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Uniswap Labs, a leading decentralized finance (DeFi) platform, recently conducted a survey to understand the motivations and barriers of retail users in the US towards DeFi. The survey received 1,860 responses, including non-cryptocurrency, centralized finance (CeFi), and DeFi users.
The survey showed that despite the bear market, almost half of CeFi users expressed interest in experimenting with DeFi protocols in the next 12 months. This finding is encouraging as it indicates a growing interest in DeFi among traditional financial users who want to learn and explore the possibilities of working on the network.
Uniswap survey points to move from CeFi to DeFi
However, the survey also showed that complexity, lack of understanding, and costs are the main hurdles preventing CeFi users from using DeFi platforms for all their cryptocurrency transactions. This finding highlights the importance of providing learning materials, improving user experience, and support to overcome the learning curve associated with DeFi. But how is Uniswap Labs making DeFi easier for CeFi users?
- Simple User Interface: Uniswap Labs has a user-friendly interface that allows users to easily navigate the platform and complete trades with just a few clicks. This is in contrast to traditional DeFi platforms, which can be overwhelming for new users.
- Automated Market Shaping (AMM): Uniswap Labs uses an AMM system that eliminates the need for order books and allows users to easily exchange tokens at a fair market price, simplifying the trading process and eliminating the need for users to understand complex trading concepts.
- Self Storage: Uniswap Labs has a strong focus on self storage which means users have full control over their assets and do not rely on centralized custodians. While it may seem intimidating at first, Uniswap Labs provides educational resources and support to help users understand the benefits of self-storage.
That being said, Uniswap Labs, which creates products to connect people directly to DeFi, aims to bridge the gap between CeFi and DeFi by focusing on UX and seeing first steps as entry into the broader cryptocurrency ecosystem. As such, Uniswap Labs aims to provide CeFi users with a more transparent, self-sustaining and publicly verifiable alternative to centralized financial platforms that often lack accountability and transparency.
Percentage of DeFi users who also use CeFi. Source: Uniswap Labs.
Transaction fees and costs identified as biggest barriers
Transaction fees and costs have also been identified as notable barriers to entry. However, as Ethereum continues to scale and layer 2 solutions become more mainstream, DeFi will become more cost-effective for price-sensitive users, according to a Uniswap blog post.
The survey also showed that better educational resources and stronger user support will increase the willingness of CeFi users to trade on DeFi platforms. Products targeting this CeFi segment have already invested in these educational resources. Uniswap Labs has assembled one of the few customer support teams in cryptocurrencies that is considered one of the best in the industry.
The incidence rate among cryptocurrency users. Source: Uniswap Labs.
To this end, Uniswap Labs is exploring Tier 2 scaling solutions that will significantly reduce transaction fees and increase transaction speeds. This will make DeFi more affordable and convenient for price-sensitive users.
Overall, the Uniswap Labs survey sheds light on the motivations and barriers of retail users in the US towards DeFi. The platform aims to simplify and abstract the complexities unique to cryptocurrencies without compromising the ideals of self-control and transparency. As the industry continues to grow, it is important to prioritize user education and support to help users build their knowledge base and boost their confidence.
UNI token on a 1-day chart. Source: UNIUSDT on TradingView.com.
Featured image from iStock, chart from TradingView.com