Sugarcane Finance Project: Quick overview

Project overview

Sugarcane Finance was an early stage retail DeFi company building a retail-focused wallet that would offer account abstraction for seamless sign up. Kyle worked with the team early on conducting exploratory research, doing early wireframing, and setting a component toolkit in Figma. What makes the project interesting is that it was a very early build using account abstraction and involved research focused on giving advanced DeFi products to novice users. While the company never launched its retail product (and eventually pivoted), it gave Kyle the opportunity to learn a lot about account abstraction and the challenges of bridging the gap between complex DeFi and retail consumer experiences.

The research divided participants into three groups: those who had no experience with DeFi, those who had only experienced Crypto through custodial apps such as coinbase, and those who had deep non-custodial DeFi experience. As an MVP, we focused the research on the two groups with prior crypto experience. Our hypothesis was that simply lowering the UX barrier to entry would be seen as a major advantage for users. However, we found that bad UX was only part of the challenge for crypto apps in 2023. We found that users who had a good deal of experience (either custodial or non-custodial) had largely moved on from Crypto by 2023 because yields and price action were no longer strong. Our research found that users saw products like Stablecoin staking as being a slightly risker form of bond investing: as staking yields had lowered to around 4%, and bond yields has risen to around 4% by that time, participants preferred to just hold bonds of MMFs. Likewise, for their “play money”, they had moved on to products like meme stocks. In other words, Sugarcane had a bigger challenge than usability: it was lowering barriers to financial products that even previous buyers were no longer interested in.

A key design goal of this project was progressive disclosure of DeFi information. DeFi apps have a challenge: users new to DeFi become quickly overwhelmed with details about how the system works. However, established DeFi users (who are often the online influencers that inspire new users) are extremely distrustful of new apps and expect a high degree of detail and rigor about how the system works to gain their trust. To account for this, the Sugarcane app design focused on three levels of detailed disclosure. The first, top level, were things on the main page of the app. These described things in approachable terms to new users and abstracted away jargon. Ample “learn more” buttons provided a second level of disclosure through the form of modals that displayed with more information about the financial products. These information boxes had more information about the characteristics of the products themselves and used slightly more advanced financial terminology. As bespoke information modals, they were not limited by small word-counts. Finally, the bottom of the modals had a link to the docs, which contained rich technical descriptions. Our assumption was that even most people who reached the docs page would not understand what was there, but they’d feel confidence in inner rigor. They’d also feel confidence when more advanced users found and verified the docs.

Outcome

The Sugarcane app was launched after Kyle helped with the MVP, but the company eventually pivoted to other product opportunities. However, the research and design work done on the project gave Kyle a lot of insight into the challenges of building a retail DeFi product, the importance of progressive disclosure of information, and insight into the account abstraction technology that would soon become a common part of retail wallet products.

Worldview

This project contributed to a broader theme in my research around crypto: crypto might have a usability problem, but that is not the bottle neck issue. Crypto’s core issue is a “usefulness” problem. The asset class might have some beneficial “medium of exchange” qualities in emerging markets where banking systems are inefficient, but those markets are not always attractive to American companies to operate in. For developed markets, crypto is measured broadly against the attractiveness of other monetary assets. For retail, stablecoins compete with ACH payments for “medium of exchange” properties and MMFs with their “store of value” properties. When the yields for these are similar, retail consumers choose the institutionally safe options. Higher volatility crypto assets (such as floating value coins like DOGE or Bitcoin, or various types of crypto derivatives) are also in competition with higher volatility traditional assets like meme stocks and options trading. There is no differentiation between “crypto” investors and “traditional” investors. The useful distinction is between “early adopters” of financial products and later adopters. The early adopters that are buying crypto in the years with exciting price action move on to options trading or meme stocks when the action moves there. This project was a snapshot of 2023: very few people that we found were interested in concepts in crypto like “self sovereignty”—it was all about price action and broad financial product characteristics.