs to be a great improvement to the UX to ensure more people can join the sector.

Things Can Break and They Do Break

DeFi is open source, which means anyone can copy a protocol, and make a few tweaks to it. Later on, another team can copy those tweaks, fork it, and launch their own protocols. This is how most progress is achieved in the DeFi sector.

Because of how many protocols are launched, things can break, and they often break in the sector. DeFi is still in the Wild West, and there is a lot of experimentation that is going on. As a result, it means that things sometimes break. However, that does not mean the industry has failed. Instead, it is the perfect time to be brave and try new things.

While everyone would love for a perfect protocol to launch, one which fulfills all needs perfectly, that is not going to happen. When designing for the DeFi sector, there is a limit to what you can do. Simply create a protocol and set it loose on the world. With time, an improvement will be made to it, which will benefit the entire DeFi sector.

There will always be compromises that have to be made in the DeFi sector. However, that is a good thing since it means people are using protocols in the sector. They are designing things, launching things, and creating new concepts and ideas that would not otherwise exist without decentralization, and crypto.

Show Dollar Equivalent of Tokens

When creating user interfaces for the DeFi ecosystem, an important tip is to show the dollar equivalent of tokens. Without this useful metric, the numbers will not make sense to many users, who might feel confused and depart. This is because each token comes with its own decimal points, and total number of tokens. Having to do conversions separately on a separate page is something that is sure to lose a platform users compared to one with an inbuilt tool that displays the dollar equivalent or other fiat currency.

Summary

In the current DeFi world, most DeFi protocols can only be described as user-hostile or developer-centric. However, none of the apps is built with the users at the center of the UX. Most experts agree that DeFi apps are years away from achieving full maturity. However, some companies are ahead of others. In a young sector such as DeFi, getting users on board will be crucial to the success of the sector. Those projects that manage to get the UX right will win over users, and become the dominant players in the sector. As such, UX cannot be underestimated when it comes to the success of DeFi platforms.

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I’m a product designer and a UX design consultant in the FinTech. space, specializing in DeFi and AntiFinCrime. I love designing user experiences that convert and help DeFi companies grow.

Feel free to get in touch: https://www.linkedin.com/in/dhananjay-mukerji/