Web3 is rapidly gaining appeal as an alternative, decentralized internet that everybody owns. It’s building a global network that isn’t controlled by a handful of massive corporate entities, meaning users are no longer subject to exploitation for their data, targeted with ads, and censored for having opinions outside of the mainstream.
Advocates of Web3 hope this decentralized digital ecosystem will eventually gain enough traction to replace the monolithic websites and proprietary applications that dominate the web today. Ultimately, they want it to replace them with a network of community-owned dApps and services built on the blockchain and controlled by no one.
Across the world, visionary developers are racing to create the computer code, protocols, and digital assets that will populate this new world. But if their vision of Web3 replacing the existing internet is to come to pass, they must make sure it’s accessible to every kind of user, regardless of their technical sophistication and knowledge of things such as blockchains and cryptocurrencies.
Web3’s Onboarding Bottleneck
Unfortunately, making Web3 accessible has proven to be one of its major challenges. The problem is that, although anyone can visit a DeFi app or blockchain-based game using their standard web browser, they must also get their hands on the digital assets necessary to participate.
This is where the headaches start. First, you need to download and set up a wallet, sign up to an exchange platform, pass KYC checks, navigate the confusing exchange interface, buy the crypto you need, transfer to your wallet, and finally, transfer it again to the dApp or game you want to play. It’s an overly complicated, often arduous task and most users will simply give up and go back to the more familiar world of Web2.
Fortunately, things are changing, and a growing number of DeFi protocols and NFT games are turning to dedicated crypto on-ramp services to integrate this onboarding process directly within their dApps, and simplify the experience too.
What are crypto on-ramps?
Crypto on-ramps are services that make it simple to buy crypto such as BTC or ETH with fiat currencies such as U.S. dollars, Euros, British pounds, Japanese yen, and so on.
The first crypto on-ramps were the centralized exchange platforms, such as Binance, Coinbase, and Kraken, which offer various options for users to deposit fiat into their accounts which they can then exchange for digital assets. Bitcoin ATMs and crypto-to-fiat payment services are also on-ramps, but none of these services are convenient for dApp developers. Because if you force your users to go away from the dApp to buy the crypto needed to interact with it, there’s a good chance they’ll never come back.
Web3 needs a much simpler solution, which is where third-party crypto on-ramps such as Cybrid, Kriptomat, and Ramp come in. They provide a fiat-to-crypto service that can easily be integrated into any dApp via an API, enabling users to buy and sell the tokens they need without having to leave the app they’re trying to use. In most cases, developers can integrate these services with a few lines of code.
Crypto’s Compliance Headaches
These integrated crypto on-ramps are becoming extremely popular for dApp developers because they ease another major headache — compliance.
Crypto on-ramp compliance is a tricky business, as cryptocurrency regulations tend to vary from one jurisdiction to another. For instance, Europe has its own Anti-Money Laundering rules and regulations that are different to those in other countries, making it a logistical nightmare for dApps to achieve compliance alone.
Nonetheless, there is a growing desire among dApp developers to be compliant, as it smooths their entry into new markets while giving users confidence that their dApp or service is both legitimate and secure.
Crypto on-ramp compliance begins with the KYC process, which often tends to be one of the major friction points in the onboarding experience, with users required to go through the clunky process of finding and uploading documents and taking selfies to prove their identities. Fortunately, companies like Ramp are helping to smooth this process with innovations such as document-free KYC, which is currently available to Brazilian users. All they have to do is enter their local tax number, upload a pic and they’re good to go.
AML is another key requirement for crypto on-ramp providers, and it’s difficult because every country has its own rules and regulations. Yet AML is necessary for dApp developers due to the heightened scrutiny the Web3 industry is facing. One major challenge of AML is screening for users who might be on the U.S. Office of Foreign Assets Control and politically exposed persons lists while minimizing false flags.
There’s also the need to set up anti-fraud and risk measures to prevent dApp users from being scammed. Finally, crypto on-ramps must negotiate with different banks and credit card companies to be able to support their payment methods and ensure their services can cater to every type of user.
Streamlined Access To Web3
Ensuring compliance is not an easy thing, but thankfully a number of crypto on-ramp providers have achieved this. Ramp, for instance, is fully regulated by the U.K.’s Financial Conduct Authority and the U.S. Financial Crimes Enforcement Network, meaning users can rest assured it’s compliant in those countries. Other widely regulated crypto on-ramps include MoonPay and Bolt Finance, which offer compliance in various nations.
The compliant nature of crypto on-ramp providers makes them a compelling option for Web3 dApps and service providers, enabling them to streamline access for new users to their services. Any dApp that integrates a third-party on-ramp is more or less guaranteed to reduce onboarding friction compared to a dApp that doesn’t, and they come with the added benefit of being compliant.
Crypto on-ramps might not be the most exciting innovations from the consumer’s perspective, as they perform a pretty basic task, but their impact on Web3’s growing adoption cannot be overstated. By condensing what used to be a clunky, time-consuming, and difficult process into a few simple steps that can be performed in seconds, they’re dramatically reducing the friction involved in Web3 onboarding, giving every kind of dApp an easy way to acquire every type of user.
