Wallets, the cornerstone of blockchain transactions, have been a part of the crypto landscape since the inception of Bitcoin. Originally designed as a tool for holding keys and managing transactions, wallets have evolved significantly over the years. However, their foundational design and architecture have remained largely unchanged. Today, we're on the brink of a new era, one that calls for a reimagining of what wallets can be.
The Evolution of Wallets
From their humble beginnings as tools for transferring and holding BTC, wallets have come a long way. Today, they're not just about transactions; they're gateways to a myriad of decentralized applications, from trading ERC20 tokens to playing games like Axie Infinity.
As the industry matures, we're seeing new dynamics emerge. Wallets are evolving into identity managers, and protocols are going vertical, owning the wallet stack for their users. Wallets are also becoming super-apps or browsers for decentralized apps, adding a new layer of utility to the crypto ecosystem.
The Future of Wallets
As we navigate this era of verticalization or unbundling, the dominance of monolithic wallet providers is being challenged. We're witnessing the rise of compelling products in different verticals, mirroring the expansion of digital payments that led to the emergence of a diverse stack of payment companies. MPC (multi-party computation) and AA (account abstraction) presents an opportunity to bring the industry up to par with other industries where current approaches might be ready for disruption (ie. marketplaces, communities, games, etc.).
All in all, we’re living through a time of verticalization or unbundling, where the dominance of monolithic wallet providers is threatened by the emergence of compelling products in different verticals, similar to the stack of payment companies that rose from the expansion of digital payments.
This shift necessitates a rethinking of what it truly means to be the users' first entry point into crypto. While harder problems at the protocol level are being solved, we need infrastructure and middleware that can abstract away the complexities of crypto from both users and developers.
Enabling Vertical Wallets at Scale
To meet the demands of this new era, wallets will need to evolve in several key ways:
Support and Abstraction for Multiple Verticals: Wallets must be able to cater to a variety of use cases and industries, providing the necessary abstraction to make crypto accessible to all.
High Capacity and Programmable Permissions: Wallets must be capable of generating thousands of wallets and handling millions of transactions per second (TPS), all while offering programmable permissions.
Accessibility via APIs and SDKs: To ensure seamless integration and usage, wallets must be accessible via APIs and SDKs.
A Time of Excitement and Innovation
We're arguably in the most exciting time to build in the crypto space. We can finally move from trying to do it all to developing real infrastructure categories that will support the creation of meaningful products. It's about time we embraced the potential of modular wallet architecture and the opportunities it presents for enabling vertical wallets at scale.