Overcoming the Hurdles: Addressing Pain Points in Web3 Adoption | KBW2023

[Music] hey guys good afternoon with a lovely venue this is isn't it well you know right now crypto is A1 trillion asset class which might sound like a lot of money but it's not two trillion not three trillion and to get to that number there are a few pain points we have in the industry you know that might be uiux you know it might be regulation might be knowledge it's a lot of things and on stage are you know two big brains that can really discuss this and discuss why crypto why web 3 have you know these pain points so why don't we do a quick intro you know say who you are you know where you're from and what you think the biggest pain point in web 3 crypto is right now sure uh hi everyone my name is s uh I'm from Robin crypto I lead product for uh the crypto business here here um in terms of what I think are the biggest pain points in web 3 adoption it's probably three things it's one what are you using it for two how do you reach users there's just lack of distribution platforms today and then three is probably what we're solving today which is the wallet uh interface itself so yeah it's a quick uh intro of me hey guys I'm Jay I'm a co-founder and chief product officer at Magic um I think the pain points at a high level probably I three would be first one would be regulation actually um and then the second would be education U it's not just educating the end users it also comes down to educating the Enterprises that with the actual big uh mainstream user base that's looking to enter uh web 3 and then third one is innovation around ux I still I still think today when you go across dabs like when you go to openc there's still a lot of wallets to choose from and you want to take your assets from one dab to another it takes crypto Savvy kind of knowledge to be able to do that and it's asking a lot for the mainstream users to do so it's a good point actually so when you Define mass adoption right does that mean that every retail user has a wallet every Goldman Sachs Trader has a wallet and like with those two scenarios what are the problems in both right like why can't Grandma be on metamask but also why can't a Goldman guy on Wall Street do the same thing um so I I think with mass adoption across Enterprise and Retail you kind of need both um and you need it on the Enterprise and institutional side because they're the ones providing liquidity and without liquidity you don't get good pricing on crypto and if you don't get good pricing on crypto it becomes too cost prohibitive for the everyday person to get into the game so I think um there's a lot of uh hurdles for institutions to get into the space I think the lack of uh safe regulated exchanges is definitely something that's becoming more of and more of a paino for institutions um I think on the consumer side uh one of the biggest issues is uh again I think it comes back to what are you using it for I think the fact that um you know we talk about web 3 as a single thing is probably the wrong way to go um web 3 is a tool to go somewhere and I think those tools are still being developed um and two um there just isn't enough distribution and ways to reach users uh which I think are bigger pain points that aren't necessarily being solved in the best ways today and then three is the cost to get into uh the space itself which is you know how do you onboard onto a wallet um which itself is extremely difficult um yeah so um so five years ago when I started a company there was only metamask and everyone's looking a wallet from like B Toc point of view like everyone needs to own a wallet everyone needs to know how to manage their portfolio how to manage their assets um how to you know uh manage erc20 RC 721 Etc but today the way we see it is like um there's a lot of angles I think yeah like Goldman Sachs uh I think the way they or like the financial institutions they don't have I think they can work with exchanges that provide the service but also there's um lot of like key algorith um Key Management um algorithms coming out where they can kind of implement it on Prem and then own own or manage crypto on their own now when it comes to end users uh how we're seeing it today we're actually tackling uh that path through going to the Enterprise like we've been working with Mattel Macy's and and and these other big Rises and it's not about actually installing wallet for the users it's actually about going into their existing Tech infrastructure so for example Mattel they built their site using Shopify and they already have azero which they use to manage identities and the um logins for the end users you don't have to replace that with metamask or these other wallets first you can first start off by just going under the hood kind of like adding the underlying Tech with web3 where we as magic we help Wallet be installed behind the Auer identity so that's example of how we can first enable the wallet wallet experience I I think later in the future um when there's a lot more use cases around around web 3 and when people are more comfortable with taking their assets across different uh apps and Etc that's when they can probably be graduate to owning their own wallet or they can stick to staying in like Mattel's wallet system or like Macy's wallet system Etc so what do these firms look for like what does Mattel or Macy's want from your company and how's that different from like other kinds of big corporates out there yeah so so Mattel Macy's I would view them as U more of a company that's invested in like loyalty rewards memberships and Etc and for them what they needed was not changing the ux like people talk about innovating the ux in web 3 and that makes sense because like if you were to innovate on the current like for example openc in Swap and how the DBS have been um showing their ux today there's a lot of improve improvements that can make that that that can be made uh on the web 2 side people are already comfortable with the ux like we two kind of has spoiled the users with the ux right um and that is the best ux so Mattel and Macy's they wanted to keep exactly as it is and then introduce web 3 behind the scenes and that's how magic came in and what we provide is a like infrastructure wallet SDK that can be easily plugged into any system without pretty much changing the ux but also on the tech side as an engineer you don't need to change much to implement magic SDK so that's how we've been helping Mel AC's yeah so it looks like then like for web 3 its Advantage is structure and plumbing not so much uiux right web one to web two was a huge jump in uiux quality but web 3 it's not quite there yet would you agree it seems like I agree but at the same time I think so the first step is piggybacking off of web to ux that's first the second step is I I like to use use a VMO as an example like people um in the old days it'd be hard to go across different banks and then transfer money right but VMO made it really easy for you to trans for money from like Chase or like Bank of America Bank of America Etc I think the first step with crypto is just enabling Matel Maes to be able to launch web 3 on their own but later on if they need to interact with one another or like with more Enterprises Enterprises in the future I think that's the ux that could be different than web 2 in the future which we don't know but technology will definitely help enable that I would say so what's Robin Hood then is Robin Hood a web 2 company a web 3 company or like a hybrid of the both yeah so Robin is definitely a little bit of both so we both have a custodial trading platform where users can come at the very beginning stages of their crypto journey and this is what the web 2 experience looks like there's almost no knowledge required of how to get started in crypto and I don't think that is ever going to go away and I think maybe magic. link is kind of doing something like that for for everyday users we also have a fully self- custodial crypto wallet where we didn't want to shy away from the fact that there are a growing number of these beginner users who started their crypto by buying their crypto journey by buying Bitcoin but eventually wanted to graduate to a self custodial wallet but the wallets out there were just too difficult um and the way we solved that was we wanted to build a wallet that was instantly usable and uh useful from day one uh and yeah that's a little bit of of what we so when people think about crypto they think about number go up right but the problem with that is also it goes down as well look at say last year FTX all the big scandals right there but web3 is part of crypto but it's not all about number go up so how do we educate users that web 3 is part of the crypto family but not about Bitcoins or shitcoins yeah I think that's a it's it's a tough challenge because um at least from my point of view which is what I see our users doing every day on the self custodia wallet the primary use case for these users is still trading on decentralized exchanges and getting access to tokens that they can't otherwise get um I I think a big re like it's hard to get an everyday person a consumer to learn about web3 use cases and be excited about it you need the use cases to be so compelling that they don't care whether it's web 3 they don't care whether they have to walk to an ATM to go do something yeah um and I think the issue is that those extremely compelling use cases just aren't there yet um and I think even if they were there there just aren't great ways to reach people so for example today uh the best distribution platform in the world is the App Store and apple um but if you want to do and access any web three use case you either see it on Twitter or you see your friend talking about it but there's really no trusted and safe place to go find all these use cases in in one area and figure out what is going to help you in your life um so I think without those two things it's it's really really hard to teach someone to to care more U versus just show them and give them a reason to without them really having to think about it yeah um I see it in two ways I think first is you need to fully abstract a way um and I think we're seeing right now how crypto is being extra abstracted away through using nft or uh like and also it's not just the like Trading nfts um also crypto being abstracted away through for for example betting markets like poly Market is one example that's built on top of magic love those guys yeah uh yeah we love those guys too um um yeah they started using magic in the early days but anyways um like through like betting through um participating loyalty through like other means of the actual use case I think crypto can be abstracted away the other one I see is if crypto was given more like um as passive income for example let's say you sell your nft in a secondary Marketplace but you entered uh in web 3 through Fiat first right and then let's say you bought a nft with $20 worth of USD and you listed a Marketplace and you actually acquire $20 of usdc or you acquire $20 of ethereum in that case they're they got into play around with the nfts they didn't get in to actually bet on crypto and then see how the prices move up and down right I think that could actually kind of widen the appetite on on holding crypto and I think that could actually really help uh yeah with within the option when comes to more more crypto so I guess one other issue here is safety right like the App Store and iPhone for instance that's not the first place you could download programs online from right but it's a safe easy fun place now with crypto you hear every day about someone getting scammed because of a fishing attack or rug pole stuff like that so how do you guys work to build safety into the crypto SL web your experience yeah so a a big part of how we did that on the wallet is first uh we aligned on the principle of transparency so uh a lot of wallets do a really terrible job of telling you when you're about to sign something that gives a program access to all of your funds and so there's just like very basic things that we did on the rined wallet that lets users know very clearly in bold letters and you know we're not talking fancy ux here it's literally a warning that says hey if you sign this you're you might this app has access to all of your money so um there's the first step of transparency and making it clear to the user what they're signing um the second part is we do have a web 3 uh essentially like a Marketplace on on our wallet today uh a big part of what we did is uh we did take that initial step of vetting the the daps that are going to be there and I I don't think that initial step of vetting which daps are there have they been through any security audits etc etc that sort of necessary step has to be there and if you look at the Apple App Store that's also how they review every every app that's coming on um so there's these two very basic steps that we've taken um in terms of how we scale this model to hundreds and thousands of of web 3 apps that's sort of the next big challenge for us over the over the over the coming year so yeah if we talk again in 12 months maybe we'll have solved the problem but yeah it's still something we're definitely figuring out okay yeah so how we've been tackling is from a technical level so if you look at the traditional o systems in web 2 world there's like OCTA o zero and they have security measures around like device registration if it's a new device then they make sure that you sign it through your original device to ensure like you own you own that identity and there's other security measures that they've been adding on the web two side we've kind of taken that Playbook on the web 3 so but applying that more on the transaction level so let's say if the transaction seems malicious or if the user is interacting with the potentially about to interact with the malicious smart contract we do transac we do transaction monitoring on our side to help with the yeah um adding security levels on top of that and we let developers to show that so that they can enable the end users to be able to um yeah avoid that situation but is all of this Boomer prooof because Boomers love the App Store as it safe and it just works right but it seems like like to get to that next level of retail adoption you have to get Grandma and Grandpa on board with this and would they know what a malicious app is or they want like a Walled Garden that just works okay that's a great question and I I I want to say that it can't be wal Garden but actually it's starting with wal Garden from what we're seeing so uh we've been working with Macy's Mattel as I mentioned um and they want to start off with their own kingdom as or World Garden as as you would put it the reason why is actually number one reason is actually due to ux right as I talked about they want to keep the same ux but the second reason is they don't want any responsibility to be held by the end user like seed phrase is definitely no question but on top of that anything that touches crypto uh when it comes to education and knowledge they don't want the user to be able to worry about that so for that reason they've started out with wal Garden and I think it will come down to two where the first one would be that uh maybe security infrastructure in the web3 space matures a lot more where that enables these companies to be to be able to get out of the wal garden and be able to take advantage of inoperability um yeah and then this I think the second is do us are actually being more educated on using crypto but like you said like Grandma's or even my mom or I think people outside of web 3 um it takes yeah it's laziness right and people don't want people want convenience so I see the education part being a little yeah definitely harder on on that end yeah I I think it has to be a little bit of both um so at Robin ID we offer two modes of playing with I mean working with crypto the first is you have a custodial trading app where you can log in with your email and password and it's very standard and traditional um and that lets you access a very limited set of things very easily um and then there is a self custodia wallet which is a separate app that um you have to be a little bit more advanced but it's still pretty intuitive but I actually don't think you can get to a model where it's foolproof for the the Boomers of the world until regulation and I'm talking specifically within the US um and you know I don't know country by country what the regulation is um until regulation is actually clear for what you can do in the United States so a lot of the a lot of the reason uh the web 3 apps are built the way they are today is because they're essentially trying to outskirt and and move out of the bounds of Regulation because it's unclear or they don't want to deal with it and if you continue to have that you're just not going to get to a place where you have safe ways to to access um some some of these web three okay so you know about regulation you know both you guys are in web3 crypto but you guys don't run exchanges yet Regulators want to talk about more than just you know Securities things like cyber safety stuff like that so have you spoken with regulators and if so what do they say do you guys this is probably the one thing that on the product side I don't interface with Regulators as much um so what's like the the the mood right now if you could um so generally speaking in the United States uh yeah there's definitely a lot of uncertainty and I think it's um yeah there's a lot of uncertainty and it it makes it really unclear what what we can and cannot do and build for for users yeah pretty much same as song um I think us definitely a lot more strict from what we've seen um and then I mean I recently visited Paris and I heard that like UK is opening up more so at least there's some yeah positive sign that we're seeing right now so but that's as far as I know on the regulation side sure sure um so it looks like a big theme as being uiux so what does the ux of the future look like because we've evolved a long way so far like in the ear in crypto's early days you had to copy and paste all the addesses right and now we're at metamask where you still have to do that partially but it's a bit more evolved so looking looking at say the next five years next 10 years what do you see as a future of this um I I think it'll start with graduation path so the way we put it is there's beginner intermediate and expert and when it comes to beginners the ux has to stay exactly the same as web 2 even if it means sacrificing some value props of web 3 because what's really important is getting the users into web3 getting their foot in the door right for intermediate that's when they start kind of learning about oh I can own my assets what does it mean to really own my wallet uh what does it mean to take my assets across different DS and that's when they'll be introduced to potentially like a self- custody wallet like maybe Robin Hood app or like a like metamask I think uh intermediate is where it goes further than metamask where they actually live in that world so you're actually um for example instead of using wealth front or these banking apps you be just banking with like a or a compound and then you be earning y yield through that or let's say if you want to participate in like leveraging like you maybe use TDX and Etc that that's how we see the expert world and yeah I mean 5 to 10 years I still think that it'll be we'll be sitting right in between uh big intermediate and people say like we should be going from Web Two to web 3 I think we should add one more step in between to be more pragmatic which is web 2.5 and to me that is The Five-Year Plan and in that world I see more Enterprises using web technology under as an underlying Tech but in terms of like building a new web 3 app I don't think will'll be there yet so what's 2.5 then is that just having web 3 in the background and having web two in the front or something else it's having web 3 in the background that's how I see it okay yeah I I think I would agree with that I think um there's probably two modes that I see playing out 10 years from now or five years from now wherever whatever time Horizon that we're talking about the first is um I think along the lines of what magic is doing which is uh you you don't actually have to think about nfts or web 3 at all and it's just embedded into your everyday everyday life of of things that you do when you go to a concert there's going to be you know the best ux they always there's this like very cliche quote that it's like it's in noticeable and I I think that actually is the right way to describe how things should be here um I think the the second path is um there's probably going to be a first the first path of like there's going to be a set of use cases that are so seamlessly Blended in that uh you're never going to notice that it's on chain the second path is um wallets become sort of the the uh the we chats of the future um and I I have a pretty strong thesis on this um simply because they just like I mentioned before I'm I'm harping on the idea of distribution platforms you you need a distribution platform for all these web 3 apps and all the money that's invested in web 3 to reach users you're just not going to get there with individual domain sites and if you just logically think about it wallets are the home for what that looks like and so yeah I think wallets are going to become the chats at the future I think you're going to see really great interfaces and user experiences that are um that aren't built for developers and I think you know three years ago I'd say all the web 3 apps and wallets out there were very developer first focused and now and I want to say like with what what what robinett has done with our wallet uh we've built a wallet that is like extremely consumer first with no thought to me some thought to developers but it's not our primary audience a good point actually like the super apps in China like WeChat for instance right they all laed around 2011 just as smartphones there became really mainstream and you could argue that they both drove each other's growth right but then what drives the web 3 super apps because we all have smartphones right now and you know with super app in China you can get a train ticket movie ticket dinner whatever on the same app but web 3 kind of lacks that Universe of usefulness right now so what what drives that growth um so I I actually think there was an opportunity for this back back back maybe in 2021 with the summer of defi um the main issue there is that I think most web 3 apps lack uh not lack but they they just weren't used to the traditional ways of engaging and retaining users so for example I think defi trading is going to stick around forever I think it's one of the biggest use cases you have in web 3 and I think that's going to stay um there's ways to make a defi trading app extremely engaging and uh high high retention and that's what we did with with rid trading um uh but but if you think about the way the defi dexes work is you go to Unis swap. org and you tap launch app and you never come back again um so I actually think there there was an opportunity to do this I think being mobile first is like one of the first and most easiest things you can do because then you can start uh retaining users you can start sending push notifications very basic things to get them back um yeah so you you say was though right as a past tense so what went wrong like why isn't it mainstream right now well I I think if uh if if more apps were suited to to sort of take the hype that was there and then capture the retention on it uh the overall uh tide would be much higher um now but I I I think you know when the next wave comes you can't control when the when people are going to be excited about something it's just really hard to do I think the best you can do right now is just build your products in a way where it's going to be high engaging High engagement for the everyday person and talk to users and ask people who've never used crypto before to use your product and see if they can navigate through it and then by the time the next Bull Run comes you will have a product that's going to be engaging and you know this is how we built um robed crypto okay what do you think Jay um I think we have one that we're seeing right now which is stable coin um people first question when usdc came out or usdt like what's the use of stable coin like what's the real use use case but we're seeing lots of use cases starting with defi that Z mentioned um like during the eel farming days Etc people wanted to uh after they ill Farm like different forms of crypto they would kind of flock towards like usdc usdt as like a safe haven right and also uh Luna was kind of supposed to help with stable coin growth but then unfortunately Luna downfall happened and then and that really decimated like the stable coin market for about a year but we're seeing some comeback right now and stable coins being used for for example like remittance um possibly helping with border uh borderless transactions I think that's one way to kind of open up the the crypto market and obviously I think a lot of verticals kind need to fall through like obviously gaming is very big and that should be involving stable coins and with crypto which should be more focused on like the gaming erc20 and then more more verticals like Loyalty Rewards hopefully will'll bring in more crypto as well I think that's the way to help with crypto dasham compared to just kind of relying on people to learn crypto through like eth and Bitcoin and just just like a store like store of asset you know um that's how I see it well we saw this morning actually the announcement from Circle that they have now working with visa to shoot usdc over salana to help visa to transactions so it's really amazing that stable coins went from this thing that you would use to off-ramp crypto so it's you know stable to now being part of the stack for I think the world's biggest payment processor Visa exactly and I would I put stable coin in the crypto family so people would say oh you got to see more eth and more Bitcoin and more of these other crypto tokens being held by the consumers but actually a lot of stable coins if if they were to be uh facilitated within the like blockchains not just ethereum and these other uh like uh evm chains and whatnot I think that's a way to also measure the uh crypto growth Market I'm really excited for visa and uh Circle working together because that's an actual real use case and that's scalable and um yeah we'll definitely reach um like the wide Mass yeah no kidding okay so last five minutes let's do a quick plug what are you working on and what's cool right now in your company uh yeah so Robin at crypto we have three products um our first product is as I mentioned our our core custodial trading app um available in the United States uh we probably for the most major coins the the cheapest place for simple retail traders to trade crypto um we have a Fiat to crypto uh on-ramp which if you're a web 3 app and you have us customers and you need help um getting users to uh buy crypto on your app um we're definitely going to be again the cheapest option for you we support Bitcoin eth usdc Etc and then our third product is a fully self- custodial robed uh self custodial crypto wallet um no kyc required it's globally available um one thing that we're excited about and I'd love to talk to anyone in the crowd is you know we're we're always looking for more web 3 apps to uh partner with for a wallet itself and so yeah if if you're interested in reaching you know a much larger user base um primarily us Focus uh definitely we should we should talk Jay yeah uh Magic we are the leading wallet as a service provider and really focus on seamless onboarding through instant and seamless wallet creation uh to this date we have over 25 million million users uh signed up with us and over 140,000 developers and hundreds of Enterprises working with us notably Mattel Macy's 7-Eleven and also immutable passport which is built on our key management and what we work on is really uh holistic onboarding infra and that starts with wallet and we built this uh key management system called delegated key management system which is patented and it was built ground up uh four years ago with my co-founder and this is really built for scale performance reliability and and availability so when uh companies have a huge influx of volume for example 100,000 users coming into the space uh we're able to support that volume and even more and even Millions right so our goal is to not really focus on just helping with growing the web 3 space alone but also the real users are in the web two space like one Enterprise could have millions of users hundreds of millions of users and our goal is to get them so that's how that's that's what that's what we've been working on and on the holistic onboarding infra we offer wallet Services we also offer NFD uh minting like checkout anything that you need to launch your web through strategy so um yeah what did that be gaming Loyalty Rewards Etc we we help with that and and yeah we also make it really easy for developers I'm a developer by background my co-founders as well I went to watero where vitalic also went the creat of ethereum and um yeah we really value developer experience a lot so um yeah if you want to get started just let us know and we'll be ready well guys that was awesome thanks so much thanks thank you