Several days ago a publication called Diar, which has been around since October 2017, published an article called “Decentralized Apps Facing Half-Life After Peak” that outlines some research regarding several well funded projects built on Ethereum and how the majority of (if not all) have failed to cement a true audience or find traction beyond the initial excitement. The numbers backing up the claim seem legitimate as they are based on blockchain analysis, but I would like to discuss a bit of my perspective regarding the state of decentralized applications and whether or not DAPPs are really going down the CRAPPr.
Just as a quick refresher OpenBazaar was launched in April of 2014 before DAPPs was even a term, when ICOs were just altcoin launches, and Ethereum wouldn’t be launched for quite some time. Our team has been building a fairly complex decentralized application for almost four and a half years and we’ve learned quite a bit about what is making it so damn hard for “DAPPs” to make it big. OpenBazaar has not become a world beater yet, but I think we’re ahead of the industry in many ways. In fact this month (August 2018) OpenBazaar grew almost 2x any previous month and it’s only August 22nd.
I don’t know if this growth will continue but I think it might be useful to share view of the landscape in hopes it could help the community get one step closer to realizing a future without Big Brother controlling our every move.
I also want to emphasize that not all decentralized applications reside on the Ethereum blockchain.
Bad User Experience
The first reason why decentralized applications up until now have done so poorly keeping users active and growing their base is the user experience (UX) is so bad (compared to centralized counterparts). Each organization will probably argue that there are unique circumstances causing their software to suck so bad in terms of UX, but my main intuition based on personal experience is that they tend to focus too heavily on building complex technology, emulating how centralized apps work with a decentralized approach instead of thinking about the end state and how users will actually want to interact with it.
Developers like to pursue hard problems that keep them up at night and fail to step back and solve the larger problems. It often is hard to justify taking time to sit down with a team of 10 designers and UX experts to walk through process flows and visuals when you know the core messaging or networking layer is unreliable and a piece of shit. What good is an awesome application if messages don’t even show up 40% of the time?
Figuring out the right balance for building decentralized software isn’t a different challenge than doing so for centralized applications. We just don’t have the advantage of speed due to almost every component being available to copy and emulate by developers. Simple interactions may take more planning, development time and testing that centralized counterparts. OpenBazaar has been working on making our network stable for four years and it’s still extremely frustrating at times even though we’ve come a long way. We spend a lot of time talking with users, troubleshooting and trying to understand problems that arise, convincing them to be patient as early adopters. I’m extremely grateful we have such a great community of dedicated people who want to see us succeed and I’m moved when I see evidence of this happening for other projects as well.
One point established in the article, when discussing Augur, was that these Ethereum DAPPs all have similar hurdles to jump over regarding fees and other UX challenges because these issues exist at a lower level that they all have in common. This is true and unfortunately when there is collaboration at the blockchain or networking layer our applications are at the mercy of other groups who may or may not be effective at holding up their end of the bargain. Layered approach to development works so long as the underlying layers are completely stable. It’s like constructing a skyscraper when the bottom floor is made of styrofoam. You won’t be getting far for long before it all crashes down.
OpenBazaar is built on top of Protocol Labs’ IPFS, which is tagged as “alpha” software. Our production final product is running on top of an “alpha” networking component. This may seem ludicrous but we attempted to build our own library and it took resources away from focusing on UX and other important pieces of OpenBazaar. We have to trust that Protocol Labs will continue to improve their software and grow and we will get to take advantage of that in the future. Hopefully it’s a smart gamble that pays off.
Currently Crypto is not Currency
Whether you’re a Bitcoin maximalist, Roger Ver or in Vitalik’s cult of personality most of us share a common hope that at some point in the future we’re able to use crypto on a daily basis. That discussion turns into a massive shitshow when we discuss HOW that will happen. This has been an contentious topic for a long time under the stress of what we call “scaling”. Some approaches propose layered scaling like lightning, plasma and several others involve sharding or some other technology, some of which show promise and others that are ridiculous. These ideas are being designed with the assumption that, at some point in the future, crypto will support being used by a majority of the world’s population for a plethora of things, including use cases that demonstrate crypto as a currency. I have strong optimism that day will come, but we are still a ways off from that reality. I know that many people reading this will scream that the lightning network is usable today and while it is extremely promising and is growing in usage, it has a long way to go before it becomes the dominant solution for scaling.
Bitcoin Cash is making an attempt (weak or strong is yours to decide) at arguing the technology is here today as well, but I do know that we tend to find that explosive upturns of growth cause current tech to groan under the load and we’re currently in a bear market. No one is stress testing anything right now. So we will probably have to wait and see how their approach to scaling performs when the next upswing occurs.
Ethereum has not really rolled out any viable scaling options as of yet (please comment below if I’m wrong) and we’ve seen that even a single DAPP can crush the performance of the entire chain when it gets popular. That’s a downright disaster and not easily solved. When Instagram experience hyper growth early on they knew that the ceiling was at the app layer and that the Internet could handle their growth if they expanded. No DAPP can just expand the Ethereum blockchain with more servers and fiber connections.
Another reason crypto is not being used as currency increasingly is liquidity. When many of your potential users are the ones who bought in on FOMO and saw their “investment” lose up to 90% of its value, you have a tough challenge encouraging them to be excited, attentive and supportive of using their pennies on the dollar to buy digital cats and trinkets and anything perceived as trivial. Rare Pepes are the exception to the rule. There’s always demand for a good Rare Pepe.
Tokens and the Crash Have Created a Huge Distraction
We had discussions with our investors (a long time ago now) about how a potential token could drive usage of OpenBazaar and would inspire developers to work hard to make the software better to drive the price of the token upwards, thus rewarding contributors and reflecting success. This thinking mirrors what we see in the stock market for organizations that perform well. They report good earnings or hit milestones and they’re rewarded by the public with a higher stock price. The big caveat though is that many times a market crash will take everyone down with it regardless of how awesome the business is doing. When crypto markets crash like we’ve seen over the last few months, small market cap tokens virtually disappear, making them nearly worthless (if they weren’t already). I suspect many of these projects’ strong supporters/investors are experiencing regret.
One thing that saves this situation from being a complete and utter disaster of epic proportions is that they were smart enough to accept USD for investing in their ICOs. This means that while users are left being patient hoping the team delivers, the teams themselves are sitting on piles of stable USD cash in the bank. Investors now have to trust that these teams will be responsible enough to execute well and not squander that cash.
There’s an entire spectrum of opinion on whether this will end badly or is a wait and see moment, but what’s not debatable is that this situation has created a frenzied user base that is desperate to see their investment go up in value and a massive pressure to deliver ANYTHING at all as quickly as possible. This isn’t much different than having VC pressure companies to return on their investment, but I would never argue that either is a positive situation. Smart venture capitalists let teams operate freely and only step in when they need to or are asked to. Inexperienced and financially desperate investors do not fall into that category.
Mainstream Users Aren’t Desperate Enough to Use a Shittier Version of Something
Whether your product is centralized or decentralized, one fact stands in the face of success. Your product has to be at least a magnitude better than its competitor to stand a chance at unseating the incumbent. I have hundreds (maybe thousands) of emails and support tickets from users complaining that OpenBazaar can’t replace Product X because it doesn’t do ____ well enough. You don’t have to do EVERYTHING better but you better damn well do SOMETHING massively better or you won’t capture any market.
Slick marketing and a pumping market for crypto will bring users in by the thousands, but it won’t create a sustainable community with low churn. You will only realize that with a great product that helps users accomplish what they want to do with the least friction possible. We have learned that promising users of a beautiful future will get them to take a look, but you have to deliver the goods when they show up or you will be relegated to waste bin of abandoned software.
It’s Not Too Late to Execute
I am not here to declare the death of DAPPs. I personally don’t think DAPPs are going down the CRAPPr, but we won’t see them take off massively in the crypto space until we mature and start focusing on our users more than ourselves. Satoshi Nakamoto handed us an amazing opportunity to take financial freedom into our own hands and use it to build the world we want. Some of us are fucking it up with our greed. It’s not too late though to change your perspective and start or continue to focus on building that ideal world. I know we are.
OpenBazaar has not experienced a horrible downturn in attention and growth as many of these other projects, outside of exchanges, have because we’re dead set on delivering a product that is a valuable utility. In fact we’ve only grown! We’re bringing our fully decentralized application to iOS and Android this year and soon after we hope to expand to the web browser. Making OpenBazaar accessible by everyone is in our DNA. Our goal is to bring free trade to everyone around the world.
Ecommerce is continually expanding and while the market share for those who spend crypto is still tiny, the world is becoming more and more interconnected and software that makes it easier to make those connections and do business are extremely useful. This will grow over time as crypto becomes more stable and the technology matures. We’ve already seen this reality.
So are DAPPs going down the CRAPPr? No, but we have some serious work ahead of us and if we think like existing successful organizations our hard work will eventually pay off and users will benefit with a more private and free world. We won’t see articles about crypto busts, but the obituaries of companies and products who failed to join us in the future.