Marco De Rossi, President and Co-Founder of HAL.xyz, a blockchain data listening and automation platform.
Cryptocurrency is strong on self-sovereignty with the term “not your keys, not your coin” a popular maxim when talking about crypto ownership. While owning your private keys may be one step in self-custody, another is understanding what is actually happening with those coins.
Data is what fuels crypto economies and is the foundation upon which Web2 was built and now Web3 is being built. In the Web2 world, users were told not to worry about the data running beneath all the apps that kept us connected. This led to millions of data points being used by companies to earn money while the user was unaware.
This put privacy and ownership issues over data right at the forefront of people’s minds. Users are acutely aware that they are missing out on the value of these data streams.
As Web3 becomes more discussed and projects building on it grow, data continues to be something that runs beneath the surface. However, this time users need to be aware of it in order to keep up with the changing crypto landscape they are participating in, whether it’s decentralized autonomous organization (DAO) voting, decentralized finance (DeFi) positions, or gas fees.
Blockchains provide transparency, not insight
A big draw of blockchain technology and the decentralized projects built on top of it is transparency. Anyone can go and look at transactions on the Ethereum (ETH) blockchain and if they know the address, identify asset movements between wallets.
However, this ledger’s transparency doesn’t provide insight or answers for users who are trying to understand what these transactions and movements mean for them.
For example, monitoring whale wallets and movements is a way for investors to have a clearer understanding of market manipulation risk, price fluctuations, and notifications to manage liquidation risk and positions.
This year saw the liquidation cascades by Wonderland on Avalanche (AVAX), where the TIME token price plummeted by 40% in 2 hours, and the total value locked (TVL) dropped from USD 900m to USD 450m.
Users who only saw the news once it happened had no time to sell or change their position thus losing out.
This highlights how transparency may mean that everything can be seen, but it doesn’t indicate that everything can be understood simply.
You need to make sense of the noise
Those already involved in cryptoassets know that buying, trading, staking, and yield farming all require constant monitoring and attention. As a user’s portfolio grows this will only become more necessary. However, splitting attention across all the different aspects of a portfolio is time-consuming.
This is likely to continue to become more intensive as the space grows. Already things like layer 2s and different blockchains create more opportunities to transact and participate in the crypto space. Therefore, providing more areas to invest and participate in will require even more attention.
As such, making it possible to make sense of all this noise is important if crypto wants to reach mainstream adoption.
However, this won’t happen without active participation by those building these products. While creating next-generation financial solutions for people is worthwhile, if a user is overwhelmed by all the information it won’t be able to serve its best purpose.
Keeping on top of your data is now part of good financial management
It’s not only the projects that need to take data clarity and understanding into consideration – data management on the part of the user is also now part and parcel of financial management when it comes to the new financial world with cryptoassets. Users may rely on others to direct or assist them but this is not true to the spirit in which DeFi projects are built: self-custody and true ownership.
Accessible tools for seeing, interacting, and responding to data are necessary to fully unlock the potential for people to truly benefit from decentralized finance and its tools.
If the crypto world truly wants to onboard millions of users and introduce them to self-custody, financial independence and improve economic participation, it has to help them know how to navigate and be aware of what is happening.
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