The Future Development of Web3 Wallets: Innovation, Challenges, and Key Issues

Introduction

Recently, the Web3 wallet field has been developing rapidly. This article will delve into the current innovations, challenges, and key issues to consider, providing builders and investors with a framework to assess long-term value.

The Current Status of Web3 Wallets

A Web3 wallet is a decentralized digital wallet that allows users to have complete control over their crypto assets without relying on third-party intermediaries. Currently, it is mainly divided into two categories: custodial wallets and non-custodial wallets.

Non-custodial wallets can be further divided into:

• EOA Wallet: The most common type, such as Metamask, etc.
• Smart Contract Wallets: such as Argent, Safe, etc.
• MPC Wallet: Uses multi-party computation technology, such as Fireblocks, etc.

Current Challenges

• Ordinary users find it difficult to understand and use
• The login and setup process is complicated
• The risk of losing the mnemonic phrase is high
• Fragmentation of wallets across different chains

Innovations Brought by Account Abstraction

The Ethereum ERC-4337 standard has achieved account abstraction, bringing significant advancements to Web3 wallets:

• Social Recovery Feature
• Atomic Multi-Operations
• ERC20 token gas fee payment
• Third-party payment transaction fees

These innovations greatly enhance the usability and security of the Wallet.

Development Direction of Wallet 2.0

Some developers have begun to build the next generation Wallet 2.0, such as Castle, Soul Wallet, Candide, etc., focusing on:

• User Accessibility
• Security
• Interoperability
• Smart contract functionality

Evaluating the Five Key Questions of Wallet 2.0

1. Is it a sustainable business model?

2. Can you provide a solution that is 10 times better than the existing ones?

3. How to establish a sustainable competitive advantage?

4. Can unique distribution channels be found?

5. What key assumptions does success need to be based on?

Potential Risks and Limitations

• ERC-4337 cannot solve the high gas fee problem.
• Introduce new security risks
• Cross-chain interoperability needs to be achieved.
• Uncertainty in legal and regulatory aspects

Conclusion

Wallet 2.0 represents the future of digital asset management. Builders need to focus on establishing sustainable competitive advantages, optimizing user experience, ensuring security, and finding unique distribution channels. As technology evolves, Wallet 2.0 will become an important tool connecting users to the Web3 world.