State of the Wallets - The Daily Gwei #316
Building the right wallets for the modern Ethereum user.
There are many flavors of crypto wallets available today from browser extensions to desktop wallets to hardware wallets and we’ve all used at least 1 type over the years. Though I think we’re now at a tipping point for crypto wallets where competition is going to heat up massively and I believe that over the next 6-12 months the wallet landscape is going to look completely different.
Obviously MetaMask has been the dominant Ethereum wallet for a very long time now - pretty much everyone has used it - but sadly it’s not built with the requirements that the modern Ethereum user needs. It doesn’t have in-built DeFi integrations, it doesn’t display your NFTs, it’s clunky and requires manual addition of tokens and it’s missing a host of other features. Though I don’t want to diminish MetaMask’s work - they’ve certainly onboarded more users to Ethereum than any other wallet - but they now have legitimate competition and need to actually innovate if they want to stay relevant.
Some of you may be wondering why it took so long for some actual competition to come to the browser extension wallet space and I think the answer is quite clear - building and growing a wallet is hard work and there was no clear way to monetize - until now. This is because MetaMask has shown the way as they are currently generating ~$10 million a month in revenue from just their swap feature alone (they take a fee on every swap). This is without a token and without any marketing - it’s just purely monetizing their existing user-base (which is quite large at 5 million monthly active users). Though if we project out how large we expect the crypto user-base to grow to (billions of users), you can see how building a crypto wallet can be a very lucrative venture.
Mobile wallets are also starting to come into their own and now offer a really smooth and modern experience. I’ve been toying around properly with a few lately such as Rainbow, Dharma and Argent and I must say that they already feel much better to use than any other wallet. They are snappy, have most of the features I want, and most important they are secure. On top of this, you aren’t limited to just using them on your mobile device - all of them support WalletConnect which means you can use your mobile wallet to sign transactions said from web3 apps on your desktop.
Lastly, I think that smart contract wallets (like Argent, Gnosis Safe and Loopring) that allow for features such as social recovery and whitelisting of addresses will begin to see much more adoption as the user migration to layer 2 continues. This is because these wallets have typically been too expensive for most users to create on layer 1 ($100’s of dollars in gas fees) so users have just given up and gone back to their usual wallet rather than trying something new. It’s also entirely possible that long-term all Ethereum-based wallets will be smart contract wallets.
Increased competition in the wallet space can only be a good thing because we need to have wallets that keep up with the fast-paced environment that is crypto. As we onboard more users into this ecosystem, they are going to demand feature-rich experiences from the interfaces that they use to interact with Ethereum - and the project that delivers this will be worth billions.
Have a great day everyone,
Anthony Sassano
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All information presented above is for educational purposes only and should not be taken as investment advice.