The Development of the Web3 Ecosystem and the Evolution of Wallets

The emergence of smart contracts has sparked enthusiasm for building decentralized applications ( DApp ). From trading and lending to games and NFTs, blockchain technology has provided developers with unprecedented convenience. According to statistics, as of August 2022, the number of DApps on various public chains has exceeded 4,000 and continues to grow rapidly.

A blockchain address is the basic unit for users to interact with smart contracts. Unlike traditional finance, on-chain addresses can be completely anonymous, requiring no KYC, and users can create and operate multiple addresses. Having an on-chain address means truly entering the world of cryptocurrency. According to official Ethereum data, as of August 2022, the total number of addresses has surpassed 200 million, with daily transaction volumes exceeding 1 million.

Blockchain and smart contracts empower users to manage their own data and assets, which is the core feature of Web3. As the gateway to the Web3 world, Wallets are key tools for managing these assets and data. From a developmental perspective, wallets can generally be divided into several categories: paper wallets/brain wallets, hardware wallets, and software wallets. For most DeFi, NFT, and gaming users, software wallets are the most commonly used choice.

Taking the current most popular software wallet Metamask as an example, users will receive a mnemonic phrase consisting of a sequence of 12 or 24 ordered English words after installation, used to recover and migrate accounts. For new users, properly safeguarding the mnemonic phrase is the most important first lesson. One of the costs of decentralization is that users must take full responsibility for their own accounts, with no centralized organization able to "recover the password."

With the development of the crypto world, users' demands for wallets are also constantly changing. We can summarize the characteristics that an excellent wallet should possess from the current trends:

1. Multi-chain support: The explosion of DeFi in 2020 and the rise of GameFi in 2021 brought a large number of users, while congestion on the Ethereum network led to soaring transaction fees. To reduce costs and improve speed, several public chains have rapidly emerged, changing the dominance of Ethereum. Users hope to easily manage multi-chain assets and achieve cross-chain operations.

2. Convenient Staking: The POS consensus mechanism is replacing POW as the mainstream. Ordinary users can participate in staking through DPOS or SaaS platforms to earn rewards. Therefore, the security and convenience of staking have become important considerations for users when choosing a Wallet.

3. One-stop experience: DeFi is just one application scenario of Web3, with more innovations continuously emerging such as DAO, games, and the metaverse. Users need a one-stop entry point to directly explore and use various DApps.

4. Basic functions: Fiat deposit, import wallet, connect hardware wallet, asset display and other basic functions are also indispensable.

In the future, wallets will become the unified login method in the Web3 world, replacing the current various third-party account logins. A fully functional and user-friendly wallet should be able to meet the diverse needs of users and provide convenience for exploring the Web3 world. As the ecosystem continues to develop, the functions and experiences of wallets will also be continuously optimized and upgraded.