Crypto — A design thinking framework for protocol design and investing
Part 3
Welcome back for the final part of the three part series on applying design thinking principles for investing and building crypto protocols. If you haven’t read parts one and two, please do so here and here.
In the first two parts of this mini-series we covered the background and context to design thinking before explaining the first two steps of the process with crypto related examples. We spent a lot of time framing the problem and understanding the user and we will now move on to the final three steps of the process where we begin brainstorming ideas, building prototypes and testing with our users. A reminder of the steps below. Let’s dive into step 3.
3. Ideate
All of the focus in the first two sections has been solely on the problem space and now we are ready to move into the solution space. With you target problem written down and at the forefront of your mind, you and your team can now begin ideating new ideas for how to solve this problem. As always, the more ideas the better and the exercise should be carried out individually for a set period of time. Think outside the box!
Crypto example
Some ideas to the above corporate balance sheet problem could be:
- Invest in bitcoin
- Allocate a portion of cash to a stablecoin and lend it out on AAVE
- Become a stablecoin liquidity provider on new projects to farm new tokens
- Engage in a bitcoin basis trade to make market neutral returns
Remember, no ideas are stupid.
4. Prototype and test
I have grouped the last two steps into one for the purpose of this article but much like all the other sections, you can go super deep into the weeds for each step should you wish.
A prototype is an artefact designed to elicit feedback at the earliest stage from your target customer. Prototypes should be quick, cheap and easy to make.
There are various levels of fidelity with a prototype but you should see them as a sliding scale i.e. start low fidelity (pen and paper) before moving up the scale to higher fidelity and effort digital mock ups. Google ventures describe this as ‘building a facade’.
the biggest mistake I see in this stage is teams spending too long on finessing their prototypes to make them shiny because they don’t want to be embarrassed when they show it to their users. Remember a prototype is just a vehicle though which to speak to target users as the nearest possible point to shape your solution before you spend too much time and money.
Take this example from the telecoms company EE when testing their prototype here:
https://www.youtube.com/watch?v=yafaGNFu8Eg
If you watch closely, even though EE are only using pieces of paper, they are already able to understand parts of the user experience which are easy and which are more difficult for the user. Watch from 56 seconds where the user is asked to remove the minutes tile from the home screen. Do you notice how he stumbled trying to achieve this action? It’s very important not to jump into assist the user when this happens and carefully observe and realise that this is part of your application that may need redesigning. ‘Observe, don’t tell’ is a crucial part of the testing process.
Crypto example
Given the composability of crypto, we have the ability to potentially bend the rules presented above slightly by showing a prototype which might be slightly higher fidelity out of the gate. Remember, only do this if it’s quick and cheap to hack together.
To answer the corporate treasury HMW problem presented earlier, a team could mock up a screen which shows fiat dollars accruing interest in the bank account used by the treasurer by the second or minute displaying an APY broken down into weeks, months etc…
This will start questions and conversations from the treasurer such as:
- How can I get those yields on my fiat?
- Is the yield guaranteed?
- Is it safe?
- Etc….
This may end up being miles from the solution that you choose to design but as can be seen above, you will continue to understand your users in more detail.
Summarising the design thinking process
The above and preceding articles was a brief overview of the main steps contained within the design thinking process with crypto examples to highlight how each stage can be applied when thinking through a new crypto protocol or a specific feature. It only scratches the surface with regard to the ways in which each step can be applied but if you are new to design thinking I hope there’s plenty of tips and content you can take away to explore further with when thinking about your crypto project. Although the steps are presented linearly throughout this article series, it is important to note that the steps are best viewed in a loop where feedback is consistently used throughout the process to apply to the various steps. I’ll finish by reflecting on why I believe this is so relevant for all stakeholders to consider within crypto right now.
Why does this all matter?
Hopefully by now you have a clear understanding of the component steps within the design thinking process as well as some ideas about how this could apply to your own crypto projects. To finish off I will touch on a few final thoughts on why this matter to builders and investors in the space.
For builders
Remember, the number one reason startups fail is because there is no market demand for their solution. Whether you are building a startup from scratch or you are looking to design a new feature or improve on your current product, the principles from design thinking can help you save time, money and effort as well as helping you engage closer with customers to ultimately build something that helps them achieve their goals.
For investors
When investing in and appraising new projects, ask yourself and the teams you are assessing some key questions:
- How painful is the problem this team is targeting?
- Why is this team the right one to solve that problem?
- How engaged is the team with the community?
- How do they elicit and use feedback?
Startups are uncertain and in a constant state of flux, find founding teams that are passionate about the problem they are trying to solve and unwavering in their pursuit of a solution to that problem rather than teams just using blockchain because it is the ‘saveur du mois’.
To visualise the importance of design in the public markets, look at the relative outperformance of businesses that we deemed design-centric vs the rest of the S&P 500.
Concluding remarks
There’s quite a bit to digest throughout this mini-series and despite covering the end to end design thinking process, there’s much more detail with which I can dive into in each section.
If you are a builder or investor in the crypto space and want to discuss any of the above and how it can be incorporated into your next project or crypto investment please feel free to reach out to me directly via my Twitter: Native_0x
