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There is a false – and, in my opinion, dangerous – belief that in DeFi, strong UX cannot be achieved without some degree of centralization. It is understandable why some believe this; centralized platforms like Coinbase and Binance are known for their intuitive and accessible interfaces for everyday users. Yet centralized systems often fall short in areas such as transparency and security.
It’s tempting for DeFi projects, who have now heard countless times that UX is the missing piece for web3 adoption, to prioritize accessibility over transparency and security to attract users. But those lower safety standards will likely come back and bite them one day.
Whether true or exaggerated, the message that UX is the keystone to web3’s success is causing too many DeFi developers to think they have to sacrifice decentralization, which would go against the nature and character of DeFi. reason for existence.
That view is flawed. Decentralization cannot and should not be sacrificed for a smoother user experience. DeFi can and should have both.
A reminder of what happens when we sacrifice decentralization
Centralized entities in crypto have repeatedly shown their limits. Scandals like the collapse from Three Arrows Capital (3AC) and Celsius has shown how centralized entities fail to provide the reliability and transparency that users expect – and can have disastrous consequences. As we saw with the FTX downfallCentralization enabled greater opacity, hiding reckless decision-making from public view and sending shockwaves through the industry as billions in user assets disappeared. FTX users were blind to the risks until it was too late.
That’s not the case with decentralized protocols, whose transparency holds them accountable. All transactions are visible on-chain, giving users insights and assurances that do not exist with their centralized counterparts. DeFi protocols like Aave, which have been in use for almost a decade (since 2017), demonstrate the viability of decentralized solutions.
That doesn’t mean decentralized systems are infallible; events like the collapse of Terra in 2022 have shown that decentralization is no guarantee of success. But if decentralized protocols fail, at least they fail in terms of transparency. Users have a degree of visibility and the ability to hold those systems accountable if something appears to be wrong.
Decentralization is not incompatible with UX
Considering the importance of decentralization in DeFi, it is clear that this cannot be sacrificed for better UX. That doesn’t have to be the case.
We already see evidence of that. Smart contract enhancements, Layer-2 solutions, and intuitive wallet designs are transforming DeFi UX without requiring projects to sacrifice decentralization, as we’ve seen with Uniswap’s wallet and Unichain L2.
The obvious challenge in achieving strong UX in DeFi is the young age of the industry. Centralized apps, which are often web2 structures with crypto features on top, naturally offer a smoother experience these days because developers have decades of web2 UX experience to build on. That’s not the case with decentralized frameworks, which pose unique scalability, fragmentation, and compliance issues. These challenges are actively addressed and resolved.
What do we measure DeFi against?
How we determine good versus bad UX is also an important consideration, especially when so many criticize DeFi for being too complex. However, isn’t that the case with TradFi?
Managing multiple accounts on different exchanges or moving assets from one broker to another are not smooth experiences. DeFi aims to simplify these processes through greater interoperability while introducing the added benefits of transparency, trust and user control. The UX may not yet be on par with web2 interfaces, but it’s getting closer. As tools and protocols mature, so will the user experience.
It can’t be this or that. We need both
The future of finance should not lead to a choice between centralized convenience and decentralized security. We must demand both, especially as we recognize the failure of centralized entities and the need for greater transparency.
The UX gap in DeFi is closing. Even if it isn’t closed tomorrow or the day after, there will come a day when users don’t have to choose between an easy-to-use platform and security. They will have both, and that is why we must focus our efforts on building that future.
