The idea of a democratic framework that offers self-autonomy to consumers is gaining momentum in the Web3 tech space. The centralized internet, on the other hand, has demonstrated various reasons why it’s time for a change.
Web3 allows users to have tighter control over their own data, meaning that anyone can interact on the web without a trusted third party. It aims to be entirely permissionless and more transparent when it comes to how data is being utilized. It’s giving power back to the people.
As the world moves towards the decentralized Web3 internet, so also will its financial framework. The current Web2 internet flourished with advancements in online payment systems and digital finance, however, it is very centralized. The Web3 space on the flip side is making a grand shift towards the goal of democratizing financial services. Take Decentralized Finance (DeFi), as a key sector with a total locked value of $247.5 billion at the end of 2021. Operating by smart contracts, it is empowering users with trustless asset swaps, yield generation, lending, and borrowing, along with a host of evolving digital financial products.
Considering how important financial services are in Web2, it’s no surprise that this area will be equally, if not more, critical for Web3. However, to realize a mature Web3 ecosystem, DeFi must first and foremost address major challenges in security.
The state of security in smart contracts
Smart contracts are a core feature of DeFi. These transparent programs automatically execute under predefined conditions and hence replace the need for central banks or brokers. Thus any point in failure deriving from smart contract code would be detrimental for DeFi. For a quick definition, smart contracts are programmable algorithms that carry out contractual agreements. They control the execution of such agreements, such as automatically releasing payments when a certain contract is fulfilled.
As straightforward as this sounds, smart contracts can fail due to technical errors or loopholes found within complex sets of program code. Recently, a user scored hundreds of thousands of dollars by sidestepping Adidas’ minting terms within their smart contract, during their debut NFT release. By the time the error was discovered, the hacker had made away with significant profits.
Real adoption requires user-centric security
Another security concern is the usage of complex private keys and seed phrases associated with DeFi wallets. While these can provide a notable level of security for users, the drawback lies in the cruciality of protecting these phrases. Users stand to lose their funds if these keys are forgotten or lost, leading to permanently inaccessible funds.
Besides sensitive private key management, phishing and cyberattacks are common occurrences in Web3 that users need to be wary of. Combating these threats calls for finding the right balance that is both scalable and practical among users.
“Advanced security protocols synthesizing intuitive user experience is a must to help secure Web3 apps for mainstream users,” says Matthew Ainscow, CEO of Avarta, a Web3 platform geared towards creating a secure, private, and user-controlled authentication layer that puts the full power of the web into users’ hands. “This includes providing convenient password management frameworks, security-enabled wallets, and increased user privacy,” says Ainscow.
Web2 apps and products have shown us that more users tend to adopt new platforms when the learning curve is reduced. People are more inclined to use apps that can quickly meet their needs with as little effort as possible. For Web3, many protocols and apps are providing turnkey solutions to lower technical barriers for users, and seamless user security is no doubt one of them.
“A crucial growth catalyst for DeFi can be largely influenced by how easy it is for users to confidently store, transfer and secure their digital assets. This is why we are actively enhancing state-of-the-art biometrics and advanced cryptographic security layers baked right into a user-centric security protocol,” he adds.
Solutions like Avarta combine biometrics and unique device metadata to generate an authentication score. This unique score verifies that the actual DeFi wallet holder can securely access their funds upon live authentication. For most Web2 users, biometric authentication is already second nature. Bringing this practical security layer into DeFi enables a viable solution that makes sense for the average person.
Trust in a trustless ecosystem
For users to embrace the adoption of Web3 platforms and apps, they must first be assured that they can trust this burgeoning technology. Addressing user-centric security will contribute largely to making this a reality. As much as Web3 opens new doors to a world of trustless financial services, ensuring robust security for users is a non-negotiable feature. “Defining the best security solution is no doubt an arduous feat. That’s why we are reimagining trust for DeFi and Web3 apps from the ground up,” concludes Ainscow.
The Human & Machine podcast is dedicated to inform and demystify the crypto, DeFi, GameFi, NFTs and blockchain industries for the average person.
Tlahui is a man in love with words and blockchain. His storytelling and passion to communicate led him to co-host The Human & Machine, a podcast and YouTube channel. Where he rightfully plays the role of an average-minded Human trying to understand and explain in layman terms, the lingo and complexities thrown at him by The Machine, his heartless, yet brilliant co-host.
Hikaru is a blockchain lover with a weakness for cooking. His outstanding understanding and experience in blockchain technologies, plus his unhuman work ethic have earned him the nickname of The Machine. In the show, he plays the role of a hybrid all-knowing robot that goes out of his way to explain blockchain concepts to The Human while trying not to lose faith in humanity.
Kenny Au, aka The Brain, is a #Web3.0 #FutureofWork #DistributedOrganizations Outerspace OG. His brain functions in spacetime. Plus his innate visions and strategies in Web 3.0 have developed him the nickname of The Brain.
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