The Gateway to the Web3 World: Development and Innovation of the New Generation Wallets

The emergence of Ethereum smart contracts has provided infinite possibilities for building a world computer, giving rise to the birth of a large number of emerging DApps. From transactions and lending to games and NFTs, the security of blockchain and the convenience of smart contracts have made on-chain development unprecedentedly simple, and various DApps can also achieve combinatorial innovation through smart contracts.

According to statistics, as of August 2022, the number of DApps on various public chains has exceeded 4,000 and continues to grow at a rate of dozens per month.

An address is the basic unit for users to interact with smart contracts. Unlike real-world addresses and exchanges, on-chain addresses can be completely anonymous, without the need for KYC, and users can create and operate multiple addresses. Having on-chain addresses is what truly means entering the new world of cryptocurrency. According to official Ethereum data, as of August 2022, the cumulative number of addresses has exceeded 200 million, with daily transaction volumes surpassing 1 million.

Blockchain and smart contracts enable users to truly manage their data and assets, which is one of the most important features of Web3, and the management tool is the Wallet. The Wallet can be said to be the gateway to the Web3 world, encompassing all on-chain asset and data-related operations, including the buying, holding, transferring of cryptocurrencies, as well as derivative operations like staking.

From the development history, wallets can be roughly divided into paper wallets/brain wallets, hardware wallets, software wallets, and other key custody solutions. For most users participating in DeFi, NFT trading, and gaming, software wallets are the most widely used solution. Taking the currently most popular software wallet as an example, after installation, users will receive a sequence of 12 or 24 ordered English words as a mnemonic phrase, which can correspond to the private keys of multiple addresses for account recovery and migration.

For new cryptocurrency users, the most important first lesson is to properly safeguard their mnemonic phrases. One of the costs of decentralization is that users must take responsibility for their own accounts and wallets, as there is no central authority to "recover passwords." Once the mnemonic phrase is controlled by someone else, the user’s wallet is essentially handed over. After familiarizing themselves with wallet security practices, users can enter the vast world of Web3. Among the many software wallets, what characteristics can define a "good" wallet? We can look for wallet features that best meet user needs based on the current trends and hotspots in the cryptocurrency world.

The Rise of Multi-Chain: From Dominance of One to Many Strong

The DeFi summer of 2020 attracted a large amount of capital into on-chain financial activities such as liquidity mining and arbitrage, and the rise of GameFi in 2021 further expanded the crypto user base. Ethereum sacrificed speed while ensuring decentralization and security, and the surge in computational demand also led to soaring transaction fees, making it difficult for small-cap users to bear the transaction costs. To reduce user costs and increase speed, several public chains have rapidly emerged, changing the dominance of Ethereum.

From Ethereum-based L2 solutions like Polygon, to exchange-led public chains like Solana, and various EVM-compatible options like Fantom and Avalanche. Although many innovative DApps were initially proposed based on Ethereum, EVM has made migration very easy. According to data, as of August 21, 2022, the top five in terms of seven-day active address count are BNB Chain, Ethereum, Polygon, Ronin, and Avalanche, with BNB Chain boasting 2.94 million active addresses thanks to its game-friendly nature.

In terms of Total Value Locked (TVL) in DeFi, Ethereum remains the absolute leader, accounting for more than half of the total TVL across the entire chain, but this proportion is gradually declining. A situation of one dominant player and multiple strong competitors has formed, and users hope to easily manage their multi-chain assets and achieve cross-chain operations.

Staking Becomes Mainstream: From POW to POS

The POW consensus mechanism of Bitcoin has always been questioned for its resource waste. To solve this problem, POS was innovatively proposed and quickly became mainstream among major new public chains. Ethereum is also set to complete its transition to POS in September 2022, namely ETH 2.0. Ordinary users can participate by staking a small amount of tokens on DPOS (Delegated POS) or SaaS (Staking-as-a-Service) platforms, without needing to stake a large amount of tokens to become validators.

Staking is becoming the most convenient way for ordinary users to enter new public chains. While users participate in staking to ensure the secure operation of the blockchain, they also receive staking rewards. Therefore, the security and experience of staking are also important factors for users to consider when choosing to enter a new POS public chain.

One-stop entry: Follow the rapid evolution of Web3

Although the combination of DeFi's Lego blocks is dazzling, DeFi is just one application scenario in the vast Web3 world. DAO, gaming, the metaverse, and more scenarios that have yet to be imagined will compose the future landscape of Web3. More than 50 years after the birth of the internet, few industries can continuously emerge with exciting knowledge, technology, and demand like Web3.

In the Web3 era, the previous "Login with Google account" + "Login with Facebook account" + "Login with WeChat account" + ... will all be replaced by wallet login. It can be said that the wallet is the first entry point into the Web3 world. In the face of the dazzling and ever-evolving Web3 industry, users need a wallet that allows them to explore upon entering, and then directly access DApps for a "one-stop" experience.

Next-Generation Wallet: Building a One-Stop Super App for Web3

In summary, we have identified the demand for a high-quality Wallet from the current market hotspots, which includes a seamless multi-chain experience, convenient staking pathways, and exploration of the Web3 world. The next generation of Wallets should not only meet all of the above needs but also feature a beautiful UI interface. Additionally, it should support essential functions such as fiat deposits from mainstream Wallets, importing Wallets, connecting to hardware Wallets, and displaying asset prices.

A good new generation Wallet should have the following characteristics:

1. Multi-chain asset management: Supports multiple public chains including EVM and non-EVM, covering mainstream L1 and L2 networks.

2. NFT Display: Supports the display of multi-chain NFTs and allows setting them as wallet backgrounds.

3. Fiat Currency Purchase: Collaborate with payment service providers to support direct purchase of cryptocurrencies using credit and debit cards.

4. Native Cross-Chain Bridge: Provides asset conversion functions between EVMs and non-EVMs.

5. Convenient Staking: Simplified staking process, users can directly complete staking operations for various assets within the Wallet.

6. Gun Pool Integration: Collaborate with yield aggregators to provide users with efficient yield optimization strategies.

7. Web3 Exploration: Provides ecosystem news, DApp recommendations, and other features to help users explore the Web3 world.

8. Security: Supports hardware wallet connection to ensure private keys are securely offline.

9. Price Monitoring: Provides real-time prices and tracking features for various cryptocurrencies.

10. User-friendly: Exquisite UI design and intuitive operation process reduce the user threshold.

This new generation of Wallet will become the ideal entry point for users to explore the Web3 world, providing comprehensive, secure, and convenient asset management and DApp usage experiences. As the Web3 ecosystem continues to develop, the functions of the Wallet will also evolve, bringing more innovation and convenience to users.