Trust, as said, is a foundation of relationships, and it is true when it comes to customer or client relations. Whether you are in conventional businesses or fancy fields like Web3 and Dapps, user trust is the key to a successful and growing business. The user trust earns a name for the business, making it more recognizable and popular, along with that helps in more outreach and userbase build-up. Regarding Web3, the user’s trust is one of the most crucial and core parts of the protocol you are building.
Let’s talk about the difference between user trust building in conventional business models and the web3 business models. We notice that the conventional business models build trust through established practices such as brand reputation, customer reviews and legal contracts. In these, the trust is built through consistent efforts, product quality, reliable customer service etc. But regarding Web3, trust is built through code, transparency, security and open governance. Thus Transparency and security become major contributors to business growth n Web3. Let’s explore why.
Security and Transparency — two crucial pillars for trust
Suppose you are interacting with a protocol which deals with crypto exchange and promises to be a decentralised platform. You book an order to find out that your funds are stolen. The worst part in this case scenario will be that you do not know whom to go to for this fraud as the fraudster may be across borders. All you can do is spread awareness about this.
This is just one of the examples of how people get scammed in Web3. Once people are scammed, they are less likely to engage in other such transactions and protocol usage. Now, before investing or using any protocol, there is a certain demand for security and transparency by the users. Now suppose the user looked for valid proof such as smart contracts of the protocol, design and architecture of the protocol, working mechanism of the protocol, and security parameters to protect against hackers. All these things come under transparency and security, and with access to these, the users can make a better-informed decision about the protocol and keep themselves safe thus, it has become a necessity for the protocols to provide security and transparency to the users in order to build a user space at all.
Security and building trust
No one likes to be hacked, especially when your business is user-centric. There are many protocols in Web3 which face very high resistance when trying to create a name for themselves after being hacked once. The users simply hesitate to trust them. There have been instances where security breaches resulted in such a huge downfall of protocols that they collapsed.
And why won’t the user trust a protocol which is more secure and which can provide him features that are so very crucial for judging the protocol and evaluating if it is safe for them to use:-
- Protection of Digital Assets:- Users tend to move towards more secure protocols which can guarantee the user’s safety in terms of Digital asset management and transfer of digital assets and provide an easy-to-use platform.
- Prevention of Malicious Activities:- There have been many such instances where protocols face huge losses due to Malicious activities like hacks, scams, frauds and other cyber attacks. A protocol being hacked creates a really bad image in the user market, and the users hesitate to get involved with a protocol that has been hacked before.
- Protection of User Privacy:- Some protocols often require users to share personal data, which is used for some protocol features. It can be wallet addresses, transaction details, etc. Protecting this data should be the top priority of the protocols.
- Robustness and Resilience:- It is crucial to ensure that the protocol is robust and resilient, meaning it is resistant to failures, attacks, and disruptions. Continuous monitoring is necessary to ensure the robustness and resilience of the protocol and thus win the user’s trust.
Transparency and Trust Building
Transparent protocols create an environment of trust which is fundamental to establishing credibility and user confidence in the Web3 ecosystem. Transparency allows users to feel more in control and informed about the updates and changes and the methodologies of the protocols. Transparency empowers users to perform their own security analysis of the smart contracts, designs, implementations etc.
Users are attracted towards protocols which offer good transparency as those protocols provide Openness and trustworthiness, User Empowerment, Protection against misconduct, Verification and Audibility. Let’s discuss them one by one:-
- Openness and Trustworthiness:- When protocols are transparent about their operations, intentions and policies, users feel a sense of trustworthiness as crucial information is shared. This, in turn, creates an environment of openness, honesty and integrity which are key elements in building trust.
- User Empowerment:- When the users are well informed about the policies and the decisions and have insights into the protocol’s working, they feel empowered to make their own decisions concerning their funds, whether to invest or not, after performing their own analysis.
- Protection against misconduct:- Sometimes, the protocol developers, operators, or the other stakeholders may engage in misconduct which may eventually lead to the loss of users. If we keep our protocol transparent, we safeguard our protocol from any such misconduct as the actions become transparent and visible.
- Verification and Audibility:- When establishing trust, verification and audibility are crucial, and transparency powers the users with the verification facilities. Transparency allows users to validate the accuracy of the information and ensure compliance with the rules, policies and standards.
Conclusion
It takes a lot to make a protocol successful on Web3, but the base for a popular decentralised application is security and transparency. Without these crucial characteristics, the protocol cannot gather many users. When it comes to security, there are many important phases the protocol needs to go through to ensure the complete safety of its users. One such phase is Smart Contract Auditing.
Smart Contract Auditing is the basis on top of which today’s users entrust a protocol, the protocols audit report shows the credibility and security of the protocol, and it is extremely important to go for an audit to save yourself and your users from a security breach.
