Users and role of web3 for CEFI exchanges

Assumptions

I have been in web3 space for quite a while and have seen various trends, some charts, and spoken to users for a long period of time first hand. This post attempts to help you understand the different user groups using web3, and for CEFIs to think through about how to design the best wallet for the users. No, I don’t use ChatGPT for this since AI didn’t experience what human users gone through in web3.

User setup

Many retail users graduate from CEX, they don’t start trading crypto directly to web3. We need to consider if users can already buy BTC and ETH from CEX, then why web3. Look at user’s progression below:

User level 1 — The chill Just-CEX fundamentals guy

Chillguy

• These people first entered simple users wanting to accumulate BTC, ETH and other recognised altcoins, likely to DCA, hodlers
• There may also be experienced traders relying heavily on technical analysis

Source of funds

All sorts, if they are starting out, then the source of funds could be their monthly salaries, therefore risk-adversed, who likes losing it all after a day sitting in the office earning it

What is CEFI’s web3 role for them?

Web3 at this point is wild-wild west for pure speculation in the minds of CEX users. Don’t force them into some nonsense meme token, their mindset is not there to accept that.

Let them understand some ideas about web3 mechanisms, but I will keep them on the safe side. I would say BTC/ETH/stablecoin staking on web3, some collection of NFT just for the fun of it, trade some random coins as an appreciation. We may need to wait for web3 to increase more utility before they are involved in web3.

Oh yes, we need consider some countries where their regulations will be tightened and CEX accounts have to be closed, bring them to web3 as much as possible. Not their wallet, not their money.

User level 2 — The outgoing web3 new user

Pepe

• Want to venture into some new unlisted tokens, cannot wait until CEX listing, usually some meme tokens.
• These folks with some experience trading are ready to they take some risks, want to 10X their returns.
• This group of users may also include users who join public token sales, therefore they need a web3 wallet account.

Source of funds

There’s a will for them to try out web3. After all, after all, 10X returns are the incentive, not for a noble cause such as decentralisation. Many don’t even attempt it’s just because they are scared to lose money. Security is too minimal, it’s not a nice feeling. Help them educate on security and also understand cross-chain bridging since many meme coins are on Solana network for example.

What is CEFI’s web3 role for them?

• Onboard new users into web3, creating mass adoption.
• These folks have the intention of buying some meme tokens, making it convenient for them to buy and accumulate, but don’t underestimate users if they already have some trading experience and have set to buy some tokens.
• It’s important to make more clear of the fees and ensure all smart contracts signing. These new users don’t like money being leaked out (for eg. Gas fees, impermenent loss, it’s not nice. If it’s too much, they will stick with CEX
• Educate them to avoid rugpull and honeypots, urgh!

User level 3 — Full degen mode

Penguuuu

• Full degens seeking mid-conservative to maximum gains, usually more seasoned users. Experimenting, seeing and trying new launches
• Usually these curious minds use web extension wallets instead of the apps because new projects are built on the web first. Simple established swaps will be done on app
• With extra crypto stash to stake into different DEFI protocols for some APY gains
• Possible to go back to using CEFI for liquidity offloading purposes or complementing traditional TA trading

Source of funds

• These folks may have accumulated some gains during earlier days and may continue to have a mentality to seek innovative or speculative projects leveraging on crypto narratives
• Full degen mode knows how to derisk by using stablecoins

What is CEFI’s role for them?

• CEFI as an all-in-one ecosystem aggregating everything for these users might be tall order. These users will be the first to discover some projects faster than CEFI. Limit the amount of ventures on web3 end, focus resources on a few more important aspects and be the best.
• What we can do is ensure CEFI web3 wallets have the best integration with old and new third party projects, fulfil high security measures and verification for these users and new users as well, some friction is helpful to safeguard assets.

I will write a web3 proposition for CEFI on a separate post in near future. Thanks for reading and hope if you are working in CEFI web3, this comes in somehow useful for you.

Allan, a product designer