Understanding web3 wallet users: Key insights and practical opportunities
At Banxa, we’ve gathered valuable insights from research on new and existing users of web3 wallets. These insights provide practical guidance for enhancing the user experience and improving conversion rates. In this article, I’ll share a summary of what we’ve learnt about how users engage with web3 wallets, what drives their behavior, and how we can streamline the buying process to encourage consistent engagement.
Web3 Wallets: Tools for Purpose, Not Just Storage
Most users engaging with web3 wallets aren’t simply looking to buy and hold crypto. Instead, their focus tends to be on a specific outcome, such as funding a project or taking advantage of a speculative opportunity. On-chain data from research we’ve conducted supports this, seeing 90% of users moving their crypto out of the wallet within 24 hours, emphasizing the wallet’s role as an action-oriented tool.
Who Are These “New” Users?
It’s important to clarify that many new wallet users aren’t beginners in the world of crypto. Often, they have experience trading on exchanges and are now experimenting with web3. Typically, these users make smaller initial purchases, reflecting caution. However, as they grow more comfortable with the system, their transaction size or frequency tends to increase.
The “Gold Rush” Mindset
A recurring theme among wallet users is a “gold rush” mentality. Whether driven by optimism or a speculative urge, many users are motivated by the potential of striking it rich with the next big crypto trend. Understanding this mindset helps us tailor the user experience to meet their expectations while encouraging continued engagement.
Addressing Key Challenges: Converting and Retaining Users
Converting first-time users and encouraging repeat transactions remains a core challenge. Many assume that Know Your Customer (KYC) processes create the most friction. Common assumptions include:
- “Fiat-to-crypto transactions should be as smooth as swaps or transfers.”
- “Users drop off during KYC due to privacy concerns.”
While there is truth to these assumptions, our data indicates that user journeys often break down at various points, not just during KYC. Friction or inconvenience at any stage can prompt users to abandon the process. For example, we observed users who preferred onboarding through centralized exchanges due to familiarity, despite having easier options.
Balancing Convenience and Desire
The core issue lies in balancing a user’s motivation against the friction they encounter. People are willing to overcome challenges only if their desire to complete the transaction outweighs the inconvenience. Familiarity with existing processes, such as centralized exchanges, often takes precedence, highlighting the challenge of introducing new behaviors.
Optimizing the User Experience: Five Key Areas
Several opportunities exist to improve the user experience, encouraging both conversion and retention:
1. Focus on Functionality
The platform must meet the basic need for users to complete their purchases without difficulty. A failure here significantly reduces the likelihood of a return.
2. Enable Quick Recovery
If an issue occurs, users should be able to retry or recover easily. The buying process should be resilient and user-friendly.
3. Reduce Friction
Minimize distractions that take users away from the process, such as needing to find payment details or identification. The smoother the flow, the less likely users are to abandon.
4. Offer Transparency
Users should understand exactly what they are paying for. Clear and upfront pricing, as well as straightforward steps, build trust and reduce frustration.
5. Simplify Inputs
The fewer steps a user needs to take, the more likely they are to complete the transaction. Streamlined inputs lead to a more satisfying experience.
Exploring Future Possibilities for Engagement
Beyond these immediate opportunities, there are several areas worth exploring to further engage users:
1. Tap into the Speculative Drive
Many users are driven by the prospect of a big win. Offering well-timed incentives can align with their speculative mindset and deepen engagement.
2. Enhance the Post-Purchase Experience
The journey doesn’t end once the purchase is made. We are exploring ways to tie initial purchases to the next step in the user’s journey, such as funding a utility or project. Providing more support beyond the buy stage can foster loyalty.
3. Lower the Barrier to Entry
Simplifying smaller, more frequent transactions can help attract a broader user base. We’re looking at ways to make processes like gas fee top-ups with fiat easier, which could open up more opportunities for experimentation.
Evolving the Web3 Wallet Experience
At Banxa, we are committed to continuous improvement. Our goal is to refine the user experience by reducing friction, enhancing post-purchase support, and tapping into user motivations. Whether it’s simplifying the buying process or encouraging deeper engagement, we are focused on delivering smooth and reliable solutions that encourage users to return.
For more information on how Banxa can help optimize your user experience, feel free to reach out to our team.