Reputation now matters more than price
When performing due diligence, the two most important factors to consumers are a company’s reputation and regulatory standards, as opposed to price, which is typically a top decision-making factor. Factors ...
When performing due diligence, the two most important factors to consumers are a company’s reputation and regulatory standards, as opposed to price, which is typically a top decision-making factor.
Factors that are traditionally imperative for consumers — such as fees and simplicity of use — are now secondary to trust factors. Customers are willing to pay a premium for peace of mind, a trend we think of as a growing ‘trust premium’.
![](https://zerohash.com/wp-content/uploads/2023/11/Reputation-Chart-1-1024x623.png)
Interestingly, the time that a company has operated is highly important – nearly as important as fees. Consumers recognize that trust takes time to build, so incumbents have a trust advantage.
Overall, we interpret this trend as a flight to quality: while consumers now exert greater scrutiny over their service providers, most are long-term believers who seek to replace dubious providers with trustworthy ones.
Somewhat surprisingly, users report that a company’s custody protocols are relatively less important compared to other decision-making factors. This is surprising because many consumers previously lost their crypto because of improper asset custody, which enabled untoward practices like re-hypothecation.
On one hand, it seems that consumers may be using reputation and regulation as a proxy indicator for custody. On the other, it’s possible that the term ‘custody’ is not commonly used or well understood by mainstream consumers. While users did not list custody as a key decision-making factor, elsewhere in the survey they expressed that the events of 2022 have made them more conscious of how their assets are stored: 53% stated that they want to know exactly how assets are stored and that their assets can’t be used to lend, and 47% want to be certain the company has no conflicts of interest.
![](https://zerohash.com/wp-content/uploads/2023/11/Reputation-Pie-1A.jpg)
stated that they want to know exactly how assets are stored and that their assets can’t be used to lend
![](https://zerohash.com/wp-content/uploads/2023/11/Reputation-Pie-2A.jpg)
want to be certain the company has no conflicts of interest
![](https://zerohash.com/wp-content/uploads/2023/11/Reputation-Chart-2-1024x533.png)
These data points indicate that custody is still a factor for customers, and the primacy of other factors in decision-making does not imply that custody should be any less important to providers. It’s now incumbent on crypto companies to make custody protocols robust, secure, and transparent.