As the crypto industry looks to expand the ecosystem beyond its current set of users, its focus is returning to an arguably neglected corner of the industry — wallets.
Indeed, the 10,000-person-plus ETHDenver event last week was speckled with presentations about onboarding users with friction-minimized wallet experiences.
Big announcements were made at the event, too — DeFi powerhouse Uniswap revealed its own mobile wallet on Mar. 3. The subsector even attracted over 1000 attendees to a one-day event preceding ETHDenver, called WalletCon.
The wallet-centric event drew participation from no less than 80 projects, Pedro Gomes, CEO and co-founder of WalletConnect, a project which connects wallets to blockchain applications, told The Defiant.
Evin McMullen, a speaker at both WalletCon and ETHDenver who is the CEO and founder of a wallet-adjacent solution called Disco, thinks it’s a pivotal moment for the technologies which serve as a gateway to crypto for so many.
“The wallet is the browser,” she told The Defiant. If the metaphor holds, it means the battle among wallets will be one of the hardest fought in crypto, just as the fight for market share among web browsers was one of the most pivotal of the commercial internet.
With Disco, McMullen is developing what she calls a “data backpack,” a concept which extends the idea of a wallet to something closer to a digital identity which has numerous off-chain credentials. These credentials could include a person’s age, ownership of a Twitter profile, or membership in a certain group.
“There’s a lot of competition,” McMullen acknowledged.
The fight to optimize the crypto user’s experience isn’t a bad thing. “We hope in the future that there is a dead heat for competition over who can offer the most delightful, valuable and accessible experience to human users, rather than hoarding their data in an attempt to make the switching cost so high that you can prevent that kind of movement,” she said.
The push to develop better wallets is in line with a broader theme in crypto — it’s time to get serious and build sustainable businesses.
People deep in the space may not give up their quirky odes to Unicorns and ad-hoc musical performances, but there is a sense of urgency that the next iteration of crypto must attract consumers who may not have the time nor interest to understand public key cryptography or how blockchains achieve security.
McMullen thinks the next stage of wallet development won’t focus only on a better user experience, but also on an expanded one. “We have hit the ceiling of fun and utility that we can coordinate around public financial assets alone,” she said. “We are running out of stuff that we can do when we only know how much money our counterparts have.”
WalletConnect’s Gomes shares the sentiment. “The NFT bull market proved that there was a market for crypto that lay beyond financial applications,” he said. “This new engine of demand allowed the market to swell and also gave wallet developers a new use case to build for.”
Wallets are also receiving a major tailwind with the deployment of a new token standard known as ERC-4337, which was announced at WalletCon. The standard will open up new use cases through what’s being called “account abstraction.”
This shift in design capabilities means that wallets can be externally controlled by smart contract code, rather than their owners needing to sign off on every transaction.
Indeed, ERC-4337 will open the door for creativity in wallet design, Vitalik Buterin, Ethereum’s co-founder, wrote in September 2021.
One of the most anticipated features enabled by account abstraction is the newfound ability to create a non-custodial wallet without needing to keep track of private keys.
Gomes considers the development to be a key milestone. “We’re now finally moving on from forcing users to manage seed phrases, an achievement that will unlock even greater momentum in the wallet ecosystem,” he said.
The new design paradigm will also make it easier to recover the private keys of a wallet through a process called “social recovery.”
Other capabilities enabled by account abstraction include developers being able to pay gas fees on behalf of users, or for users to be able to pay for gas fees in tokens other than a blockchain’s native token (like ETH on Ethereum).
ERC-4337 also enables “pull payments,” which would allow people to pre-approve transactions to certain parties. This would make actions like automating bill payments, currently difficult in crypto, far easier.
Looking forward, McMullen thinks wallets will become less generalized toward financial transactions. “2023 will be the year of opinionated onboarding,” she said. To the Disco CEO, this means that wallets will start making design choices that cater to certain communities or verticals.
McMullen expanded, saying that right now, solutions like MetaMask successfully facilitate current crypto activities, which are mostly financial transactions.
The backpack model, as well as ERC-4337, however, open up a wider range of potential wallet experiences. This could mean wallets built specifically for e-commerce, trading NFTs, or managing a decentralized autonomous organization (DAO).
As part of what is perhaps a burgeoning wallet renaissance, McMullen thinks designers will have an outsized influence in crypto’s next stage.
“We believe that designers will inherit the metaverse,” she said.