Build for on-chain natives or mask crypto entirely
If you’re a startup building a crypto consumer application, you should either (a) build for on-chain natives or (b) mask crypto entirely.
Build for on-chain natives
There are only ~400k active on-chain users right now, and fewer when you consider how many of them are using multiple wallets. What these users care about, interact with, and want to do, should far outweigh the “middling” interest of crypto curious folks. Startups need to solve hair-on-fire problems and on-chain natives are the only ones who care and use crypto with enough frequency right now to give you the signal necessary that you’re on the right path.
If you solve a hair-on-fire problem for current on-chain users, you might still fail because this group doesn’t grow or you can’t charge them enough. But if you don’t build for them, you definitely will fail because they’re the only ones willing to try new things right now.
And if you serve the needs of on-chain natives well, you can take the bet they’ll directly or indirectly bring others in via word of mouth. A non or barely active crypto user won’t care about your marketing (in fact they’ll think it's a scam), but he or she will if their degen friend talks about it all the time and pulls them in. And you’ll be ready and waiting to serve this newly minted on-chain native.
What does this mean tactically? It’s okay to have onboarding specific to natives and assume your end customer knows some of the relevant jargon. Have Metamask as the default. Lean into the degeneracy at times. Just don’t go overboard and forget that (your target) on-chain native audience still needs to understand it too - I’ve seen gigabrain protocols that no one can explain or are too complicated to use. The Dimwit barbell meme still applies to this native audience.
Mask crypto completely
There are a lot of cases where crypto is just a backend tool to solve your customer’s problems. In this case, you should just mask 100% of crypto until absolutely necessary. And if crypto doesn’t solve your customer’s problem, don’t hesitate to remove it entirely. Don’t fall in the trap of SISP’ing (solution in search of a problem).
Reddit NFTs did this well - their customers just wanted avatars and then later these users discovered they were actually NFTs and could be supercharged by crypto liquidity. Reddit built a wallet-less, fiat purchase experience with real utility and didn’t mention anything about NFTs or crypto. The users then independently “graduated” and went through onerous hoops to onboard themselves to NFT marketplaces when they were ready.
Role of Incumbents
The advice above is only if you’re a startup. It’s trickier when you’re a crypto “incumbent” with existing PMF and a sustainable business model. The pressure changes to be TAM expanding while protecting your core, instead of developing a wedge and finding PMF.
Even in this case I would caution trying to force a market to happen - historically this occurs when smaller and nimbler startups try crazy things. Instead a better approach would be to provide a platform to highlight interesting projects (ex. drops platform for NFTs, dapp stores, new tokens, etc) and give broader distribution to these new projects to quickly see what resonates with mainstream audiences.