The Web3 wallet war has entered the second half: 5 major development directions of wallets

Introduction:

The Web3 industry is developing too fast, and new things appear every day. Therefore, many daily thoughts are worth recording.

These thoughts will be updated in real time on the Twitter account, and regularly summarized and published on the WeChat public account.

As a Web3 wallet product manager and a direct practitioner in the Web3 wallet track, I design various functions by myself every day and perceive the real needs of users on the front line.

But in addition to burying your head in work, you also need to look up and see the road; in addition to micro-operation, you also need macro-perception, so that you can go further.

I have always believed that the wallet track is an important infrastructure layer with a high ceiling. The wallet is the entrance to the Web3 world. After mastering the traffic, you can do a lot of things.

Nowadays, the wallet track is also surging, and the competition is extremely fierce. There are a number of old wallets such as Metamask and TokenPocket, and exchanges have invested a lot of resources in Web3 wallets. Now there are wallets that cut into many subdivided scenarios, such as Particle Network's chain abstract wallet.

It seems that the current form of wallets is also very homogeneous, so how can new wallet products establish their own differentiated competitive advantages? What will the future form of Web3 wallets be like?

The Web3 wallet war has entered the second half.

Here, based on the user needs, latest technology trends, and market development directions that I perceive, I will list several possible development directions of Web3 wallets in the future.

Direction 1: Wallet + AI Agent = Smart Wallet

The combination of AI Agent and blockchain wallet can realize the transformation from ordinary wallet to smart wallet.

Today's wallets are still too simple, just like the "feature phones" of the past, with only basic functions such as making calls and sending text messages.

But after adding AI capabilities, is it possible for existing wallets to leap into the era of smart wallets?

Combined with AI technology, wallets are not just tools for asset storage, but have become intelligent systems that can actively help users manage funds, optimize investments, improve security, and provide personalized services.

This greatly enhances the functionality of wallets, thereby realizing the transition from ordinary wallets to smart wallets.

The combination of AI Agent and wallet will completely subvert the interaction mode of existing wallets.

I hope that the wallet track can usher in the "Apple moment" in the future!

Direction 2: Wallet + DeFi = Financial Wallet

Asset management is the first step. After the user's funds are deposited in the application, the next greater value lies in financial management.

The three core needs of the Web3 industry: asset issuance, asset trading and asset management.

The progressive relationship between these three is to solve the asset issuance problem first. After the assets are obtained, they need to be traded, which requires easy-to-use trading tools. Later, users need easy-to-use asset management tools.

In asset management, in addition to basic asset custody, the more important thing is the opportunity for asset appreciation, that is, financial management.

Users hope that their idle funds can earn interest without playing DeFi or trading.

It is best to earn interest in the simplest way, such as recharging ETH or stablecoins, which can automatically earn interest without additional operations, but can be used at any time, similar to Yu'ebao.

Users need a real on-chain Yu'ebao!

Compared with the current size of Alipay, the ceiling of financial management wallets is very high, which can not only attract a large amount of asset precipitation, but also bring stable and high returns to the wallet platform itself.

Direction Three: Wallet + Crypto Card = Consumption Wallet

Crypto Card, encrypted bank card, can also be called U card, recharge USDT/USDC and other stable currencies, no need to withdraw money, can be bound to WeChat Alipay for daily use.

Doing Crypto Card business in the wallet is a very good combination.

Crypto Card directly solves the biggest pain point in the currency circle: withdrawal.

Because it is very easy to receive black money, it is very easy to freeze the card when withdrawing money. Withdrawing money is more difficult than depositing money, and the wear and tear is greater. The basic handling fee of some stable and reliable withdrawal channels is about 6%.

After the emergence of Crypto Card, it directly solved the problem of small withdrawals for people in the cryptocurrency circle. This card can be directly bound to a third-party payment channel (such as WeChat & Alipay) for daily consumption, and will be treated as a normal foreign currency card in China.

Crypto Card is essentially a prepaid card. The issuer has a bank account with Visa/MasterCard. Users transfer stablecoins to the issuer, and the issuer will give you a card payment limit, just like the recharge card issued by a supermarket. It can only be used for payment, not transfer. There is actually no legal currency balance in this card.

The deposit and withdrawal business is generally in cooperation with OTC service providers, which has very high KYC requirements. Crypto Card is a good supplement, which can be used for small withdrawals in disguise, and the profit margin is not low. Therefore, it is a good business direction for wallets and has synergistic effects.

Currently, Bitget Wallet has built-in Crypto Card related services in the wallet.

A relatively popular brand recently is Infini Card. This card can stand out among a number of U cards. One of the core secrets is that it combines financial management scenarios. Users charge U and not only use it for consumption, but also can obtain 7% annualized returns without other operations, which realizes the ability of "Yu'ebao on the chain" in disguise.

Direction 4: Wallet + Web3 payment = payment wallet

Payment is a very high-frequency service, and naturally there is a lot of room for imagination.

But the biggest problem currently facing Web3 payment is the lack of scenarios, just like the rise of online payment in Web2, which was also due to the booming development of e-commerce.

It is precisely because of Taobao that the demand for electronic payment has emerged, and products such as Alipay have appeared.

For Web3 payment to be popularized on a large scale, a killer application scenario is needed to unleash the unique potential of blockchain payment.

At present, in the consumption scenarios of C-end users, it is still far from the popularization of Web3 payment, so making payments in wallets does not seem to be a high priority.

However, both Binance and OKX have made some attempts. For example, Binance launched Binance Pay and cooperated with some merchants. When paying in some scenarios, you can use the card to call up the Binance APP to make payments with one click. The experience is very similar to Web2 payment applications such as Alipay.

OKX directly entered the consumption scenario and created the OKX House e-commerce platform in the OKX Web3 Wallet. When buying things on this platform, you can directly use the payment call.

In fact, in addition to the payment of C-end scenarios, there is also the payment of B-end scenarios, which is more mature, such as cross-border payment, merchant collection, etc. These scenarios are currently met by some enterprise-level wallet service providers, such as Cobo and Fireblocks.

Direction Five: Wallet + Chain Abstraction = Chainless Wallet

Ordinary users have only one demand for Web3 wallets: whether they can make it more convenient to surf on the chain.

However, most wallets are not doing well enough now. Ordinary users need to understand many concepts before they can really use them, such as private keys, Gas, cross-chain, etc.

Although many wallets have smoothed out the differences between different chains as much as possible at the application layer and tried to provide users with a unified experience, a typical example is the OKX wallet, which aggregates a lot of chains, DEX and cross-chain bridges, and can complete these operations in one stop.

However, this does not fundamentally solve the problem, and various concepts based on the characteristics of blockchain still need to be understood by users.

There is a bold and radical way: that is to completely overturn the current user experience and change the user interaction mode that seems to have become the "industry paradigm".

The complexity of the current wallet lies in the concept of "chain". There are too many chains now, and more encapsulation should be done at the product level, so as to provide a completely different product experience.

In this scenario, you can consider combining "chain abstraction", that is, encapsulating the concept of chain, so that users do not need to perceive the concept of chain, the existence of Gas token, or chain switching and cross-chain, and can use a universal token to pay the handling fees of all chains.

This is the common experience of Web2 applications that truly meets the needs of novice users.

Currently, Particle Network is very advanced. Looking at the development history of Particle Network, from wallet abstraction to account abstraction to chain abstraction, its product development is very focused, and it has developed vertically in-depth in wallet technology services.

The overall process is to iterate step by step on the basis of existing users and products, solve problems at different stages respectively, and integrate many cutting-edge narratives of the Web3 industry.

Today, Particle Network has expanded to the decentralized exchange business. UniversalX is actually an exchange form, chain abstraction + DEX + no private key wallet.

In the future, chain abstraction should become a basic component and a standard feature of all kinds of products.

To sum up

The five types of wallets in these five directions are not clearly defined, and a wallet cannot only choose one direction or have only one attribute, but often spans several attributes.

So how do we capture users?

Here I borrow a sentence from the OKX wallet product manager at the OKX New Year's Eve dinner sharing session:Dig deep into the scenarios, put users first.

Demand is based on scenarios. Only by deeply understanding the user's usage scenarios can we truly understand the user's needs and provide users with the products they really need.

At the OKX New Year's Eve dinner, Star kept it a secret. In addition to the two core product lines of exchanges and wallets, there is a secret product line that will be released in February.

We can also wait and see which direction OKX, which is far ahead in the Web3 field, will develop in. Will it lead the development direction of wallets, or will it redefine the paradigm of wallets?

Perhaps, OKX's new products will be among the several wallet development directions listed above.

In any case, there is still a lot of room for development in the wallet track. There are still many exchange users who have not come to the chain, and there are still many users outside the circle who have not come to the Web3 world. Wallets are the entrance to the Web3 world, and there is still a lot to do.

We can continue to pay attention to the wallet track.