Revisiting Users: You Could Have Grasped Them Better
Author: Jiawei, IOSG Ventures
In the past few months, I have had conversations with dozens of startups. I found that some teams did not think about the users from first principles, were unclear about the users’ needs, or made too many assumptions about the users.
Technical innovation is fascinating. But the ultimate audience for all this is the user. As Jobs said: “You’ve got to start with the customer experience and work back toward the technology — not the other way around.” People need to think more about user-centricity and the “work backwards” way of thinking.
Folks, it’s time to refocus seriously on the user again.
UI/UX
Interfaces akin to Uniswap or Lido have essentially become standards in the crypto world. From the UI/UX perspective, the design should be as intuitive as possible. This allows users to grasp and use it easily, minimizing friction.
UI
A website often serves as the first point of contact for users. As an avid product user, I once felt very desperate on two occasions.
- I’ve seen sites with many buttons on the landing page, each leading to different information-heavy pages. This can be overwhelming and confusing about where to begin.
- Sometimes I just struggled to find the documentation. For many, like me, documentation is a fast way to grasp what a project is about. While catchy phrases can attract attention on the homepage, they may not help in understanding the project effectively.
Don’t make the page too lengthy. People can skim through all the content on uniswap.org in just 20 seconds. If users are intrigued, they will naturally seek more information; if not, they’re unlikely to scroll down. While dynamic pages filled with creative designs can be appealing, users often prefer simplicity.
UX
Let me give two examples to show that we need granular thinking about UX in crypto.
- Mobile
For dapps, having a good mobile experience is crucial, but often ignored. Many dapps don’t work well on mobile, making users switch between their wallet and the browser. Think about someone who trades memecoins but can’t always be at their laptop. They’d feel safer with a mobile Dexscreener.
Together with Privy, friend.tech has taken a step forward with a built-in wallet. However, DEX still lagged behind CEX’s mobile experience. Features like instant notifications and price alerts are key for time-sensitive trades like perps. For social apps, sharing anytime, anywhere is important.
- AI Agent
AI and LLM can help users understand new projects better.
For example, I often find myself confused at a L2 ecosystem page. It presents many protocols and numerous wallets, tools, and so forth. Where to begin? Imagine an agent that can tell you the most popular dapp on this L2 based on recent on-chain data, or the fastest-growing protocol. It could even analyze the behavior of each address to offer tailored suggestions.
These highlight the considerable potential for UX optimization in crypto. A few years ago, we lacked the necessary infrastructure to support applications geared toward mass adoption. Recently, however, we’ve seen scalable chains and user-friendly onboarding processes. It’s now time to shift our attention more towards improving UX.
Stickness..Wat do?
In the world of crypto, getting short-term growth data is often easy. You can quickly start a campaign and hand out a specific Genesis NFT to meet immediate goals. People tend to see this as a positive sign, hoping for future benefits. But, getting real users and keeping them involved for the long term is a lot harder. There are rarely any quick fixes for this. For example, Uniswap took almost three years to develop a good product before the DeFi Summer started.
Acquisition, wait..it’s all about airdrop?
While I do not want to lump airdrops and user acquisition together, it’s clear that airdrops have become a shortcut for achieving the latter.
Airdrops are often seen as a marketing approach, with tokens from airdrops considered part of acquisition costs. For airdrops, it’s crucial to define the purpose. What are your aims for the airdrop, and how can you manage expectations and devise strategies based on these goals?
For example, Starknet awarded the top 5,000 GitHub contributors, aiming to attract web2 developers to the ecosystem. Similarly, other protocols have targeted home stakers or those teams developing public goods.
I concur with what Regan said: “Community means making money with your internet friends”. It’s undeniable that many users interact with a pre-token protocol only to farm.
However, I have reservations about Hayden’s statement: “Don’t be stingy — give a significant amount away. If you don’t think the community deserves a significant amount, don’t release a token.” The fact is distinguishing between the “community” and “farmers” becomes challenging. The latter has even evolved into a well-developed industry. To address this problem, the protocol should put more effort into identifying real contributors for sustainable growth.
Airdrops can also become toxic if not managed well. Users often view venture capitalists and project teams as adversaries, creating a dilemma in designing airdrop rules. If airdrop farmers feel inadequately rewarded, they might fud the project on CT publicly. Conversely, failing to screen out sybils can lead to token dumping, undermining real user rewards.
When you want to use airdrops to bootstrap, remember to never be vague or deceive users. Ensure clear information and rules are communicated.
My view is that if you are a long-term builder, try to focus on organic growth. Avoid excessive marketing that creates unnecessary expectations. Focus on creating a great product.
In summary, most projects conduct airdrops to attract users and encourage long-term usage. This requires having a sufficiently good product before setting airdrop expectations. If the user experience is poor, an airdrop can backfire.
If you don’t have clear airdrop goals and strategies, and a good product, then focus on building. Embrace organic growth and wait for a better time to come.
Retention
For retention, product is one of the top priorities. But different types of projects typically require distinct user retention strategies. For DeFi applications, liquidity is key, while NFTs often rely on community engagement.
Uniswap has built up substantial liquidity and a robust brand over the past few years. When users want to exchange a specific token, they often instinctively turn to Uniswap, naturally assuming it offers the best liquidity and lowest slippage — They don’t feel the need to visit DeFiLlama to determine which pool is the best. This solid reputation, built on user intuition, forms a strong moat.
Furthermore, the liquidity established by large funds is relatively stable. Given that large funds usually move slower than smaller ones, recreating this liquidity without a compelling incentive mechanism is extremely challenging.
For application projects directly aimed at end users, the community may be the most crucial aspect. The concept of a community can be abstract, appearing as a unique culture or emblem where a group of weirdos congregate for enjoyment.
When assessing whether a founder is crypto-native, we often discuss their understanding of the community. This requires long-term involvement, at least one to two years of participation to develop intuition and mindset. For such projects, founders need to engage with the community, immerse themselves in its culture, and listen to their users.
Seeking Token-market-fit
Tokens often reflect market consensus on a project. For instance, Arbitrum, being the L2 with the largest TVL, is widely agreed to have strong cash flow. The consensus on dogwifhat’s hat is also another example. So, what kind of token does the market favor? What kind of token does the market invest in? This can be understood from two perspectives: utility and speculation.
- Utility
Utility comes in two types.
- One type involves utility generated by anticipated future earnings, e.g, staking. For instance, to become an Ethereum validator, you need to stake 32 ETH, which yields ~4.5% APR.
- Another type is akin to the token-gated: you must hold a certain number of tokens or NFTs to gain access to a community or to use a protocol.
Many projects cannot endow their tokens with significant utility. For example, most L2 tokens currently only serve a governance role. That’s why some only have a speculative quality in their narrative.
- Speculation
If retail investors believe that a particular token has the potential to pump for various reasons, such as direction, product, narrative, community etc. This collective belief can drive market forces to support the token’s price.
Users typically find straightforward stories easy to understand. However, many infrastructure projects are complicated. It’s not fair to expect everyone to grasp complex ideas like ZK, FHE, developer tools and stuff like that. But we can make these easier to understand by using simple abbreviations like ZK, FHE, and restaking.
Trace mentioned two good points here: “bigness” and “simplicity”. For example, L1 is a long-lasting narrative in the crypto world, it’s big enough to accommodate a large number of dapps and users. Another example, memecoin is the simplest token, it has almost no learning curve, and the only reason users buy it is the expectation of pumping, so it can quickly occupy users’ mindshare.
Another key point is how users view and engage with a project. When users try out Solana, they often find it faster and cheaper than Ethereum, making them think Solana is better. This is a pretty straightforward thought. Many people who restake in EigenLayer don’t really understand what ‘AVS’ means. But because EigenLayer has a staking interface that makes them feel familiar, they’re quicker to accept the concept of restaking.
Closing
More projects and tokens are being rapidly pushed to the market this year, and users have to face rapidly changing narratives and a dazzling array of projects. In this space where everything is accelerated, attention is a scarce resource.
Over nearly a decade, the crypto landscape has transformed. Users now expect more than just a good DEX, as was the case a few years ago. Today, building a successful crypto project is more challenging than ever.
Despite this, the key focus should always be on the user side. I do hope builders revisit user needs from first principles.
