Web3 Onramps for the Next 1 Billion People
The promise of web3 is that creators and users can finally own the upside from their work because trust can be set by code.
But we’re not quite there yet. Exploring web3 today is fraught with bad UX, high fees, confusing terms, and scams.
So how do we better onboard the next 1 billion people to web3?
In this post, I’ll share my thoughts on:
How people onboard to web3 today
How exchanges, wallets, and NFT marketplaces could evolve
Dark horse candidates for web3 onboarding
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How people onboard to web3 today
Why would a regular person care about web3?
Today, I think the most common reason is: “They want to make money.”
Regular people onboard to web3 as follows:
Use an exchange to buy BTC, ETH, or (god forbid) a meme token.
e.g., Coinbase has 89M verified users and 11M monthly transacting users (source).
Set up a wallet and transfer tokens there.
e.g., Metamask has 30M monthly active users (source).
Buy an NFT or explore DeFi.
e.g., 3M people have ever bought an NFT (source).
There’s a massive drop-off in each step above. How can exchanges, wallets, and NFT marketplaces provide better onramps?
Exchanges: Your place to buy and sell crypto, and hopefully something more
Exchanges are the closest proxy to web2. With an exchange, you:
Log in with a regular username and password.
Deposit money from a bank or credit card.
Use that money to buy and sell crypto.
However, many people only use exchanges to buy and sell crypto. They move their tokens to a standalone wallet to do anything else (e.g., buy an NFT).
That’s why exchanges are moving down the stack. Coinbase, for example, already has 89M accounts linked to a bank or a credit card. They can upsell these 89M accounts to:
The risk with exchanges is that they’re not decentralized. It’s unclear how much adoption Coinbase wallet has and whether Coinbase’s NFT marketplace will let artists and creators earn a cut of the transaction fees.
Wallets: Your web3 identity, social network, and App Store
There are two problems with wallets today:
Moving assets to a wallet is nerve-wracking. A wallet’s public address is a long string of random characters. One typo and your assets are gone forever.
Seed phrases just aren’t that secure. Scammers will go to great lengths to phish you into sharing it. One mistake and your assets are gone forever.
To address these problems, wallets can:
Build direct fiat onramps. Wallets can let people buy crypto directly with their credit card or bank account, skipping exchanges altogether. This requires KYC (identity verification), but I think most users won’t care.
Improve UX and security. There’s ALOT to improve in wallet usability (e.g., wallets can warn people when they’re signing a smart contract from an unverified source). Wallets can also introduce web2 security (e.g., 2FA) to help people secure their seed phrase.
But wallets can do so much more. They can be your:
Web3 identity. Wallets can ask you to set up a public address that’s much easier to remember (e.g., peteryang.eth). They can also let you create a public web3 profile page to highlight your NFTs, on-chain credentials, and more.
Web3 social network. Wallets can make it easy for you to find, follow, and message other wallets.
Web3 NFT and app store. Every dapp and NFT project wants to onboard more users. Wallets can show you what people you follow are actually doing on-chain (e.g., Backdrop) and recommend top trending NFTs and apps in your network. Social context is incredibly powerful for discovery.
Today, wallets acquire customers primarily through other NFT projects and dapps (wallet moat = integrations). In the future, wallets will be the central hub for your web3 identity, social network, and app discovery. In case you can't tell, I'm very bullish about this product space.
NFT marketplaces: Your web3 recommendation and search engine
If wallets will help drive discovery through social context, where does that leave NFT marketplaces (e.g., OpenSea)?
Let’s start by asking who is the customer? Most NFT transactions come from a small handful of traders that are chasing the next flip. But marketplaces should focus on the next 1B people who can buy NFTs but don’t. Specifically, I think they should build:
Direct fiat onramps. Getting crypto from an exchange, moving it to a wallet, then connecting it to the marketplace is too much work for beginners. NFT marketplaces should make it easy for people to buy NFTs directly with credit cards (OpenSea already supports this).
Social faster than wallets. OpenSea’s collector profiles are missing basic social features such as a follow button and the ability for collectors to customize their profile. Making people care about their profile and social graph will help marketplaces build stickiness.
Powerful search and recommendations. There are now over 250M searchable NFTs on OpenSea. NFT marketplaces need to evolve discovery from focusing on top trending projects to personalized recommendations and search based on each user’s on-chain activity and preferences.
NFTs will continue to grow rapidly in quantity and variety (jpegs, music, essays, titles, deeds, etc). NFT marketplaces need to solve the fundamental problem:
Show me an NFT that I’m interested in and make it easy for me to showcase it.
To put it simply, NFT marketplaces should be the web3 Google or Amazon.
Dark horse candidates for web3 onramps
Exchanges, wallets, and NFT marketplaces are the obvious onramps, but let’s not forget these dark horse candidates:
Games. For example, Axie Infinity has 2M+ MAU. While impressive, that still pales in comparison to the PUBG’s 100M+ MAU. It’s not crazy to imagine a web3 game taking off and onboarding millions of players while abstracting away concepts such as seed phrases and NFTs.
Web2 finance apps. For example, Cash App has 44M MAU and aims to be “the easiest way to send, spend, bank, and invest.” Today, the app only lets you buy Bitcoin. In the future, it could let you buy, trade, and showcase many types of tokens and NFTs.
Web2 social networks. For example, Twitter has 217M DAU and has shipped basic features like setting your profile pic to be an NFT. It’s already the go-to platform for web3 people to connect with each other and discover cool projects. Why not let people add a wallet and track on-chain activity as well?
A better web3 onramp is coming
Here’s the experience that I think will onboard the next 1 billion people to web3:
Buy crypto and NFTs directly with your credit card or bank account.
Set up a profile to showcase your NFTs and on-chain credentials. Follow and message other users, join interest groups, etc.
Through your network, discover amazing web3 dapps and NFTs. Use these dapps and NFTs together (multiplayer vs. single player).
I truly believe that wallets are the closest to making this vision a reality. I’ll dive into this more in my next post, which will feature an interview with Brandon Millman, CEO of Phantom wallet.