Problems with existing wallets

Today’s dominant crypto wallets were not developed for the wide range of use cases that have emerged in Web3.
As a result of this, legacy wallets have poor security, confusing UX, and zero incentives to stay loyal.

Poor Security

The main security risks of legacy wallets are not in the core cryptography, dependencies, or the front end.
As with any software, the biggest risk is the human factor. Self-custodial Web3 experience puts shifts all responsibility to the user. As a result, plenty of bad actors take advantage of that to drain users’ wallets.
  • Dangerous smart contracts: Anyone can deploy a smart contract. Yet most users do not have the skills to evaluate what a contract does. Users can interact with hacked smart contracts, unsafe forks, or even outright malicious dApps.
  • Risky transactions: In its raw form, transaction data is unintelligible to the average user. The necessity of giving permissions and approvals creates a poor habit of mindlessly singing any transaction.
  • Phishing: The simplest scam does not even require any smart contract or an on-chain transaction. Instead, scammers employ various social engineering techniques (e.g. acting like a support team member) to share the private key or the seed phrase.
These security problems are compounded by inadequate UX choices.

Complicated and confusing UX

One of the promises of Web3 is to bring economic power back to the user.
Instead of a corporation like Facebook capturing the value of user actions, the user should get rewarded. Some of the leading dApps like Uniswap already transfer all the value to the users who provide value (i.e. liquidity). Wallets, however, do not currently give any rewards to their users.
Meanwhile, unlike Web 2.0 accounts, wallets have low switching costs.
The user owns their seed phrase and can use it to move all their addresses to any other wallet. It’s not uncommon for the user to use several wallets. The expectations of airdrops might be the main reason to use big wallets like MetaMask.
Legacy wallets were not built for today’s diverse Web3 environment that now consists of dozens of Layer-1 and Layer-2 networks, hundreds of dApps, and thousands of tokens.
  • Additional networks must be added manually: Finding RPC data and entering it isn’t hard but it creates an additional barrier to trying new Layer-1 and Layer-2 networks.
  • Tokens do not show up: Receiving a new token into the wallet and not seeing it immediately is stressful. A user often needs to manually add a token by copying and pasting its smart contract address.
  • Lack of information about the portfolio: Today’s wallets are used for more than just holding ETH, BNB, or other coins. A wallet might hold Liquidity Pool tokens, Aave’s deposits, NFTs, DAO governance tokens, and more. Without specialized third-party apps, it’s hard to get an accurate view of what’s in your own wallet.
  • Hard to manage multiple addresses: Active Web3 users have many addresses. One could be the public address with ENS. Another could be an active address for big trades. Yet another could be a ‘degen’ address for trying new dApps. Finally, several addresses could be burners for receiving funds without revealing the whole portfolio. Managing the multitude of these addresses in an older wallet like MetaMask is inconvenient if not outright impossible.

No reason to stay loyal to a wallet

One of the promises of Web3 is to bring economic power back to the user.
Instead of a corporation like Facebook capturing the value of user actions, the user should get rewarded. Some of the leading dApps like Uniswap already transfer all the value to the users who provide value (i.e. liquidity). Wallets, however, do not currently give any rewards to their users.
Meanwhile, unlike Web 2.0 accounts, wallets have low switching costs.
The user owns their seed phrase and can use it to move all their addresses to any other wallet. It’s not uncommon for the user to use several wallets. The expectations of airdrops might be the main reason to use big wallets like MetaMask.