WtFi is DeFi-Designing for the Next Million Users - Galen Danzinger

okay up next we have mouse belt galen all right uh hey everyone uh this is uh galen danziger here i'm the cto at mouse belt um and we have uh really been looking at uh we're so first i guess some background information on us we are a blockchain focused accelerator uh we run an educational program we have engineering services uh we're really focused on how we can bring more users recently and one of the biggest issues that we see uh is usability so we we've tried to target this in the past we we run educational programs we try to get people in different colleges uh into developing uh working on ethereum the blockchain ecosystem in general um we've invested in projects and um we really believe that just the difficulty in usability and uh just uh uh the general challenges with onboarding new users will make it really difficult to bring the next million wallets or the next billion wallets on board so this is actually what we put forward as a challenge in east denver and we would uh i'd like to talk about some things as well that i've seen that worked and haven't worked and maybe if you're working on some of these uh feel free to approach mouse build as well um so we think uh there are many users right now that have used blockchain and cryptocurrency wallets and systems in the past and they're using them more they're getting involved with d5 they're they're doing all of these things that are very complex um but this isn't pulling in first-time users uh a lot of these applications you're interacting with one contract you're getting some wrapped aetherium you're getting a stable coin you're lending them out you're putting them in pools which are a complicated instrument in themselves uh it's um very challenging for a new user and uh just a personal anecdote as i had sent some relatives friends cryptocurrency for them to use a lot of them had very serious trouble with that uh one relative i'd sent some cryptocurrency to a few years ago uh when the price spiked up uh ethereum was at uh one thousand five hundred bitcoin was at forty thousand they decided they wanted to sell it um but they lost their wallet and their seed phrase they're asking how they did that uh i fortunately had to tell them this is irrecoverable you have no way to access this money and it was just surprising to them they came from a background where they were using banking apps they were using all sorts of uh or rather they're using all these centralized systems that are pretty forgiving uh you can call support someone on the phone will talk you through it um you sort of know what you're getting into here you could set up a wallet and um maybe you just lose all your money uh another uh personal anecdote um i had told a friend about cryptocurrency and uh they bought some ethereum they're trying to buy tokens they're trying to interact with different smart contracts and at one point they got a transaction stuck from uh just a not high enough gas fee and uh their wallet actually didn't support changing a gas fee so they had to figure out how to download a separate wallet uh and increase their gas fee on like a third party application they're doing all of these things they're hitting me up trying to figure out how they actually just move their money around um and a third one someone spent like 20 minutes trying to set up metamask and just couldn't figure it out and gave up so these are some things that um they're both uh sort of user experience solutions to but they're also just some more uh uh you you can actually use some tricks with smart contracts with blockchain systems themselves to get around these kinds of problems make it easier for people to use um and there are even many more ideas than this so if you have something cool i encourage you to tell us about it in the hackathon so um this isn't to say that there have been no ux improvements or no um improvements in working with blockchain so far if you think about uh the very early days when people were mining bitcoin there are so many people with stories about having a wallet on their hard drive and some encrypted dot like wallet.dat file or something like that where they uh they had 5000 bitcoin or 10 000 bitcoin that they lost um the systems have come pretty far um uh the whole the whole concept of uh a seed derivable from a mnemonic was a great innovation rather than just having a file on a hard drive that if you forgot to back up or forgot the password that was gone you you were able to derive a a private key from a seed a set of words that's a although it is still very cumbersome for a new user that represents a huge improvement of experience rather than managing backups or losing all your money um uh they also uh the concept of a hardware wallet uh sort of enshrines a bunch of best practices and just how you send your money they make it uh well you shouldn't expose your seed to the internet or uh you should be very careful on how you handle a seed a hardware mullet really prevents you from doing many bad things you can still lose a wallet uh have the key exposed or the seed that exposed that you use with the wallet um but it gives you a easy to use way to send money and a more long-term backup with a seat phrase um additionally the concept of wallet providers uh metamask in the browser is a great system they've done things pretty good things so far however it does take a very long time to set up properly uh implementing wallet providers has uh really improved the experience there so you get uh other wallets they're even they're wallets that are more centralized their wallets they're just different options there's phone based wallets the wallet connect ecosystem has really helped uh give users some more options there and finally there are some wallet contracts that have come out and just new ways of interacting with money um and they they offer users a little bit more compromise between more centralized systems and decentralized ones they give them a little bit more power and how they send money and they add risk controls as well things like your bank might have uh where maybe if you uh wired half your money out of your bank to someone maybe they might give you a call that might stop you uh because that looked like a kind of odd transaction now there are still many complaints uh it's it's really difficult to use especially for these first-time users there's little or no room for mistakes if you do something wrong maybe you have a pending transaction that you can't figure out how to stop until it it gets evicted from a mempool maybe you have uh maybe you sent your money to the wrong place maybe you wrote down something wrong uh it's kind of confusing especially many of these defy projects uh it's hard to figure out how to interact with them for first-time users often and the fees are a little bit erratic and a little bit high so what i want to talk about first about how uh maybe we have ways to solve these for users um and solve the problem in general for fees so first for feats um here is uh here's a visualization actually of all the active ethereum addresses and we can see there's there's way more people using ethereum right now than there has been in the past except for the uh 2018 spike um and there has been a pretty pretty steady growth of users in the last year um however there's also been a pretty steady growth of fees um and just some notes about fees that a user might experience as they start to use a blockchain system uh so cryptocurrency transaction fees in some cases and many times can be cheaper than their centralized counterparts um but not always they have a really huge amount of variance um we have um uh well while a bank you might know exactly how much money you're going to pay although it's kind of high sometimes on a smart contract you could have a really erratic fee and if you set the wrong value your transaction just won't go through at all um uh so here's a visualization actually here are uh in the past three or so months uh here are all of the network fees and uh we see uh there's been sort of a steady climb especially as the price has boomed through january um but ethereum is very very erratic it's gone from a little over one dollar to as high as 26 dollars uh which is uh definitely a really high amount of variance now i'm gonna just for reference i'll put up the outgoing wire fees charged by my bank just overlay that right here now this is in many instances much higher um but at least i know what the value is and for a sort of novice user incoming if you were to tell them you have to set the fee value correctly if something gets messed up uh and you set the wrong value your transaction will just get stuck uh but the fee is going to be some number between like 1 and 22. your wallet will probably get it from an api that's possibly not not the best experience for them uh so it's it's often very nice to find a good way to predict a fee and have mechanisms for users to adjust that if they need to so additionally fees are also very high well uh interacting with a smart contract for like a dollar or a few dollars is very palatable if a user were paying uh 20 each time that starts to get uh very painful for many many users who are interacting with uh a smart contract um especially just sending money every time they transferred money with alternatives like venmo like other centralized apps to send money a 20 fee is pretty high however as developers in the blockchain community when we see a problem we don't let anything stop us we we just keep working at it we keep working at it we try and find a solution to make our users lives better and we end up creating an instrument to speculate on it sometimes uh so we we ended up uh trying to find a way to normalize fees many uh many projects out there or rather a couple projects out there have created markets allowing users to bank fees or bank gas when it's cheaper and spend it when it's later spend it when it's more expensive and there have been a few different models of this you can see gas tokens that have been created and uh these take advantage of ethereum storage space rebates uh where you can use a bunch of storage space when it's cheap and in the ethereum blockchain there's a mechanism to refund your fees now you might be thinking this isn't actually doing any more useful work and yes that's actually true but um it does allow users to get a little bit more regularized fees if they want to gamble on what they think the gas price might be in the future um uh so miners this actually does have some advantages for miners they can get a little bit more smooth profits um when fees spike more people will be redeeming these gas tokens but if they ever have an under utilized period and if they ever have a period in time where blocks are under capacity people might choose to bank some of these gas tokens then and hope the price will more than double later and then they can cash them out of profit uh people people speculate on this so it does have some benefits this just optimizes economic impact for user it also puts a little bit more useless work in the blockchain and when blocks are more empty you still have miners competing to fill these uh or you have users competing to mine these gas tokens so this is not really a solution it's more of a financial instrument that smooths gas out a little bit but it does have definite benefits it gives price discovery on gas um and it makes the best of this gas rebate feature of ethereum now there are some long-term benefits that we can take advantage of we could use something uh like a uh plasma chain there there were uh implementations in the past there's some underwork by uh omise by um optimistic uh or sorry sorry the roll-ups by optimistic and plasma by omise there are different strategies for this to uh do a l essentially all of them come down to doing a little bit less work on chain and uh maintaining other state that you can settle back to the main chain when you need to and systems like this end up offering transaction fees at a small fraction of what they're offered at right now so while um creating a market around gas prices will work in the interim and gen generate some savings for users if you really wanted to reduce gas prices and stop users from paying both the very erratic fees and very high fees a better longer term solution might be one of these side chains they're actually starting to come now into into mainnet usage people are starting to roll out trials on them i would say that they are a fairly new product but people have been using them and uh somewhat successfully so the other thing i wanted to touch on is uh wallets in the crypto ecosystem um wallets are pretty complicated compared to a modern banking app or payments application uh you might enter your email password a bunch of identifying information so they can figure out you're not a terrorist uh just all all the all the bits of info they collect on you for compliance or whatever and you've you've onboarded yourself to this app now with a wallet uh set it you end up setting one up or with a crypto wallet rather you end up setting one up saving a seed tracking tokens uh finding like a contract cash or searching for a name transferring money in it it takes a while to actually get your funds in your wallet and start to use a blockchain ecosystem um now some wallets are a little bit friendlier some are a little bit less friendly some offer more features there's a huge huge variety and as well there's uh ways to improve on a wallet ecosystem so uh for users that have a really a lot of trouble onboarding they could um uh use alternative solutions they're they're now more and less centralized solutions uh some are linked to sms like uh fortmatic um or their magic now uh but they they handle uh text message authentication uh hardware security that links to some hsm wallet it's a it's a cool approach to it um there are systems where you can you can allow maybe you're more uh through like a wallet connect system you can give users the freedom maybe there are like a hardcore crypto user they want a really easy time to trans easy time or a lot of control transacting or maybe they're a more novice user where they want something a little bit easier they don't mind if it's centralized and we can also use some more advanced features around wallets uh to handle um uh or more advanced approaches to wallets to handle different ways that users may want to recover funds or access funds and uh one of the more interesting ones uh that i'd like to uh touch on is the um a smart contract wallet so um uh similar to smart contract wallets do go back a while uh so one of the the famous ones early on that unfortunately did suffer a hack was the parody wallet where someone managed to uh uh some someone on github i think their their handle was devops 199 or something and uh they famously destroyed it on accident so everyone's wallet all their tokens got frozen um uh but um these wallets offered users a lot more control rather than implementing uh multi-signature uh sort of native to the chain uh like uh bitcoin and a few other blockchain products did ethereum opted to leave that to developers in the application level or in the smart contract level um and these types of approaches can be used with uh just many different features so uh one of these is a social recovery wallet so you could have a smart contract that sets a particular active address that's allowed to transact on it and um you can let you can give users some aspect of governance over that and one of the major features that these are are pushing is a system of key recovery so maybe you have uh five friends and uh you say that uh three or four of them if they get together you can call up three or four of them and they can rotate your address so as you deploy this contract you might set your addresses uh an active address that's allowed to manage funds and um you could give a few different addresses the ability to manage your or manage what public key is the active public key so if you eventually lose your address you can authenticate yourself to many of your friends uh they can log in and or they can they can send a transaction updating to that new address now in this you do bear a little bit of risk in that uh if your five friends collude against you or however many it takes to achieve your uh the quorum that you set for transactions going through they could take your money so these have to be five people that you trust somewhat uh but it does offer a really nice alternative uh you could set up an address where maybe you don't need to have those 12 words on a piece of paper or even if you lose them you have a way to recover or you have a way to contact people that you know and have them rotate your address so there are there are ways like this where you can use aspects of smart contracts to to give a little bit better ux to people um where they might not have found that before there are there are other approaches um for these wallets as well you can have them do more advanced things with money as you have a payment coming in you can route them to the correct place you can you can also establish limits similar to a banking app so uh if i were to transfer out uh try to transfer out three quarters of all the money that i had uh it might be an incident where they were that were an accident or i could contact my bank and say here's how much money i would like to be transferring at a maximum you now have wallet systems that are capable of doing this you can you can set some governance rule on the wallet and say here's the maximum amount of money that i would like to send and um uh your wallet will stop you from making a terrible mistake uh or um if you find that that becomes too too little you can go and change it but these are these are risk systems that have been put in place by centralized finance for a while and for a reason because they're helpful to their users they stop them from doing bad or harmful things to themselves and uh they're totally replicable replicable with a smart contract as well um and uh finally just with the uh onboarding there are different approaches to this um or managing failed transactions just ways that uh users can can uh uh have a like easier time sending money or onboarding or getting used to the wallet would really go a long way in bringing in those next million users so if a user is sending money they could examine a mempool they could find um if their transaction is not likely to go through or if it's getting stuck and it's really going to take long uh you could start to notify users that maybe their transaction isn't going to go through maybe they'll need to increase gas and well it should probably become a little bit smarter on uh giving users the right condition for their transaction to become final in a good amount of time um let's see so that's actually most of what i wanted to touch on today um i had a couple minutes left so i just wanted to talk a little bit uh about mouse belt um some things that we're doing and if there's any interest if anyone here is working on a project that really covers any of these elements we would love to get in touch and uh see how we might be able to work together um all right well i think that's about uh all the time that i have here uh thanks everybody and um uh yeah uh thank thanks everyone for having me well thanks for your presentation we appreciate it and as you mentioned they are an accelerator looking for you know cool projects so you know feel free to engage with them in the space you know around the discord um there's some um big opportunities there of course we're um also going to be partnering with many many accelerators through the colorado gm um technology sandbox and incubator so yeah good times ahead galen thank you so much all right thank you john