Blockchain Onboarding Complexity

I recall my blockchain onboarding and how difficult it was for me to get acquainted with all the terminology and new stuff that I needed to understand before becoming a part of the blockchain world I so wanted to be. Probably the biggest moat was when I got introduced to the recovery phrases - I didn't quite understand why they were needed. Coming from a web2 world, the mnemonic phrases felt strange, but I understood the importance of them. Forget them, or if someone gets a hold of them - that's it, you're out. In any case, it added that bit of uncertainty and anxiety to me, and at first, I was reluctant to step into blockchain because of them.

It doesn't seem like I am alone in this, and there are other people who got confused, too. A 2025 study found that fewer than half of crypto users (43.4%) could even recognize a seed phrase, and a majority conflate it with a resettable password - evidence that seed-phrase self-custody is actually a conceptual wall, not just a UX nuisance for DeFi.

The embedded wallets solve this user experience problem. Their functionality allows new users to seamlessly sign up via email, social media, Google, or passkey and to get a wallet address instantly. This has, in my opinion, become a critical feature in wallets, DEXes, and the entire DeFi.

Let's take DEXes, for instance. PancakeSwap has this feature, Velora (ex ParaSwap) has it, too, Uniswap added it a couple of weeks ago, and there are quite a few other DEXes that have had this enabled for a while now.

The wallet setup complexity is viewed as the number 1 friction point for new users onboarding to DeFi.

I believe that new blockchain users often choose to go with CEXes first because of the wallet friction that still exists with many DEXes. Coinbase recognized this, too, and they added embedded wallets to their DEX trading in 2025.

These thoughts have been in my mind lately, and I'm glad I shared them this way. And if you're looking to remove new-user onboarding friction and increase their engagement in your application, feel free to get in touch. Cheers 🙇

P.S. This was originally written as an article on X, but I wanted to also put it on the official Steelbridge GTM website as I'm currently the Head of GTM at Openfort.io.