Today, the total number of daily users of all dApps barely exceeds 50,000 people, and this can hardly be compared with the multi-million audience of popular computer games. The most famous EOS dApp, Endless Dice, has 11,644 users, while the most popular Ethereum dApp, My Crypto Heroes, has a total of 2,647 users. DeCenter gathered expert opinion on why 2018 did not become the year of dApps.
The Great Mission of the Kitties
The Crypto Collectors, a media outlet that covers gaming dApps, writes that “one of the most unique dApps today is a dApp for a dApp.” The official website of crypto kittens has a whole universe—the KittyVerse—with applications in which your cats can be entertained. Among them are a fighting game Kitty Battles, a racing game Kitty Race, and KittyHats with accessories.
But crypto kittens, who—when gaining momentum—were dubbed a killer dApp by many, sharply “burst” after the December peak. “And rather than understand CryptoKitties as a collectibles game, it might better be understood as a dApp that, for a short time, enabled one of the only successful uses of cryptocurrencies so far: speculation,” writes Yaoshiang Ho, co-founder and CFO at Superlinear.
In a recent interview with Charlie Lee, journalist Vlad Costea called gaming dApps “cool proofs of concepts” and compared them with Solitaire, which taught users how to use the mouse. Thus, today’s dApps can be viewed as an educational tool, so when the mass killer dApps enter the market, users will already know where to poke.
Development Is the Point
Yin Wu, the founder of Dirt Protocol, believes that the mechanism for creating and launching blockchain applications is not working properly for today. Instead of using a low-risk environment where iterations (one of the data processing methods in which actions are repeated many times) and training are possible, blockchain companies are trying to develop an “ideal product” from the very first version. As a result, this leads to an increase in development time and unrealistically high user expectations.
She calls to look at how successful traditional tech companies create a product and apply their development tactics to blockchain space. Wu identifies three basic rules:
Build a product not a protocol
Wu notes that users, in fact, do not care about technology. By themselves, openness and decentralization have no value for them, as this is the priority of developers. Therefore, it is impossible to achieve mass success only at the expense of one philosophy. Decentralization is not the answer, but a means to achieve a goal. The goal is the use case for a mass user.
In her opinion, blockchain applications should go back to basics and ask who their users are and what problems they have. For example, at the time Ethereum was launched, there were more than 200 cryptocurrencies, but it was Ethereum that became the “second cryptocurrency” because it offered something that no one had—namely, the ERC-20 standard for creating tokens on a single blockchain, smart contracts, and, as a result, dApps.
“No crypto-economic incentive is strong enough to overcome a missing use-case,” writes Wu.
Don’t let users tell you what to do
“Some of the most important product decisions that seem obvious in hindsight were controversial at the time. For crypto projects, a vocal community can be the biggest asset or biggest liability. Listen to your users but filter the feedback. Don’t give your users what they ask for; give them what they want,” writes Wu, citing as an example the products that are popular today but faced sharp criticism at the time of their launch, including the news feed on Facebook, all the launches of Apple products that were considered too expensive to succeed, and streaming by Netflix, which caused the service to lose over a million users.
Focus on iteration over the idea
Wu notes that in the crypto space, there is an erroneous belief that the idea is the most important part of success. As a result, teams focus on white paper and postpone launch for years. But a good idea is just the beginning. At the same time, the high cost of mistakes makes developers work for a long time without contact with users: “The product development cycle for building smart contracts and decentralized networks is excessively slow because the high risks of mistakes are too high (e.g., Parity wallet hacks). Rather than launching and learning from user feedback, teams iterate in isolation and delay the valuable learnings that come from real users. Moving forward, projects should launch earlier and smaller. Test the product with a small group of users, get feedback, and iterate,” Wu said.
Another 20 More Years…
Many in the crypto space note another global and fairly obvious problem, which can only be solved “naturally” and that is to wait. “Finally, the number of crypto users today is approximately where the Internet was in 1994. By comparison, two of the first megahits in the Internet era, Netscape and Yahoo!, were founded in 1994 and 1995 respectively,” writes Yaoshiang Ho, co-founder and CFO at Superlinear.
In a discussion on Reddit, one of the users compares the current development of the crypto industry with an even earlier period: “Lol. I don’t think it’s correct to call crypto equivalent to the Internet in 95. It’s equivalent to the ‘the internet’ (lowercase i) in 1986. BBSes, FIDO Mail, ARPANet, Compuserve, Quantum Link… Almost like looking at today’s assortment of crypto stuff,” writes the user under the nickname s1gmoid.
Yaoshiang Ho cites several reasons why, in his opinion, none of today’s dApps has fired, and many of them are also associated with the “infant stage” of industry development, but, in this case, not in terms of adoption but in terms of technology:
Ho cites the words of Vitalik Buterin himself, who in April 2018 at a conference in Seoul said: “If you want to build a decentralized Uber and Lyft on top of an unscalable Ethereum, you are screwed. Full stop.”
The problems with the management of Ethereum have already been publicized, and one of the “Ethereum killers,” EOS, was called upon to solve this problem in particular, but in the end, it ran into it already at the launch stage.
Ho notes that the advantage of conventional online services and mobile applications over blockchain applications is that they can be tried for free, at least as part of the freemium model when developers provide a free version of the product with incomplete functionality. To use Ethereum dApps, however, you must have Ether (ETH).
“Transactions on EOS take a minimum of 500 milliseconds to complete. If your click on a webpage needs 10 transactions behind the scenes, you’ll have to wait 5 seconds. That’s an unacceptable level of latency,” as Ho writes.
Ho notes that too much responsibility is placed on the user when working with dApps. One should not lose a private key, should take care of security so that it is not stolen, and there is no customer support line that could help to abolish fraudulent actions. Ho believes that a solution should be developed for dividing a key among community members.
In general, this point can be reduced to the idea that ease of use wins. “Convenience and user interfaces are the Goliath that always defeats David. We could all use cash instead of bank cards, but we were wooed by the convenience of writing off fractional amounts and not having to carry sliced up pieces of paper,” said Alexander Garkusha, co-founder of Modern Token, in a commentary for DeCenter.
“Users do not and should not give a s**t about blockchain or decentralization. All that matters is the user experience. The user just downloads and uses,” writes one of the participants in the discussion on Reddit.
Other problems include storing and distributing large files—which is inconvenient on a blockchain—volatility, and the issue of random numbers (namely, that they are difficult to generate on a blockchain, while many types of games cannot be created without them).
Why Problems Are Good
At the same time, despite the absence of “their own Bitcoin” in the dApps niche, experts are optimistic about the future. “By the way, another way to look at this list of problems is that it’s actually a list of areas ripe for investment,” Ho notes.
Wu, in turn, refers to the dotcom bubble and notes that the period and subsequent burst of the bubble showed that “bear markets are one of the best periods to collect talent and build.” And she is not the first to express a similar view on a bear market.