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Head of Venture Capital Fund under FTX: The next order of magnitude of Crypto is applied on the mobile terminal

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If we want Web3 to be truly integrated into society, we must start thinking about how ordinary people interact with technology and build the tools to reshape people's perception of the importance of technology.

Original title: "On building mobile first."

Original author: Joel John, head of venture capital of LedgerPrime, a fund under FTX

Original compilation: Kxp, BlockBeats

The work in the Crypto industry is always around the clock, consuming a lot of our resources and energy, and this The arrival of the second bear market just gave us a chance to reflect, allowing us to weigh the pros and cons. Different from the traditional market, many so-called "successful" founders in the blockchain ecosystem will use Token for hype, and can earn large sums of money without any products, users or business models.

In Crypto you can build a billion dollar level agreement. Many of the industry's proudest moments have had little real impact on those outside the industry, and whenever regulators try to create laws about technology in some emerging market, they always Pay attention to this. Therefore, even if we are full of fighting spirit, it is still difficult to get on a bigger stage.

Founder Suffering From Peter Pan Syndrome

In Our Industry , the symptoms of Peter Pan syndrome are particularly obvious, that is, although a person is an adult, he still indulges in childhood and does not want to grow up. To outsiders, we in the crypto industry, as founders, investors, or technology users, seem to be playing childish games. But as long as there are people who can make money from it, the game will continue.

Nonetheless, to be multi-billion dollar like Coinbase, FTX and Binance, It still takes years of accumulation. Over the past 5 years, consumer-facing mobile applications have been the biggest driver of growth in the Crypto industry, which in part explains why Wyre and Moonpay have high valuations of $1.5 billion and $3.4 billion, respectively . What both companies have in common is that they are both critical infrastructure for apps to acquire users through microtransactions on mobile devices.

If Crypto is to be freed from Peter Pan Syndrome, it must be exposed to those Normal people who don't care about private keys and protocol maximization. In other words, if Crypto wants to enter the next order of magnitude, it must understand what people outside the currency circle want. In this article, I want to make a preliminary analysis of the motivations, trends and opportunities in the Crypto industry, hoping to be helpful to founders who want to develop in this field.

Computer Interface

The reason why most Web3 applications are carried on the computer interface today is because most people in the Crypto industry entered the market between 2017 and 2019. At that time, the Crypto industry was in its heyday, with 25 billion or so dollars flowing into more than 8,000 ICO projects, and anyone could trade and make money quickly. But as with most trading, speed of access to information is the key factor, and charts, communications and news are constantly being updated every day.

In that era, ordinary people entered this field to obtain enough IC0 funds, and Pray that it can be listed on a larger scale, which can be said to embody the theory of Bosha to the fullest. Once a token is listed, you start looking for the next ICO project to deploy funds. This is very different from before 2017, when you could only send and receive or trade digital assets. During the same period, digital wallets such as Myetherwallet and Metamask also began to carve up Jaxx's market share.

With the in-depth evolution of the DeFi ecosystem, the computer-based interface has also become the The standard for industry interaction. In my opinion, there are two main reasons for this: first, large institutions that can obtain high TVL usually need a secure infrastructure when deploying funds to DeFi protocols, and only browser-based wallets such as Metamask have Such a function; secondly, the interface on the personal computer is more convenient for smart contract interaction and operations such as adding Token.

Value Destruction Cycle Diagram

As the diagram above shows, developers today prefer Serving a small number of users with large amounts of capital. When designing a product, you don’t need to consider the user experience too much, but focus on obtaining TVL. However, this also means that most of the ordinary users entering the ecosystem will not be able to use these new DeFi primitives for most of 2020.

Move to Mobile

From Bondcap's 2019 report

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The reason why mobile devices can carry Web3 applications is, in the final analysis, because they are the most attention-grabbing. Today, smartphones are the primary way we learn, date, entertain, shop, pay and think. So, if we exclude mobile devices, we give up a large part of the Web3 market. After all, as of 2013, we already spend more time online on mobile devices than we do on laptops or desktops.

Mobile devices also make it easier for people to take ownership of various Opportunity is created by people who have access to this type of functionality. Applications mainly based on mobile devices can not only accelerate the process of digitalization, but also reduce the cost of using devices, allowing more people to enjoy convenience and services at low prices.

In the past, complex financial products and products that realized ownership were basically high-cost but low-profit products, which explains why banking services to the unbanked has historically been a huge problem - bank staff cannot cope with an exponentially growing customer base. In the era of incomplete digital systems, bankers spend a considerable amount of time on each user, but these users often only deposit small amounts (less than $100), so it is difficult for banks to pass these accounts generate income.

Digital entities can often achieve growth while controlling costs

Before the emergence of digital banks , if lenders want to issue loans to 10,000 users, they must hire credit assessors at a ratio of at least 1:100. With the popularity of digital banking, AML/KYC and distribution functions have grown exponentially, reducing the time lenders spend on credit assessment, thereby reducing the size of their teams. Not only that, but the larger the user base, the less the team will incur to serve each new user.

For platforms like Compound and Aave that run their smart contracts on Ethereum, They will cost less. These DAOs do not run their underlying blockchains and have no credit evaluation mechanisms and AML/KYC costs.

The emergence of digital banks has lifted its original geographical restrictions. For a time, banks no longer needed to set up offices in remote areas. Instead, they can reach their users directly with the help of mobile devices and provide corresponding banking services and customer services. The shift has been most pronounced in India, where a state-owned payments network in the region called UPI expanded from $4 billion in monthly transaction volume to more than $120 billion in four years. Not only that, Indian Internet users complete 72 billion transactions every year digitally.

Parents of our generation are afraid to use online payments

The emergence of DeFi has made everyone All can purchase investment bank-level financial products, which means that everyone can invest in early-stage venture capital projects. That being said, all people really want are those settings that don't have to be viewed in real time. This can be evidenced by a local app in India, JarHQ, which consistently ranks in the top 20 for UPI transactions in the region, and so many of its users’ transactions are aimed at buying gold for as little as $0.05.

In the past, it was difficult for Indians to buy gold, because they not only need to save a fortune For a small amount, you have to pay the middleman. Finally, they can only buy very little gold and worry about where to store it. Therefore, Jar has found another way to store gold digitally, which effectively reduces the purchase cost of gold. Focusing on the Indian market, they will achieve faster development than other traditional shops.

Users who are oversubscribed in this round will only receive calls from TiEr 1 venture capital firms

All How did these transform into DeFi? In my opinion, most founders have already started building products for institutions. This way they don't have to spend a lot of money on user experience, they can just focus on a few customers, while still claiming billions in TVL. Since your customers are seasoned financial managers, you don't have to spend time explaining what they're buying, and most of them are desktop users. The difference is that 90% of TWS users are on mobile devices. Therefore, the struggle between capital and users is the decisive factor for the final adaptation of the product to the device.

When looking at TVL and predicting market activity, we always forget that DeFi can be used to provide financial products, because these products often did not have investment value in the past.

Understand user psychology

Intrigued to learn more about user motivations and behavior patterns in emerging markets, I turned to Ravindra from /">Frontier wallet has learned. Frontier wallet is one of the first smart contract-based wallets on the market, allowing users to view their investment portfolios on multiple blockchains without opening the browsing interface of each chain.

Ravindra observed that Frontier's users saved an average of $1,000 to $10,000 more Ordinary users who deposit assets on the platform know more about Crypto. Users in Indian exchanges with wallet balances around $150-$200 interact directly with multiple smart contracts and are more interested in earning USD. Dollar gains also mean a lot to users in inflationary regions like Turkey (one of Frontier's larger markets).

He found that some people in the market have begun to turn to the Web3 field, and they will buy and sell on the chain NFTs for music or games. In his view, the next wave of users participating in digital asset transactions is not for speculation, but for fun. In 2021, when I first wrote about NFTs, I mentioned that tools like NFTs would have great potential in emerging markets. Just a year later, celebrities like Justin Bieber and Jay Z entered the market.

The last ice age has only passed 11,000 years

In my opinion, digital assets China's user growth curve will follow a pattern very similar to India's digital consumption. The graph above shows how much time Indian Internet users spend in each category of apps in a given year. Since social media and entertainment apps are passive apps, they also have the most users.

Generally speaking, this model is basically in line with Maslow's hierarchy of needs theory, but The basic need here is to consume attention, and then there are financial services online, and some people choose to receive education or learn skills. I used the above data to create the below version of Maslow's Hierarchy of Needs.

Technically, all apps can be dating software

In Web3 , this structure is inverted - most of us spend our time on Telegram, Discord, and Twitter, and many Web3 applications are only focused on financial or speculative fields. To expand the influence of Web3, we must focus on a larger market and develop applications for people to entertain and communicate.

In the past few years, many teams are also working in this direction. Axie Infinity's team has spent two years building one of the largest Web3 mobile device user bases, with rapid growth in 2021. Recently, Sweatcoin, a Web2 application with 3-4 million DAU, has also built a Token economy in its application.

Apps such as Mirror, Coinvise and OpenSea allow creators to create closer relationships with their users Commercial connections, but this is also based on the basic condition that users will actively participate in transactions, and what we should really achieve is passive participation, that is, users can benefit without actively trading or publishing information a way of In my opinion, there is one class of apps that could lead to this shift.

Such applications are games - they tend to have rich digital assets, large and diverse The user base and the lowest threshold. Unlike most crypto apps today, games provide users with a sense of belonging and experience.

Since most users who participate in Crypto transactions are also keen on games, these applications can completely Let users learn how to use wallets, make transactions, or interact with NFTs while playing games. In the past six months, I have been cooperating with one of the largest game studios in India to effectively combine games and education, and will release related information in the near future.

Exploring the future direction

Today’s Web3 is still a community of technical men, but if you want Web3 to truly integrate into society, you must start thinking about how ordinary people interact with technology, and build corresponding tools to reshape people's perception of the importance of technology. In the words of Jobs, what we really need to do is to change the world.

Several companies are already working toward this goal: Bluejay is developing a Stablecoin for emerging markets, and Goldfinch has issued over $100 million in loans to SMEs worldwide. According to Crypto-art , NFT hype has netted almost 900 artists $100,000 in the past year Above that, there are over 10,000 artists earning over $2,000. So we've made some valuable changes in the current market, but to scale that change to everyone, we'll have to use a mobile interface.

< p>We should focus on transforming the chaotic and complex Web3 into a normative and practical ecosystem while retaining Crypto's decentralization and high tolerance.