How is Web3 different from Web2 in design?

Designers are born experimenters, yet many of us remain intimidated and overwhelmed by Web3. The "exclusivity" of the topic made some people uncomfortable and embarrassed to ask questions if they realized they didn't know enough about the topic. I've collected some of the confusions that seem to me common to Web2 designers trying to get into Web3.

Web3 has no traditional model (yet)

Like any new technology, Web3 is in a phase of diversification. As soon as the automobile was invented, car designers began experimenting with various shapes. Today, after a century of constant iteration, cars in the same field of use look remarkably similar. The same goes for cell phones. The same goes for Web2 design patterns. What is certain is that Web3 will go down this road.

Diversity in form factors decreases as technology advances

We live in exciting times, and the Web3 model has not yet been formed. While the lack of clear guidance is a bit scary, it's also exciting, making it easier and faster for designers to make a personal impact and "make the world a better place."

However, in my opinion, the situation is not as dramatic as it seems. While Web3 is new from a technology standpoint, when it comes to user experience, 95% of it can be built on top of Web2. For example, a transaction on a blockchain is conceptually very different from a transaction in a traditional bank. However, rarely will there be any significant difference in the way we display transaction history for users. Another example is Dapps using non-custodial wallets: for many Dapps, users may not even realize they are using a blockchain, thinking they are Web2 products.

As our world moves faster and faster, Web3 traditions and patterns are forming at a frantic pace. For example, DEX (decentralized exchange) exchange pages already look like copies of each other. I think the terminology is still very diverse, but soon we will reach a certain standard, and DEX will become indistinguishable.

The exchange pages of most DEXs look pretty much the same

Users in Web3 aren't always human

The fact that all interactions on Web3 don't necessarily happen between real people, but between wallets still makes me wonder. While on Web2 no one can guarantee that all your users will be unique, in most Web2 products people are supposed to create unique accounts and the friction is so high that people don't have a lot of incentive to create unique accounts from different Mail or IP creates a large number of accounts.

In Web3, one person can have multiple wallets, and usually when using a DApp, the only thing you need to do is to connect the wallets with a few clicks. Also, in Web3, people may have good reasons to have multiple wallets, for example to execute certain trading strategies. Many traders are using bots for automation. For example, in one of my projects, we estimated that the proportion of robots was about 70%. Therefore, users on Web3 are not just people, but also organizations and bots.

In addition to creating a sense of strangeness, robot design also presents challenges in analyzing user behavior data. You can use tools like Google Analytics to measure user interaction with the interface, but once the user connects their wallet, everything starts happening on the blockchain and becomes very difficult to track. The good news is that this way it can be tracked on the blockchain.

Displaying the number of transactions per time period for the top wallets is impossible for a human, but achievable for a bot

So far, there is no perfect way to connect interface data and blockchain data. For example, you can see where and which users clicked, and you can also see how much the wallet spent. But it's hard to see demographic data on consumers, or how much time they spend before making a transaction. Bots also make things worse because in many cases, they don't even interact with the interface, but go straight to the backend.

Ethical Dilemmas in Web3

Take the simplest DEX revenue model as an example: DEX earns money from exchange fees. People are hesitant to swap currency pairs that are illiquid because the less liquid the more volatile the price. Liquidity providers are also making money from exchange fees. Therefore, in order to encourage liquidity providers to lock funds in the liquidity pool, the currency pair should have a certain exchange volume so that they can earn fees from it. We are facing a chicken-and-egg problem in this regard.

As a UX designer, you might think, "I need to do something to encourage users to lock their funds in liquidity pools, so the system starts to have a ripple effect." But then you learn that due to impermanence Losses, individuals locking funds in liquidity are usually very risky, so encouraging users to do so is morally questionable.

Pancakeswap issues impermanent loss warning to liquidity providers

This is just a very simple example, but the blockchain is full of such situations.

While the business model of a Dapp is usually outside the remit of a UX designer, we need to understand these nuances. Unlike Web2, where designers of Web2 know a lot of "dark UX" patterns and can consciously choose sides, Web3 is still a developing field and the contours of good and evil are still unclear.

Influenced by the crypto market

The crypto market is super sentiment-driven, and its volatility can create a huge background noise in the analytics data you collect for your product. In traditional niche markets, the impact is seldom so large. If you're coming from Web2, you'll probably get burned out pretty quickly by seeing crazy random jumps in DApp usage, TVL, transaction volume, etc. Sometimes it correlates to the market price of the token, but not directly.

The impact of market volatility can often outweigh the impact of any other factor in product development (UX, marketing, etc.), making it difficult to accurately interpret the results of its disruption.

Even if your product has nothing to do with cryptocurrencies (e.g., digital identities), the crypto market can hit you in another direction: investing. Many blockchain startups are experiencing difficulty investing in this crypto winter. We are experiencing our fourth winter since 2015. Compared with traditional fields, the entire blockchain industry feels like a very unstable place. So for those coming from Web2, it will be unbearable.

Funding for Crypto Startups

epilogue

Although many patterns can be borrowed from Web3 in the design of Web3, there are still quite a few Web3-specific aspects that are challenging for designers.