Stuck between the devil and deep blue sea: Should we be onboarding the next 1B users or next 1M?

From mirror by Harvesto

“This post is taking part in the Devconflict x Kiwi writing contest”

At Devcon 2024, Devconflict hosted 14 speakers to hopefully resolve the spiciest debates in the blockchain industry. One of them was whether crypto needs to onboard the next 1B or the next 1M users. Let’s use the internet as a small case study. In the early days of the internet, especially during the read only phase and before social media apps, the discussions was largely centered around the smaller, more experienced users on platforms like Stack overflow. Overtime, the continuous exposure to the technologies and constant conversations surrounding it led to a shift in focus - the large groups. Hence Facebook and the plethora of applications widely used emerged globally.

For crypto, this debate is fundamentally about growth strategy: should builders focus on getting a massive, mainstream user base immediately at the expense of the blockchain or to focus on a smaller, more experienced users to ensure integrity and long-term success?

Remco Bloemen of Worldcoin and Vadim Koleoshkin of Zerion were the panelists and here are the core arguments from their talks;

Moving on, they both agree that if you have 10 million users to 100 million users, you can consider your project mainstream in crypto. That said, what brings these numbers? Is it the simplification of the product or proper distribution that engages and pushes them to use it more?

Like Remco shares, I agree it is more of a mix of both than one of the above. How? When you look at the social media and tooling titans of today, you notice two things: they targeted mainstream problems while providing better solutions supported with world-class distribution. Additionally, they became very popular and successful due to the widespread acceptance of the underlying technology.

Google started in 1998 when  26% of all Americans had the Internet at home , Instagram started in 2010 when  over 20% of the US population had smartphones , Amazon was a huge success because the  infrastructure needed was already existing . So, is crypto ready for its 1B+ application?

In my humble opinion, no. Not yet anyway. Here’s why:

According to  Crypto.com  crypto  market report , global crypto owners were 617 million by the first half of 2024. Out of that, only 136 million (22%) own/hold ETH. Let’s not focus on the percentage, lets focus on their on-chain activities. According to Etherscan, there are about  500k active addresses  that use Ethereum daily meaning most ETH owners don’t transact daily - which is to be expected. They have never swapped on Uniswap, bought NFTs, and may be using crypto social apps without onchain transactions.

These statistics show we are not at the level of onchain activity we desire. Yet, we shouldn’t loose hope nor keep waiting for builders to build the perfect dapp. So what should we do?

Solving the Fundamental Problems

There are a bunch of hard and fundamental problems blocking adoption right now. What do people do when they don't see a way out of a hard problem? They churn because they’re either disappointed or don’t want the responsibility of figuring things out. This is true for any technology, not just crypto and the way out is by building “Killer apps” that users really need and can only be used with an existing particular technology.

For Google, it was Gmail, Google maps, Google Search, Chrome, Docs/Drive, Youtube between 2004 - 2008. The nail on the coffin was in 2005 when Google acquired Android Inc., the startup developing mobile operating systems. By 2007, Google had fully integrated Android and it was an open-source operating system. The move was genius because:

This resulted in the "Google Mobile Services" (GMS) ecosystem, which includes the above mentioned apps. These apps were revolutionary at the time yet simple to use. To access any of them, you needed an online identity; your Google account. You also needed WiFi or an internet connection, a smartphone and basic knowledge of each app. With the online ID, if you wanted to find a location or watch a cute dog video or search the perfect birthday gift, you clicked a bunch of uncomplicated buttons. In fact, apart from Gmail and Docs/Drive, you could use the other apps without a Google account while getting efficient results.

According to Mac Budkowski’s thesis, “The blockchain (Ethereum) is a new, general-purpose, world computer like an Android phone or PC. It doesn’t need one app targeting 1 billion users. What Ethereum needs is 100s of apps targeting 100k-10 million > users.”

Once these group of users are onboarded, they’re open to trying other things. It is the same set of people that bought NBA Top Shots in 2020 that created the NFT frenzy of 2021. Same with people who betted on Polymarkets during the US general elections, or holding stablecoins in Nigeria against inflation or artists that launch music NFT collections. They start with their narrow use case/interest and gradually gravitate towards other exciting use cases. So the correct approach is to create hundreds/thousands of dapps focusing on hundreds of narrow, extremely well-executed use cases. In other words, 1M users per dapps as opposed to a few 1B users per dapps.

Wrapping Up: The Advantages of this Approach

Statiscally, brands have a higher chance of success when they adopt building for 1M users as opposed to 1B users. This is because if they decide to build a mainstream product from beginning, they could suffer from  Tyranny of the Marginal User.  Simply put, the product becomes forgettable because it must serve more and more users. Also, their product is tailored to their users exact needs which delights users and incentivizes them to use the product more.

No one knows the trend or meta that will bring massive adoption because the space moves fast. Furthermore, in the grand scheme of things, UX isn’t that big of a problem. E.g: people who barely used the internet or their banking apps were signing up on Google to access their services. People download Metamask everyday, onboard, save their seed phrases and switch networks to use their favorite dapps. Users sign up on Binance and take out time to complete KYC.

Mac best explains it. 👇

Give users something they really want but can’t get elsewhere.

Bottom line is: Users are willing to jump through ANY UX hurdles if the value they expect is higher than the time, energy and brain-power they need to spend on an activity. That said, of course your app’s UX should be great as Remco suggests. Improve UX if need be, while exponentially increasing the value EXTRACTED from your app.