That question is becoming more pressing across the industry as crypto moves closer to mainstream finance. Asset managers have tokenized funds, exchanges are expanding into lending, payments and other financial services and blockchain networks are courting institutions. The challenge is no longer just proving these products can be built, but figuring out what will make consumers and institutions choose to use them
For companies like Coinbase COIN$179.41·Market Closed, that has meant thinking less about the technology itself and more about what customers are trying to do with their money
“The crypto industry oftentimes in the past was very technology oriented,” said Ben Shen, Coinbase's head of financial services and loyalty products. Products could be heavy on jargon or expose users to the technology running underneath them
That matters less as crypto starts to overlap with more traditional financial services, he said. Customers want to grow their money, hold it, send it, spend it or borrow against it. Whether a blockchain sits underneath the product isn't necessarily the point
Instead, Coinbase is looking for what Shen calls “magic moments” — instances when a customer can immediately see why a product is useful. But getting someone to try a product once is only part of it
Coinbase thinks about adoption as a cycle: money comes onto the platform, customers have a reason to hold it there and then they have ways to use it, he said. That could mean receiving a paycheck or making a deposit, earning rewards while holding assets and eventually spending, trading or making payments with them
“If you create the right magic moments across these three parts of the flywheel, then that'll get people to increasingly bring more and more money onto the platform,” Shen said
Rewards are one way to get that cycle started. Some are part of the product itself, other incentives are temporary and designed to persuade someone to move money from a product they already use. Those can help “break inertia,” Shen said
But Coinbase doesn't want someone to move money onto the platform for a promotion and pull it out as soon as that promotion ends. The bet is that once the money is there, customers will find other things to do with it
Someone might initially come for a yield incentive, for example, then use the same assets to trade or spend, he said
Kevin O'Leary, the Shark Tank investor and chairman of O'Leary Ventures, sees a similar problem playing out among the blockchains themselves
Speaking at the Avalanche Summit in New York last month, O'Leary said networks looking for institutional business need to show that companies are actually using them
“The challenge you have is ‘show me, show me adoption,’” O'Leary said
“The merits of that chain are well understood for those technologists and S&P 500 companies that understand why that's important in building capacity and not being concerned about transaction volume,” he said. “I get it, but what I want to see, and everybody else, and which is why they call it work, is you got to get some deals, and you got to get adoption, not just tests.”
One big customer can also make landing the next one easier. “The most powerful marketing tool of technology is word of mouth between competitors,” O'Leary said
There is a consumer version of that, too. Financial services depend heavily on trust, Shen said. People are handing over their money, sometimes their paycheck and savings. Hearing that someone else has used a service and found it reliable matters
“There's like a social proof thing for financial services that is important,” he said
For some firms, getting adoption also means putting their products in places where customers already are
WisdomTree, the $150 billion asset manager, has built a suite of tokenized funds, including WTGXX, a tokenized money market fund with about $1.2 billion in assets, according to Will Peck, head of WisdomTree Onchain
Now it wants to get those funds onto more platforms
“You don’t need to just come to WisdomTree,” Peck said in an interview. “There’s going to be other access points that you can go through, where you’re effectively coming to WisdomTree, but through a different front end.”
WisdomTree recently announced a collaboration with MoonPay that will let eligible U.S. retail customers access WTGXX through MoonPay's platform. Customers who have already provided their information to MoonPay can buy the fund using stablecoins without separately onboarding with WisdomTree, Peck said. MoonPay isn't meant to be the only place WisdomTree's tokenized funds show up
Coinbase is also thinking about how its products can reach customers outside its own platform
Shen said he doesn't see that replacing the need for companies to build their own apps and websites. Most will probably do both: maintain a first-party platform while looking for other ways to distribute their products
AI agents could become another one of those routes, he said. Coinbase is working on ways for its services to connect with third-party AI tools while still building products on its own platform. The technology and products aren't finished being built. But increasingly, that's not enough
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