Though decentralized finance (DeFi), non-fungible tokens (NFT), and the metaverse lay the groundwork for an exciting new era of crypto-native internet, the concept of crypto/Web3, as a lasting paradigm—let alone a new technical one—won’t persist unless it caters to the common man and moves beyond its niche enclave. Thankfully, for those evangelizing the crypto financial utopia at Thanksgiving, after years of simply being dubbed the “future of finance,” it appears that crypto is finally witnessing a surge in consumer-oriented, everyday financial applications built on blockchain technology. This rising wave of non-custodial finance (NoFi) apps is pointing to a glaring opportunity for widespread adoption of crypto in the mainstream. Without innovations in settlement, scaling, smart contracts, wallet infrastructure, and DeFi protocols, NoFi apps could not have been built on the foundations of prior speculative crypto adoptions. Although there are 5 to 10 million individuals transacting on the blockchain every month, the general financial services market hosts billions, indicating a massive potential market waiting for NoFi to tap into.

Synchronous Evolution

In the early adoption of new technological paradigms, we often witness synchronous developments around similar ideas and problem domains, sometimes with slightly varying solutions and assumptions. I’ve emphasized this in a prior blog about the wallet experience stack, which denotes the convergence in the Web3 wallet-enabled identity and B2B middleware ecosystem, with diverse players addressing it in multiple ways. In the realm of Web3 consumer finance, we observe a similar trend. Wallets, payment apps, neo-banks, and centralized exchanges are all coalescing around common use cases enabled by functional blockchain rails. Let’s consider some examples.

Non-Custodial Payment Apps

Ironically, for cryptocurrencies, payment—perhaps the most evident use case since its inception—has been the last to truly evolve and gain traction. Payments with volatile assets like Bitcoin and Ethereum were naturally niche, buoyed by DeFi and NFTs. But it’s only with the advent of stablecoins and cheaper blockchain spaces that payments have truly blossomed. The foundational function of crypto wallets—sending tokens—has become sufficiently user-friendly, offering a Web2-level experience. We now witness various applications and infrastructures geared towards this goal, including chic consumer “crypto Venmos” and global payment apps like Eco’s Sling and Beam. There’s even a community crowdfunding for a meme token $SEND, building a peer-to-peer payment app supported by Account Abstraction (AA). Unlike crypto wallets, these applications more resemble streamlined early versions of the Cash app, often focusing on peer-to-peer payments for students and youngsters, or remittance services tailored for expatriates and remitters.

Non-Custodial/Semi-Custodial Neo-Banks

While some emerging NoFi fintechs position around specific payment use cases (a massive use case in itself), others approach their products more holistically, intertwining payments with added stablecoin yields, multi-crypto currency accounts, investment features, and hybrid crypto-fiat accounts integrated with traditional banks and card systems. Projects like Decaf and Paie (both Solana applications), as well as the upcoming smart-contract IBAN wallet from Obvious, come to mind. Malaysia’s exiled government is even creating a non-custodial neo-bank named Spring Development Bank on Polygon for its citizens. It’s crucial to understand that while these are centralized entities, representing users in centralized capabilities interacting with traditional KYC financial systems, their core functionality and value proposition revolve around user interactions with their non-custodial wallets (or semi-custodial/MPC) on-chain. Many functions previously relegated to banks (or challenger banks) are shifting on-chain, with these new banks providing users a streamlined interface to leverage all on-chain protocols for lending, borrowing, yields, and trading, nestled within a stellar user experience. In certain scenarios, non-custodial neo-bank features will pair with traditional banking ones, but as more financial “tasks” migrate on-chain, traditional financial institutions begin to resemble a mere dumb switch, much like centralized exchanges do for crypto users nowadays.

Neo-Banks 2.5

While most non-custodial payment apps and neo-banks have predominantly been emerging crypto-native startups, we also notice significant activity in the existing neo/challenger bank space. These include existing neo-banks setting up non-custodial/semi-custodial wallets for users and offering crypto services, as well as custody-focused crypto neo-banks and investment models, offering similar services in a custodial format. While not precisely pure Web3 non-custodial neo-banks, they leverage blockchain technology directly or indirectly for their services, which we might dub “Neo-Banks 2.5.” Cenoa in Turkey, targeting regions like Turkey and Argentina, provides custody solutions to access USD stablecoins and on-chain yield protocols as inflation hedges in nations most impacted by currency volatility. PayPal is another notable example, extending its crypto foray from custodial crypto buying and selling to EVM-based stablecoins and companion embedded wallets, akin to Africa’s Yellow Card. Alongside typical fintechs transitioning into crypto neo-banks, brands like Brazil’s NuBank, Germany’s N26, UK’s Monzo and Revolut, and USA’s Cogni are on similar paths. Neo-banks, once challengers to legacy consumer banks, find themselves now being the challenged in the crypto space. They’re adapting by beefing up their crypto offerings, melding traditional finance with crypto neo-banking. It wouldn’t be surprising to see larger scale traditional consumer banks pondering similarly.

Centralized Exchanges

Centralized exchanges are among the oldest “applications” in the cryptocurrency domain. Despite representing “centralization” within the crypto ecosystem, these exchanges are intensifying efforts to develop their non-custodial wallets and aspiring super apps. They are providing services for an increasing number of these fintech cryptocurrency use cases through centralized infrastructure. Binance Pay, usually denominated in USDT or Tron USDT, has a significant impact and daily usage in cross-border remittance channels and emerging markets, especially in Latin America. The USDC earnings offered by Coinbase in its primary app, along with the equity accumulation in its Coinbase Wallet app, coupled with the semi-payment features launched in Base (for instance, Beam Eco), all serve their existing users’ financial needs. Centralized exchanges are well-positioned to offer financial services to their current users and have invested in growth sectors, such as standalone wallets, to capture an increasing number of emerging use cases.

While the exact scope and approach may differ, what is it that all these participants are beginning to converge around? Could it be the actual consumer fintech use cases for cryptocurrency or the early product-market fit?

Users and Use Cases

Much has been written about the early adopters of the crypto local economy, but for cryptocurrency, the most pivotal user group is evidently the “early majority,” to use Geoffrey Moore’s terms – a cohort that can genuinely resolve everyday financial product issues. For a technology paradigm to transition from early adopters to the early majority, it needs to “cross the chasm,” moving from early adopters who try to perceive the value of something new, to the early majority who are simply trying to get things done in their lives. Moore also outlines a typical process where initially, a set of vertical use cases arise, much like a set of “bowling pins,” which, once promoted, can sequentially “fall” since adjacent use cases offer ample opportunities for lateral and generalized adoption. This all crescendos in a “tornado,” where early use cases converge amidst massive adoption by the early majority, forming a substantial, integrated winning platform and a series of applications that find product-market fit. In our unhosted financial world, we observe the emergence of the following “bowling pins,” sketching out what the tornado might resemble.

Payments

Despite value transfer from A to B being ostensibly fundamental in crypto design, for many years, the significance of crypto payments has merely been a detail of novelty or highly localized crypto applications (or illicit activities). Within the crypto realm, classic use cases haven’t even had real traction, becoming an in-joke within the crypto community. However, this is rapidly changing. Intriguingly, TRON and Binance have gained genuine traction in everyday payment sectors in emerging markets, and increasingly, more crypto application layers are trying to reposition around consumer payments that “just work” using blockchain infrastructure. A key catalyst here, of course, is the advent of stablecoins like USDT, BUSD, and USDT, which also hold significant sway in other parts of the unhosted fintech domain. Broadly, the momentum we’re seeing in crypto payments can be split into two recent and one mid-term arenas - peer-to-peer Venmo-like payments, remittance payments, and B2C payments. Creating a Web3 version of Venmo might be the most obvious decentralized crypto application, but in reality, the full features and benefits of crypto only manifest in a consumable manner under the advent of stablecoins, cheap networks and second layers, non-custodial seeding, and account abstraction. These same advantages apply to international remittance payments, as corridors for crypto remittances begin to see significant flow between Latin America <> USA and Africa <> Europe.

Inflation Resilience

Especially in emerging markets, inflation resilience is tightly interwoven with payments and remittances. The key factor here again is stablecoins - particularly USD stablecoins - as people in countries with weak or volatile currencies seek ways to preserve wealth. Latin America is once again at the forefront of this trend, predictably considering its unstable currency backdrop, but we’re seeing this trend wherever people want to hold value in a store of wealth that maintains the gold standard - the US Dollar (no offense to financial maximalists). Unhosted financial applications can provide basic USD access to anyone in the world (often more easily/cheaply than traditional forex channels), as long as they can swap in from fiat in some way. These dollars can be held, placed into interest-bearing accounts, and sent to anyone worldwide with a compatible wallet, at increasingly lower costs.

Savings/Yield

Everyone with spare cash needs a place to store and preserve that value, and we see unhosted financial applications leveraging on-chain infrastructure to offer users easy-to-use, consumer-friendly interfaces to earn yield and interest. While on-chain rates were once subpar, more aggressive interest policies from centralized stablecoin issuers, aligning with the off-chain fixed-income environment, have pushed on-chain rates closer to off-chain money market rates. Even without a fundamental rate advantage on savings account rates like DeFi had in its boom phase, various permissionless yield products (relatively) still enable people to effectively increase their savings. DEX LP positions against stable or blue-chip currency pairs, conservative money market positions, stablecoin risk-free rates, and conservative yield aggregation strategies provide unhosted financial applications with potential on-chain yield sources, representing their users, both for their stable assets (thus expanding the inflation hedging use case in these instances) and for any volatile/investment assets. We see the contours of this experience in UX-focused Web3 native applications like Instadapp and Zerion, which make depositing funds into yield positions a matter of one or two clicks, and consumer applications like previously mentioned Cenoa, which completely simplify it into a “savings” feature.

Loans

On-chain borrowing presents more of a challenge to consumers compared to traditional lending since most global credit is low-collateral or uncollateralized. However, we’ve observed intriguing progress and innovation. Decentralized finance (DeFi) applications haven’t fully dived into this yet, except for Binance, which genuinely offers crypto loans to its users. But we can anticipate this changing soon as foundational protocols improve and integrate with interfaces. MakerDAO’s Spark protocol allows users to borrow DAI at a fixed rate of 3.19% (with an optional associated debit card for spending), which is appealing in today’s environment, provided you’re ready to offer twice the loan value in collateral. It’s intriguing to see if it will attract retail borrowers priced out of personal loans by current interest rates and credit scoring systems who wish to lock in low-rate loans for purchases without actually spending the money. Alchemix offers “self-repaying loans”, potentially suitable for car purchases or home down payments. DeFi protocols like Goldfinch are delving into uncollateralized loans, serving off-chain businesses, an idea that could potentially extend to millions of small businesses. Experiences from this will certainly inform the next wave trying to create more accessible credit applications, whether it’s oracle-based uncollateralized models, post-Sybil reputation models, or innovative new collateral loan protocols. The ultimate “boss” is the opaque, centralized, Orwellian credit institutions and traditional bank credit ecosystems. Once DeFi presents a better solution, decentralized finance can offer it to consumers.

Forex/Multi-currency Accounts

For certain demographics like international students, foreigners, freelancers, and digital nomads, handling multiple currencies is a part of life. Whether it’s receiving payment in one currency but needing to remit in your home currency, paying for a SaaS application in another currency, or having multiple clients or side gigs paying in various currencies, there’s often a need for swift exchanges between different currencies. This exchange can be cumbersome, slow, and costly via traditional banking systems, with the administrative overhead sometimes being prohibitive for some. With stablecoins and decentralized exchanges (DEX) offered by DeFi applications, individuals can have a “crypto multi-currency account” housing several stablecoins, enabling them to send, swap, or save as needed. Within these same demographics, multi-currency accounts have already become a popular feature in non-crypto fintech/neobank applications. As more crypto-neobanks focus on these use cases and existing fintech firms start exploring blockchain as an alternative, these two use-case groups are expected to converge over time.

Trading/Investing

Trading was crypto’s first core use-case, so we won’t delve deeply into it here. Still, it’s worth noting that opportunities to invest or even trade risky assets are something the traditional fintech realm has been promoting for a while now (think of Robinhood). It’s a legitimate user demand that decentralized finance tech applications will obviously cater to. Decentralized exchanges (DEX), bridges, and aggregators make it relatively easy for consumer apps to offer non-custodial cryptocurrency trading, allowing their users to assume a certain level of risk exposure. As more real-world assets (RWAs) get tokenized and move on-chain, the prospect of offering everything from cryptocurrency, stocks, forex, real estate, to fixed income from a single application becomes evident for decentralized finance tech applications. If a digital dollar’s DeFi yield protocol can hedge against current inflation and achieve monthly savings goals, why not simply channel the excess funds into the latest hot cryptocurrency or stock using the same application?

Implementation Mode

Synchronous evolution surrounding the problem space has naturally been accompanied by the same around the solution space. As we begin to see NoFi applications that can reasonably compete in large-scale markets, common threads supporting various approaches become evident. Starting from a high-level settlement layer, moving to the application layer, we’ll delve into some pivotal technical topics.

Multi-Party Computation (MPC), Account Abstraction, and Elimination of Seed Phrases

Clearly, the next billion users won’t securely store a 24-word phrase. Over the past year, the crypto industry has taken this meme seriously, launching various implementations, standards, and software development tools to assist dApp developers in providing a web2-style login experience with crypto wallets. While I elaborated on this area in the “Wallet-Centric Experience Stack” article, it’s worth noting that secure self-hosted solutions are vital for NoFi application layer growth, offering web2-style logins and recovery. Whether based on MPC, smart accounts, or a mix of both, NoFi applications are tapping into the latest and best wallet experience stack middleware innovations, bringing them to the masses. Beam’s Eco utilizes ERC-4337 compatible smart accounts and account abstraction infrastructure on Optimism (and soon Base), offering a seedless onboarding process and sub-5-cent payment experiences, even for users who’ve never set up a wallet before and are accessing via a link.

Solana

Being a well-known Ethereum enthusiast, I have to admit, Solana deserves its accolades. Sling, Decaf, and Key.app all run on Solana, arguably three of the smoothest NoFi apps in existence. While Solana has consistently been cost-effective (though with decentralization trade-offs), its significant presence in the NoFi sector comes from the quality of application builders and their focus on daily user value. So, while Ethereum’s sidechain ecosystem is rapidly catching up to Solana in cost and speed, from an innovative NoFi user experience perspective, Solana’s application ecosystem might be a step ahead in some respects.

Zaps, Meta-Transactions, Intentions

Without delving deep into the intricacies of blockchain intentions and MEV’s future, I’d like to point out that bundling multiple on-chain operations to facilitate user transactions isn’t just for speculators to get the best limit order prices. Whether they are on-chain “zaps”, schemes of multiple transactions meant to be executed together, or off-chain signed messages representing user intent, NoFi apps can employ a combination of various transaction types and transaction-like instructions to simply deliver what users are seeking. Soon in NoFi applications, we’ll see the removal of such minor frictions as buttons like “Convert to USDC and Save” or “Convert to ETH and Stake”.

Block Unicorn Note: Zaps refer to consolidating a series of interaction processes into a one-step/one-click operation, commonly known as Zaps.

Integration of Cryptocurrencies with Traditional Banking and Payment Systems

In the rising wave of NoFi (Non-custodial Finance), a recurring theme we observe is the melding of cryptocurrencies with traditional finance in meaningful ways. One manifestation of this is entities operating these applications often manage to add value for their users by establishing relationships with banks or collaborating with certain banking infrastructure providers. Non-custodial neo-banks, which are essentially 95% non-custodial wallets, have the capability to introduce services that transition from fiat to cryptocurrency and banking accounts, thereby amplifying the value offered by these applications. The ability to automatically deposit a portion of one’s salary into a non-custodial wallet makes other services within that wallet more valuable and essential. Further, the convenience of using cryptocurrency for card swipes or tap-to-pay in grocery stores extends this value. While users must undergo identity verification to access these services, meaning they forfeit some degree of anonymity, for most users the reality is that their everyday lives are already “identity-verified”, making this integration a smooth enhancement to their daily experiences. The landscape is becoming more intertwined with Visa and Mastercard already experimenting with payments based on EVM’s smart accounts and account abstractions, and a blended world where on-chain and off-chain connections in user interfaces are becoming increasingly prevalent. \

Tokenization of Real-world Assets

As alluded to earlier, an increasing number of high-quality real-world assets are being tokenized, paving the way for innovative consumer financial products that were previously unattainable. The most evident and straightforward approach is via stablecoins themselves. Issuers like Circle and Tether are producing tokens by investing billions in short-term notes, and are increasingly passing on yields from government bonds and other short-term off-chain securities to on-chain stablecoin holders. Another exemplar is the recent surge of on-chain U.S. treasury bonds, which cryptocurrency investors can access through platforms like Ondo Finance. While there are requirements for identity verification (and geographical restrictions based on the products you wish to use), once verified, one can reap substantial rewards in a user-friendly on-chain wallet without the perplexity of navigating through confusing brokerage apps. As more valuable real-world assets are tokenized and introduced on-chain, they pave the way for a broader array of potential financial products for the average user.

Why Now?

To understand the explosive growth of these use cases we’re witnessing today (whether you’re a fan or not, the TRX chain boasts 2 million DAUs), and why even serious players like PayPal are joining the fray, one needs to consider several converging factors driving this momentum.

Stablecoins

Arguably, the most evident reason for NoFi’s rapid rise is the maturity of the stablecoin ecosystem. Digital dollars (and an increasing number of other fiat currencies) can be viewed as the killer app for blockchain thus far. As highlighted in many instances, stablecoins act as a lifeline for everyday business, a role volatile cryptocurrencies can’t fulfill. Frictionless digitized fiat is making inroads into various applications, regions, and sectors. This momentum is accelerating, not decelerating. Case in point, Circle alone, with its $26 billion USDC issuance in the first half of 2023, generated over $700 million in revenue, surpassing their total for 2022. Tether is reaping massive profits, and if the trend continues, they might become a systemically important holder of U.S. treasuries. However, more significant than vast issuance volumes or revenue statistics is the adoption by regular users and businesses for mundane and essential tasks, especially for those previously underserved by banking in developing nations. While we haven’t seen explosive mainstream usage in developed markets yet, there’s reason to believe this might change (more on this later).

Maturation of Scaling Solutions

Without declaring premature victory on the trilemma of blockchain scalability, it’s evident that we’re nearing a point where decentralized blockchains become too costly and cumbersome for everyday use. Solana’s transaction costs have reduced to nearly negligible levels, and Ethereum’s Manhattan Project-esque focus on a Rollup-centric roadmap is finally bearing tangible fruits. We’ll not only witness a substantial reduction in Rollup costs from EIP 4844, but also all the scaling benefits yet untapped in the zk domain. Additionally, we’re seeing a flourishing L2 infrastructure ecosystem, allowing apps to easily launch dedicated “Rollapps” for optimum control, performance, and monetization. Cryptocurrencies, especially Ethereum, underwent a “rough patch” in scaling, but these efforts are yielding “good enough” L2 solutions, fitting nearly any use case, without the need for a hard fork. Hence, NoFi apps are entering the most liberal block-space era in crypto history, with several good and continually improving network choices.

Wallet Technology Innovations

As mentioned, innovations like MPC, smart accounts with account abstraction, gas-less transactions, and products like Privy and Web3Auth are tying the entire “wallet stack” closer, offering developers an easier route to build applications on top of deeply native wallet functionalities. The next wave of crypto neobanks and non-custodial fintech apps won’t be bothered with user seed phrases or require an installed wallet. Not only are these blockchains finally affordable enough, but they can also frictionlessly interact with cutting-edge smart accounts through a few lines of JavaScript.

Macro Tailwinds

Stepping back from cryptocurrency itself and examining the broader backdrop in which it operates, the world around crypto is evolving in a direction making this NoFi innovation more attractive and necessary. Inflationary shocks are making a significant comeback, especially in developing countries with weak currencies, fueling the desire to hedge against both international and local inflationary exposures. E-commerce is striving to penetrate every corner of the globe, yet in regions with weak local banking and payment infrastructure, or lacking internet access, enthusiasm for traditional fintech innovation is dampened. The long and arguably tedious path of market efficiency is being propelled by cutting out centralized (and costly) intermediaries.

Blockchain as a Competitive Vehicle

All the aforementioned factors, and many more, come together to give blockchain a variety of competitive “vehicles” in fintech applications. Instead of relying on speculative future value or ideology, cryptocurrencies are now starting to incorporate sober and tangible realities into their value propositions in this emerging NoFi domain.

Transaction Costs

Centralized intermediaries have inherent profit margins, and the more such intermediaries stack up to transfer value from one place to another, the more profit is extracted from consumers and businesses. Blockchain can embed intermediaries into smart contracts, essentially doing more with fewer resources. Nowhere is the triumph of cryptocurrencies more evident than in reducing the transaction costs of international payments. Sending payments between two countries using the international wire system might cost nearly $100, while sending via USDC could cost less than a dollar. As gas fees and scalability increasingly become non-issues, the clear advantage of cryptocurrency payment systems in terms of transaction costs will permeate every possible consumer and business service. By leveraging blockchain for this purpose, every bit of profit that can be reclaimed this way will be. Autonomous DeFi protocols might carve out more “profit space” from finance, and NoFi applications can pass these profits back to consumers through better financial products.

Composability

Composability, a notch above simple interoperability, refers to how different parts in an ecosystem interconnect to create higher-order and more complex value. At a basic level, NoFi products based on EVM wallets instantly gain capabilities like paying with any other on-chain EVM wallet, interacting with DeFi protocols, reading identity NFTs from other apps, and crafting EVM app logic that uses the wallet. While a somewhat abstract quality, this unique composability of cryptocurrencies, intertwined with general interoperability and network effects, allows for the combination of services to achieve greater end-customer value. When paired with the next trait – permissionlessness – NoFi builders immediately access a massive sandbox when enabling their users to connect to the blockchain, facilitating transactions, lending, borrowing, payments, or anything built atop or in conjunction with them.

Permissionlessness

Integrating with other complementary providers or value-added services can be a cumbersome, costly, and time-consuming process when building fintech apps. Integration with crypto protocols is a stark contrast, as even though there may still be some user experience hitches with some of these protocols, the fact remains that anyone globally can add a basic “savings” functionality to their app as soon as it has a wallet and they plug into Compound or Aave. This permissionless integration leads to faster innovation cycles and a broader set of potential building blocks to craft compelling financial products and experiences.

Reduced Business Footprint and Liability Scope

One intriguing aspect of non-custodial finance that makes it appealing to fintech players is the distinct division of responsibilities that the non-custodial nature itself creates among users, developers, and other services. Along with the aforementioned permissionlessness, being non-custodial not only reduces the initial friction of integrating things like DEX trades into your app but also (in many jurisdictions) legally and regulatorily empowers you to do so, compared to integrating traditional stock trades. The same holds true for activities like lending, typically reserved for conventional banks, but accessible via DeFi protocols to anyone with a wallet, including your clients. NoFi apps can offer a suite of financial services, BD licenses, MTL licenses, even bank licenses, if you consider what can be moved on-chain (and your specific jurisdiction) and via regulated third-party providers, like regulated on/off ramps. There are even experiments regarding more decentralized wealth management on-chain in an advisory capacity (though, once again, this isn’t legal advice). This disrupts how fintech app development traditionally operates, as it implies a broader range of potential participants in the financial services domain. By minimizing their off-chain business footprint and earning via transactional interfaces, NoFi apps can effectively tap markets they couldn’t in a non-crypto setup.

User Experience (UX)

Is User Experience (UX) a potential selling point for crypto financial services? Wasn’t it UX that supposedly held us back from mass adoption? While not wishing to undermine the ongoing efforts to improve crypto UX, over time, we can actually anticipate crypto tech to have significant advantages over non-crypto tech in UX. Take logins and payments as examples. To fully realize this, a certain volume of crypto-enabled apps and wallet-holding users is needed. Yet, the ability for individuals to simply connect to a wallet and pay, without inputting any additional details because they control their private keys, will, over time, offer a superior experience to web2. Instantaneous crypto payments are, in essence, potentially fewer clicks than their swiftest web2 counterparts, like the cumbersome wire screens encountered when making international bank transfers. At the moment, the UX stands both for and against crypto tech, but that’s changing rapidly (for reasons mentioned above), paving the way for an essentially inverted sovereign user experience. The convenience implied by the wallet-centric UX will draw users in pure usability terms.

What’s Next?

Decentralized finance without custody (NoFi) is entering an optimal environment. Over the next few years, I anticipate that the number of participants vying for this opportunity will grow by an order of magnitude. This sector will not only become highly competitive but will also merge with the existing dynamics of fintech and the new banking industry, culminating in a dynamic unity. While it’s challenging to predict the victors, certain future directions warrant attention.

Social and Social Finance

Running parallel to most of these NoFi developments is a burgeoning decentralized social network ecosystem, much of which revolves around cryptocurrency. Protocols like Lens, Farcaster, and BlueSky are paving the way for new design spaces in social apps. As the design of such social networks explodes, business model innovations by creators are likely to merge with the emerging NoFi meta-sector. Just last week, a fascinating experiment with social tokens in Friend.tech was spotted deep within the crypto Twitter sphere. While still in its nascent stage, as more innovations occur in the so-called “Decentralized Social (De-So)” domain, both areas will influence each other. Perhaps the most impactful scenario to consider is what would happen if platforms like Twitter integrated cryptocurrency payments. Presently, on-chain experiments with community finance, microloans, social insurance, and basic income plans are underway, and as they become technically straightforward, we should anticipate developments in multi-user finance that aim to address real-world issues.

B2C Messaging and Conversational Blockchain Commerce

Messaging protocols like XMTP are finally gaining traction in consumer wallets, adopted not just in consumer wallets like Coinbase Wallet but also by B2B experience stack providers like Dynamic.xyz. This suggests a slew of potent business use cases that might involve conversations between consumers and dApps or even merchants. Conversational support, sales, and marketing will enter wallet-based commerce, adding another layer of considerations for NoFi apps. Will they become B2C platforms themselves (as Decaf does with its consumer wallet and merchant crypto PoS solutions), or will they try to be generic clients for blockchain commerce, allowing transactional messaging on behalf of user-permitted apps? This will herald a new era of trusted business communications, especially as spam becomes more effective and menacing, with AI inundating our digital channels.

Experience Stack Providers Focusing More on NoFi

I project that wallet experience stack providers I’ve mentioned here, and in other articles, will increasingly focus on NoFi as a niche. Beyond gaming, NFTs, and traditional DeFi, these consumer-focused financial apps epitomize the middleware product proposition, offering web2-like experiences on the web3 track. With over 40 well-funded companies and projects in this space, their attention will usher in superior NoFi development solutions and the emergence of more killer apps.

Momentum Finally Emerging in Developed Markets

Early NoFi advancements were largely concentrated in emerging markets or pertained to individuals associated with them. Intuitively, this makes sense, as these areas often suffer from underserved markets, while affluent nations tend to overserve their consumers. However, with the aforementioned forces at play, we’ll witness more innovations in markets where consumers might be overserved in apparent ways but underserved in more subtle dimensions. This will likely manifest as innovations trickling from developing nations back to more developed ones.

NoFi Super Apps

Lastly, even though this piece presupposes various NoFi applications, it’s entirely plausible for a few dominant players to aggregate these “unfinished financial features” into a NoFi super app, akin to WeChat or GoTo. These apps could perform all the tasks mentioned above and possibly link the entire decentralized web via a dApp browser (or more likely, a “mini-app” framework). Some generic web3 wallets indeed hope for this outcome, with many fundraising with this theme in mind. While I believe one of the current batch of integrated web3 wallets may attain super app scale and scope, it’s more probable that established tech giants, smartphone manufacturers, or NoFi apps that start with a more consumer-centric and limited preliminary scope will achieve this.

Conclusion

Although I eagerly await use cases stemming directly from on-chain culture and the utterly avant-garde, a fully decentralized web and metaverse will take time. NoFi, as it stands, serves as the bridge from the crypto domain to the early majority of users.

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