Do we need a Spotify for Wallets? with Alexandre Gabadou from The Big Whale

Do we need a Spotify for Wallets? with Alexandre Gabadou from The Big Whale

With 400 million active on-chain personal wallets last year, we're still in the early stages of the Web3 adoption cycle. That's a mere 7.5% of the world's online population, or 5.35 billion people (with the over-optimistic assumption that 1 wallet equals 1 user). The good news? You're still early.

To onboard the remaining 5 billions, Web3 will have to get a design upgrade and get simpler. The challenge, however, remains: how can wallets achieve both simplicity and security?

To answer this, we spoke with Alexandre Gabadou, Head of Product at The Big Whale (TBW), France's leading Web3 media outlet. We'll explore what diversification means for wallets from both user experience & business models standpoints, to make them mainstream-friendly.

4 high-friction UX problems that slow down wallets adoption

Before diving into onboarding the non-technical majority, let's identify user experience pain points plaguing wallets today:

• Onboarding friction: The UX cost of the first transaction is too high. To enjoy the wonders of Web3, newcomers have to achieve the following steps: they first need to convert fiat to crypto through an exchange, send it to a wallet, understand gas fees and pay them. They can also opt for the on-ramp solution, but which comes with a KYC. The number of steps to cross is way too high to onboard non-tech savvy people.
• Transaction abstraction problem: All of the steps in a transaction are abstracted in Web2 (except for 3D Secure in some cases). They’re not so much in Web3. To get their funds from A to B, users are faced with a variety of different options they need to get familiar with: bridge, stake, send, lock, provide liquidity, and many more. All this lingo coupled with manual tasks adds complexity for the mainstream user.
• UX Competition: A battle for dominance unfolds whenever users connect to a DApp. Coinbase Wallet, Metamask, and the entire crew pop up at the same time in the browser, fighting for attention. It creates needless confusion due to a lack of standardization.
• Validating transactions: While conceptually interesting, validating a transaction before payment creates a clunky experience for Web2 users. To them, payment IS an authorization, and both usually happen at the same time. Web3 could benefit from a similar approach for simplicity.

On this last point, Alexandre shares a good example: Web3 operations applied to Web2 businesses.

To illustrate, we attempted offering crypto payments for TBW subscriptions. Renewals were riddled with manual tasks and limitations, resulting in a 50% higher churn rate for crypto payers compared to fiat. This is because we had to manually remind crypto renewers to go through Coinbase Commerce and recreate a transaction. Fiat users had everything automated with Stripe. We’re excited to see similar options in Web3 subscription systems emerge, such as SubsProtocol.

While these four examples highlight UX limitations hindering wallet adoption, it's unfair to solely focus on Web3's shortcomings. The entire ecosystem is a playground for innovation and new use cases, and it should also be part of the equation. Perhaps the best way to illustrate this might be from emerging monetization patterns.

Complexity breeds flexibility

Let's talk business models. Subscriptions are the bread and butter of many Web2 businesses. But what if Web3 could add a twist to it?

Alexandre continually explores how crypto could complement revenue generation sources for TBW:

We researched NFT models for TBW, considering not just monetization but also community engagement. It's allowed a significant shift from traditional subscriptions, which in my opinion became irrelevant in the age of free information for established media outlets. NFTs have the power to enhance user retention through gamification and foster a strong community around our brand.

Staking presents another alternative: the more users stake, the more functionalities they would unlock within the product. Staking offers a compelling alternative to subscriptions, allowing users to provide liquidity on a DApp and earn yield, while retaining control over their assets.

This is where, despite their complexity, these new models bring modularity. They enable individuals to decide how much to spend, when to pull back, and to get proper skin in the game to support their favorite projects. That’s what current users find so fascinating about Web3.

Let’s rewind to some 30-40 years ago. In the early days of the internet, innovators like the CERN in Geneva used to stock their first datasets onto physical tapes. They indeed came to the conclusion that taking such datasets out of the system altogether was the most secured way to store them. Sounds familiar to a certain way to save on-chain assets?

Alexandre offers another interesting adoption example: when music used to be free during the Limewire era.

For a while, music didn’t have a CD sales-led business model anymore, Limewire and peer-2-peer downloads killed it. But eventually Spotify came up, and simplified access for everyone. We think that in the media industry, there is an opportunity to do the same, to change how users interact with content, to make it worth the experience.

Early birds in Web3 thrive in its complexity: it’s free, it’s wild, it’s flexible. But the learning curve to get there was costly. To bridge the chasm and appeal to the mainstream market, a Spotify might be necessary for wallets. One that would bring simplicity in the user experience, even if it comes at a premium.

A diverse spectrum of wallet solutions

The future of Web3 wallets doesn't lie in a one-size-fits-all solution, but in a diverse ecosystem catering to various user profiles. Web3 usage will soar when users will have a choice between several solutions that align with their needs.

• A Spectrum of security options: Cold wallets will remain the go-to choice for security-conscious users, while hot wallets and delegated on-chain custody solutions (like Kiln for staking) will cater to those seeking a balance between convenience and security.
• Wallets tailored to use cases: Today's Web3 users manage their assets across blockchain ecosystems (e.g., Metamask for EVM chains vs. Keplr for Cosmos) or by risk level (cold vs hot wallets). Web2, however, has a use-case based approach: people have different accounts for savings, risky investments, and joint accounts, each with appropriate security and freedom levels. A similar approach in Web3 would significantly improve the user experience.
• Flexible business models: Most wallets currently generate revenue through in-app transactions. But there's more to explore! This model diverts development from user-centric solutions (as discussed in our previous Deep Dive article on The Liquidity Chase). Instead, users should have access to wallets with monetization models that works best for them, such as flat subscriptions (SubsProtocol), freemium with paid features, token-based (Trust’s $TWT), or NFT gatekeeping (Tokenproof).

Let's revisit staking as an example. According to Alexandre, current Web3 mechanisms should persist, but with beginner-friendly options.

Imagine a tiered subscription model for our platform. The higher the tier, the more content and features readers unlock. After paying in fiat, they're informed they can actually get their payment back anytime, because we've seamlessly on-ramped and staked it on the backend. This simplifies and streamlines staking for everyone.

Embracing diversity for a thriving Web3

It's widely acknowledged that current on-chain users have endured a steep learning curve to get there in the first place. They're accustomed to the Web3 equivalents of Limewire and Linux, valuing their free and flexible nature. It's also a commonplace opinion to say that the mainstream audience might prefer the simplicity of a Spotify or iOS experience, even if it comes at a premium. A mature Web3 ecosystem thrives on both modularity and its ability to abstract complexity. It's a world where iOS and Linux coexist, just like today.

On this point, Alexandre offers a compelling benchmark for success: the Grandma Test.

Can your grandma make an on-chain transaction? It seems far-fetched now, but it's a useful metric to gauge Web3's UX readiness for the non-technical majority.

The path to a flourishing Web3 ecosystem isn't paved solely with simplicity, but with diversification. The space won't succeed by abandoning early adopters or resorting to uninspired Web3 experiences through over-centralization, custodial services, or intermediaries. True growth lies in enabling all these options to thrive together.

About The Big Whale

In an ecosystem full of opportunities and dangers, The Big Whale helps individuals and companies make the best decisions in Web3. Access high quality content about the latest in crypto, top events and an engaged community, all from a single source.

About Kulipa

Kulipa helps non-custodial wallets issue crypto payment cards. With Kulipa, wallets can create new use cases, onboard users, and generate more movement through your wallet. We provide a one-stop-shop payment solution with branded cards, flexible infrastructure, best-in-class payment experience for users, and comprehensive support tools to supercharge your team.

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