Psychology of UX in Decentralized Exchanges / Madalina Raicu

Transcript

foreign hello everyone my name is madelina and today I will speak about psychology of user experience in the centralized exchanges this might be interesting for people who are concerned with greater user adoption and user retention in defy but this is going to be a different take we won't be talking about accessibility or metrics but more about usability and cognitive biases applied in decentralized exchanges I would like to introduce myself my background is in computer science but I specialize in human computer interaction I have worked as a software engineer for trading and portfolio management applications for more than four years but in traditional finance and then I

have shifted towards a more decentralized scope since last year I started contributing to a decentralized application trading console all the code is open source this dap runs on the Vega blockchain which is a blockchain built specifically for derivatives which allows for a permissionless market creation okay now I would like to start with a question that in my experience has driven everything that I have worked on so far which is what do people want from a trading UI and based on my own experience implementing user feedback the answer would be everything a person trading just wants a UI that is intuitive user friendly and

efficient they just need speed and responsiveness to make quick decisions take advantage of Market opportunities but also it needs to slow them down to safely complete all the confirmation steps they need all the data at their fingertips and they need it now but they would not be interested in everything so it shouldn't overload them with too much information for more complex exchanges it needs to be customizable if a user feels efficient with their own layouts they should be able to create them but there shouldn't be an empty canvas how do they know how to use the exchange if it does not have an appealing layout by default and last but not least they need to trust the process it needs to be secure

but what if something goes wrong what if they make a mistake where can they get some help and support good but that is trading in general regardless if the exchange is centralized or not today we will be talking about decentralized exchanges we need to make sure this is highlighting the key points for a broader audience so today we refer to dexes as exchanges that operate on a blockchain and here are some key features of the decentralized ones they operate on a decentralized architecture where users have full control over their private Keys which are used to access and manage their funds this means there are non-custodial meaning that funds are not held by The Exchange but the exchange facilitates trustless transactions which are recorded on and verified on

the blockchain which promotes higher transparency and accountability in the trading process they are typically open and permissionless meaning that there is no need for kyc in order to participate in the trading process which allows for greater inclusivity and accessibility in trading and also privacy as users do not need to disclose personal information during the trading process however everything is transparent and last but not least security dexes offer a higher level of they prioritize security through features such as smart contract audits multi-signature wallets however they are not immune to security risks so users still need to exercise

caution and follow good security practices cool now having all of these in mind how do we design for this um before continuing I need to make sure I'm making a very clear disclaimer this presentation needs to be visual to make sense so what I plan to do is a ux case study on multiple decentralized exchanges that are out there some use four swaps some used for derivatives but there is no intention to do any type of critic or advertising now let's dive into the psychology of design and the cognitive biases and principles that may affect and exchange user experience a very simple way for me to start talking about this would be to bring up

a classic which is the cognitive load Theory this is the theory which states that people have a limited amount of mental resources in order to available for processing the information so a platform can be designed in a way that minimizes distractions or reduces complex features however things are never that simple this actually contradicts Tesla's law which reminds us that if you simplify too much you may end up just transferring some complexity to the user now let's get a little bit technical because we are trying to design something that is a bit specific let's talk about some key factors that can impact the trading experience and the cost of transaction processing indexes so the first one is liquidity

users may experience wider bdasks spreads and slippage when trading if there is lower liquidity and that is why Dex is Implement different liquidity mechanisms which allow users to provide liquidity to the platform and earn some fees in exchange meaning that it impacts the fee structure on dexes same as the order books or any other types of models such as MMS which have a direct impact on the pricing and the execution of Trades you may say that the access offer a higher level of security Now that users are in full control over their private Keys assets are not held in a centralized location but they are now responsible for managing their own security now keeping those four important factors

in mind let's try to simplify and break down the user journey in a decentralized Exchange because any user interacting with a decks will filter and gather the information to connect their wallet and start trading and then seek the meaning of what's in front of them so that they can start trading safely or provide liquidity and then they need to act within a given time in order to place the most profitable orders to assess if they can minimize slippage and generally follow their own trading strategy and they need to store bits of this interaction in their memory related to their funds and realize profit and loss so to improve their user experience we need to understand the biases and heuristics affecting these four decision

cycle steps now let's Dive In we're going to start with some laws that are repeatedly applied in popular decentralized exchanges for the aforementioned four categories category number one information users filter out a lot of the information that they receive even when it could be important I will start with the most popular law which is very simple to understand and practice if the number of choices increases then the time to make a decision increases as well and the very nice example of this law are lists to apply this law to dexes designer simplified the UI in order to minimize the number of clicks required to select a token to swap and here you have some popular examples

of decentralized exchanges methods to select a token you do have a scrollable model to find and select your token but designers made it even easier by narrowing down that list with a search filter these uis from this slide they do look very similar right why is that well that is because users will transfer expectations they have built around one familiar product to another one that appears similar and that is called the Jacob's law another example for the same law is actually this GIF where we have examples of more than nine popular swapping indexes and you can see how they are following very similar patterns for their uis

what happens is that designers leverage existing mental models so that users can focus on their tasks rather than on learning new processes and this is very common and you can see this being applied in General on any sort of uis so apart from limiting the user's needs to learn new models designers are also looking at breaking down complex information and they are disclosing it sequentially at the moment the users need it most ah and this leads us to a design pattern that sequences information and actions across several views which is called Progressive disclosure the purpose is to lower the chances that users will feel overwhelmed by what they encounter so by disclosing information

progressively interaction designers are trying to reveal only the essentials and help users to manage the complexity of what they see and here you have this example where user finds out information regarding the price impact and then about the fees and then about the route used for optimization only by interacting with the UI it is important to know that designers need to choose very well what to disclose first and in what order why because people rely too heavily on the first piece of information they receive when they are making decisions and this is called the anchoring bias indexes a platform can be designed in a way that discloses everything in a perfect sequence for the trading process however one thing that actually gives

the user the motivation to look for more would be the confirmation bias as people are more likely to believe information that confirms their existing beliefs or expectations and if they don't find it they might look for it in Texas this law can be applied by designing the platform in such a way that reinforces that enables users to double check or that reinforces Traders confidence than trades you may say by providing clear and accurate Market data or offering risk management tools and this actually leads us to another concept which is helping users find the meaning users need to seek the meaning of what's in front of them to analyze Market data

so that they can start trading safely manage risk and if they want to provide liquidity and I'll start talking about processing the information when people are presented with complex shapes or a set of ambiguous elements their brains choose to interpret them in the easiest manner possible and this law can be applied by designing up the platform in a way that presents information and data in a very clear and concise manner making it easier for users to understand and process this information here on this slide we have an example of the creation of a new balancer liquidity pool the UI needs to help the user's cognitive load and working memory because the human brain can only hold a limited amount of information at once

how much well it could be limited it could be around seven plus minus two chunks of information and this is an older UI of uniswap but it exemplifies very well this concept where it was breaking down complex information such as liquidity pool details into smaller more manageable chunks that are easier for users to understand and process and of course the user needs to pay attention to this type of details in order to manage the risk of impermanent loss now we will move to another concept which also folds in the meaning category and it is also related to managing the risk of your own portfolio which is called the scarcity principle in Texas this law is applied by creating a sense of urgency or scarcity around

certain traits or certain assets for example in Vegas trading console the UI highlights the fact that you are running out of collateral coloring the amount in red or orange if you may soon not be able to cover the margin on positions now having that knowledge you can act in time in order to manage effectively your collateral you can either adjust your positions or deposit more and this actually leads me to acting in time users need to act within a given time in order to trade effectively or and to avoid losses there is this bias which states that people are more strongly motivated by the fear of loss than the prospect of gain and this is called loss aversion

interaction designers are looking at implementing different tools for risk management and loss prevention such as by providing clear warnings when Traders are at risk of making a loss or allowing them to adjust parameters for their orders and on this slide I have chosen a very simple swap example where a user could adjust the slippage and get a warning that the transaction can be front run what is interesting is that users tend to remember their interaction with the UI and store it in their memory and of course this leads me to memory users store bits of the interaction in their memory usually they would remember the interaction related to the realized profit and loss or related to managing their funds

there is this effect commonly applied in multiple uis which is called the zagarnik effect people remember unfinished or interrupted tasks better than completed tasks and to apply these log to dexes designers can use visual cues such as progress bars or status indicators in order to keep the users engaged until the transaction is complete here you have an example of submitting an order on the Vega blockchain and the UI tries to keep the user engaged giving them also cues that they need to accept that transaction and approve that transaction in their wallet staying on the same effect here I have another example of awaiting confirmation on making deposits

while bridging with ethereum with this law right here I'm trying to finish this section where I'm presenting these laws that I have seen being repeatedly applied indexes and I would like to mention some laws that I would have my eyes on in the future however good these laws be applied in a correct analytical way so there are going to be three the first one self-determination Theory people are more motivated and engaged when they felt feel a sense of community and relatedness a platform could create a sense of community and connection through social features or other interactive elements and this is a very interesting one as it influences user

retention on any platform so for a user the emotional cost of a switch would be higher if the user would already feel part of a community another one would be the expectancy Theory people are more motivated by the expectation of a desired outcome and the platform could actually emphasize the potential benefits of trading such as highlighting successful trades or providing information on past performance another one would be the pick and roll a platform could be designed in a way that actually provides a very strong positive Peak and end to the overall trading experience look these are some laws that could lead to increased user retention but to what costs could they be applied in a correct and ethical way could we

harness these rules for good uh now I would like to leave that open question and come back to some features that would make you realize you are on a decentralized exchange and I'm gonna show some features and this is how we've been trying to do it on the Vega console Dev but that could be applied to other decentralized exchanges as well first would be managing multiple Keys you may be able to trade on many keys manage multiple accounts and only you would be managing all of them so don't forget all the keys are yours and all the funds are just yours so it is safe only if you keep them safe secondly trying to make sure you are using a transparent decentralized

Exchange viewing as any public key remember as a DEX user you are on a blockchain and everything is transparent you just need to know someone's public key and all the information is out there for you to check and since everything is visible on the Chain then the UI could actually help you visualize that too to conclude there are lots of Concepts out there that we could actually cover in this talk but I would like to highlight the impact of the concepts that are described today and what they represent at the end of the day we don't want to encourage inexperienced users to try indexes or do any sort of trading that should never be the goal when we say greater adoption in D5 what we want to do with a better user experience and

empathy is to empower users to achieve their existing goals make their life easier by giving them an accessible way to use the valuable features of decentralization so we want to find both usability and usefulness in defy and we can improve usability by understanding the biases and heuristics that influence this decision cycle steps which are allowing users to fill their information seek the meaning act in time and remember bits of the interaction and I believe that by applying these laws in a correct and ethical way with empathy we can lead to increased user adoption retention and satisfaction in D5 thank you very much for listening to me

there is a QR with the slides and with the sources attached if you would like to dive deep into this Concepts there is also a link to the open source front end of the Vega dabs as well feel free to contact me anytime ask me any questions and I'll be around for the rest of the conference more than happy to discuss anything related to dexism psychology of ux wonderful thank you very much [Music] foreign