The Usability Challenge in Crypto dApps

Even after several years in the crypto space, usability remains a significant challenge. As someone working in this industry, you might be particularly critical. However, any user who has seriously engaged with decentralized apps and aims to implement effective risk management is bound to encounter substantial obstacles.

What stands out the most is that beyond basic functionalities like deposits and transactions, very few additional features are provided. This is a significant point of criticism, as it lies squarely within the provider's responsibility. They have every opportunity to implement essential improvements in this area.

In this article, we will delve into the specific features that are (eventually) lacking and explore how these gaps impact users.

Our Research and Tools:

We have thoroughly analyzed the usability challenges of the Aave Lending Market in the crypto space and integrated these insights into our app to better support your investment decisions. However, please be aware that our initial assessments may not cover every aspect perfectly and should not be viewed as explicit recommendations. Instead, we offer tools designed to help you structure your own evaluations and make well-informed choices.

Introducing Aave: A DeFi Giant

Aave is undoubtedly one of the pioneers in the Crypto DeFi space and stands out as one of the more positive examples. That's precisely why we want to start here, to show that this is already onf of the best that exists. Beyond Aave, there are applications in much worse condition, where an analysis would almost be endless to highlight all the problems. Our goal is not to complain, but to sharpen the perspective of developers and providers, while also helping users understand how certain things work and how they can still achieve their goals.

In short, Aave offers decentralized loans. Users can borrow and lend capital, earning or paying interest depending on their goals. Essentially, there are two main use cases:

Lending Capital: Users who hold a certain asset mid- to long-term can lend it out to earn rewards from others who need capital.
Borrowing Capital: Users can leverage their investments by taking short positions, requiring more capital than they currently have. They can borrow from other users or use their own assets as collateral to purchase additional assets.

For the analysis, we also categorize users into two broad groups: beginners and advanced users. This distinction is crucial because these groups have different expectations and goals. An application too focused on beginners might deter advanced users with redundant information. Therefore, it's a challenge to know your customers and offer a solution that caters to both.

Aave underwent an exemplary transformation in 2024.

It's worth briefly mentioning that the onboarding process in Aave is very minimal, which is common in the crypto industry. Typically, users are presented with a landing page and, through a launch button, are taken directly into the application. This hands-on approach is simple and user-friendly, which is a positive aspect. However, users quickly reach a point where they don’t understand how to proceed. There is no opportunity to explore the features offered; you either connect your wallet at this point, or the application seems incomplete and makes no effort to guide the user. This is precisely where it would be beneficial to provide more support for beginners.

What could be made better?

Not much. At the moment, the landing page is designed in a very satisfactory manner. Following the release of this article, a major update was introduced, which is highly commendable. The landing page now appears significantly more professional and has moved away from its previous, somewhat playful cyber-design.

**Non-existing Onboarding Process**

The process of connecting a wallet and setting up an account is logical but lacks clear guidance for less tech-savvy users. The absence of a comprehensive onboarding flow can leave novices puzzled about the steps they need to take.

**The First Hurdles: Confusion and Challenges**

To an advanced user, this might seem trivial. However, this is precisely the point where most users disengage. And it's no surprise—connecting to a malicious website and executing transactions there can result in the complete loss of all investments.

It's important to understand that this concept is not yet widely established. It's somewhat akin to linking your bank account to third-party applications. This is undoubtedly one of the advantages of crypto and is what makes DeFi possible in the first place. But at the same time, it’s a moment of uncertainty. We must not forget that in the financial sector, there is a significant need for security. And at this point, the user is often left alone.

In the traditional internet, outside of Web3, there are established methods to ensure user security, such as logins and certificates that give users a sense of safety. It’s now standard practice to secure accounts with email, account logins, and two-factor authentication. I understand that crypto enthusiasts often reject these methods, mostly for ideological reasons. However, it's also important to acknowledge that many scams target users at this very point, precisely because users feel insecure and cannot rely on established patterns that provide them with a sense of safety.

**FAQ and Support Limitations**

The FAQ section, which could serve as a valuable resource, is filled with jargon and lacks visual aids, making it less accessible for beginners. The lack of prominent, user-friendly support options further exacerbates this issue.

The issue continues in the FAQ section, which is primarily geared towards advanced users. However, advanced users are relatively rare, and even they can be lulled into a false sense of security. Security concepts in crypto are generally weak, and even those with experience can easily fall into traps if they proceed carelessly, relying on established habits.

Since most of these applications are supposedly backed by a community, the developers and providers often leave users deliberately in the dark. Everything is open and accessible, but it’s unclear who is truly behind these platforms. It is an illusion to believe that a large group of volunteers, working without compensation or solely through donations, built these applications. The reality is that most, if not nearly all, crypto projects operate like any other IT project. There is typically a core team of responsible individuals who often prefer to remain anonymous or unreachable to avoid accountability. This approach is particularly absurd given that these platforms have many potential customers.

Protocols earn money from their users, meaning that users are effectively paying for the service. However, this information is often handled in a very questionable manner. The fee structure is rarely well-documented or is presented in a way that is difficult to understand. Direct support is virtually non-existent. Unlike traditional businesses, where valuable customers receive support because they significantly contribute to the company's success, here, both small and large users are left unsupported, whether they're trading $1 or $1 million.

Challenges in Depositing Assets
For users attempting to deposit crypto assets, the lack of onboarding and clear instructions can make the process intimidating. The interface assumes a level of familiarity with DeFi concepts that many novices do not possess.

For me, beyond the initial challenges, this is where the first major issue arises. The user selects from a list of assets, each displaying its respective interest rate. At first glance, this is the only information available. It's only by clicking on the button with the "..." that additional details can be viewed, as if they were secondary. However, in crypto lending, interest rates are not fixed; they fluctuate constantly with every transaction for a given asset type. This can lead to significant volatility. Yet, none of this is mentioned or made apparent.

In traditional financial products that pay interest, such as savings accounts, bonds, or other fixed-income securities, the following information is typically disclosed upfront:

Current Interest Rate: The exact rate at which interest is being paid.
Interest Payment Frequency: How often interest is paid out (e.g., monthly, quarterly, annually).
Rate Fluctuation Potential: Information on whether the interest rate is fixed or variable and how it might change.
Associated Risks: A detailed explanation of the risks involved, including the possibility of loss of principal.
Yield to Maturity (for bonds): The total return anticipated on a bond if held until it matures.
Fees and Charges: Any associated costs that might affect the net return, such as management fees or transaction costs.
Terms and Conditions: The full terms governing the financial product, including early withdrawal penalties or other restrictions.

In contrast, with Aave and similar crypto platforms, users are left to their own devices to dig through submenus to find this crucial information. Of course, one might argue that a professional will do this. But I pose the provocative question: Why should I have to search for basic information necessary to evaluate an asset? In traditional financial products, every company issuing stocks, every interest-bearing product, is required to transparently disclose such information. Why should it be different in crypto? It would be easy for the developers to provide this. And somehow, this doesn’t feel like the bright new world of finance. Instead, users are often told: "The information is all public on the blockchain, go find it yourself!"

Liquidations and positions held

One piece of information that is almost impossible to find is anything about liquidations. These events do occur, and people lose their money as a result. The question arises: why is there no information provided about this? The answer is simple—because it's an inconvenient truth. Unfortunately, this is the reality of the supposedly open and accessible world of crypto.

What we do receive is a brief evaluation of how many assets Aave allows to be made available in its products. This is described in very vague terms, and if you search for more information through the tooltip, you are redirected to a manual that seems to be more targeted at developers than at economists or everyday users.

A transparent approach to risk management and a commitment to open banking could look very different—and it should. I understand that Aave is unlikely to issue ratings on its own products, especially during crises, to avoid making them appear unattractive. However, it’s not about ratings; it’s about providing clear information on what’s happening, and liquidations are a critical topic that users need to be informed about.

Additionally, there is no information provided about the positions held, their size, or other relevant details. Aave possesses all this information; they use it themselves for monitoring their application. These are not classified secrets.

For instance, in traditional finance, such transparency would involve disclosing:

Details of Liquidations: Information on when and why liquidations occur, including historical data.
Exposure Levels: Clear metrics on the extent of exposure within the system, such as the total value of assets at risk.
Stress Testing Results: Insights into how the platform would perform under various economic scenarios.
Credit Ratings: If applicable, the creditworthiness of assets or users participating in the system.

This level of transparency would not only help users make informed decisions but also build trust in the platform. In the world of DeFi, where users are often left to fend for themselves, such transparency is not just a nice-to-have; it is essential for the long-term sustainability of the ecosystem.

**Supply APR Chart**

Unfortunately, this is all the information we have available for our assessment. The details provided are not very informative and are difficult to interpret because, in crypto, things are done differently than in traditional finance (TradFi).

Borrowing Crypto Confusion: The borrowing process, although straightforward for experienced users, presents significant challenges for novices. Critical information, such as the relationship between collateral and borrowing limits, is not clearly explained, increasing the risk of uninformed decisions.

The Impact of Aave’s Usability Pitfalls

Barrier for Novice Users: The steep learning curve and lack of clear guidance likely deter novice users from fully engaging with Aave. This could lead to missed opportunities for Aave to attract and retain a broader user base.

Increased Risk for Users: The unclear presentation of key financial information and the absence of comprehensive educational resources could result in users making risky financial decisions without fully understanding the consequences.

Aave vs. Other dApps: A Broader Usability Issue

Comparison with Other Platforms: Aave's usability challenges are not unique; they reflect a broader issue within the DeFi space where many platforms are designed with experts in mind, leaving novice users struggling to navigate complex interfaces.

Recommendations for Improving Aave’s Usability

Enhanced Onboarding Experience: Aave could benefit from implementing a more detailed onboarding process that guides users through key concepts and actions, such as wallet connection and asset management.

User-Friendly Educational Resources: Developing accessible learning tools and resources, such as simplified FAQs, tutorials, and visual aids, would help users better understand DeFi concepts and make informed decisions.

Clearer UI and UX Design: Refining the design to make key information more prominent and intuitive, such as clearly explaining the implications of borrowing and lending, would reduce the risk of user errors.

Why Usability is Crucial for dApp Success

Importance of Usability in DeFi: Usability is crucial for the broader adoption of DeFi platforms like Aave. By addressing these usability issues, Aave could not only enhance its appeal to novice users but also promote a safer and more inclusive financial ecosystem.

Crypto's Usability Pitfalls: A Closer Look at Aave Lending