Smart wallets have been developing rapidly. Here are several things that are required for them to go mainstream.
From inside the crypto industry, it is clear that smart wallets are developing very quickly. When I first tried Argent, arguably a smart wallet due to multi-sig functionality, a few years back, I had to pay over US$200 to set it up. Gas fees were high and we were clearly in ETH-to-the-moon euphoria. Obviously, a normal human being is not going to pay $200 for a smart wallet, so a lot of work has to be done.
And so it was done.
Smart wallets and major crypto activity migrated to L2s, becoming faster and more reliable. It is now possible to transact for 1 cent when the same transaction a few years back would cost $100, a very solid 10,000x improvement! With various improvements such as EIP-3074 for gas sponsorship, and many others, wallets became even more seamless and easier to use. That’s the technology we employ at Moai as well — making the wallet truly free to use, where the transaction fees are covered, and implementing various safety features that make onboarding about 10x faster than when you had to write down the seed phrase before you’d even know what you need it for.
But even more needs to be done.
Traditional (and I mean leather and textile here) wallets in themselves are quite dumb invention. A traditional wallet carries money, cards, or photographs (are these NFTs?!) and protects them from the elements, but does nothing beyond that. A smart wallet can and should do a lot more, because it is programmable in nature. I put these features in three broad categories: Opportunities, Social Recovery, and Protection.
Opportunities. A smart wallet should do more than just store money or be able to swap tokens. It should nudge you intelligently if the token you are holding is ripping or tanking, whether your USDC sitting idle can earn you some interest in liquid staking (or better yet just do it automatically if permitted… free money!), provide the option to participate in prediction markets, staking, and more, and overall help you grow your capital or invest it, wisely or unwisely, with your permission. Imagine a wallet that can employ an AI agent to take a portion of your portfolio to buy Base memecoins with specific parameters. If your risk is low, maybe you can allocate 5% of capital to this. If you are adventurous, increase allocation higher. Same with vaulting prized assets. If there are some assets that appreciated considerably, a smart wallet can automatically move them to your designated cold storage.
Social Recovery. This has been talked about for many years by many, including by Vitalik in his recent post, but basically, accidents happen. It is important your wallet can be recovered and protected, with some social interaction. Maybe even between your crypto friends — i.e. if you swap or share money with certain people over and over again (real people, your other wallets), several of them can form a weak bond that can vouch for you to recover access if lost. Weak bond would mean that if you send money to one wallet, this wallet cannot singlehandedly sign a transaction to lock/unlock the wallet, but a group of several such parties can nudge a wallet in the right direction. Specific parameters can be set for people who are highly technical, and “easy mode” can be implemented for most.
Protection. Lastly, it’s not a secret that the way blockchain is designed is becoming untenable for many. The ability to spike tokens or NFTs to with malicious code makes transacting with them dangerous or being able to see every single transaction should be considered a bug. Privacy and provenance should go hand in hand. While various blockchain foundations are reworking the basics, the smart wallets can help temporarily by providing protection. For well-known malicious tokens, these should be isolated and removed from a wallet (many are already doing that part), for the spammy tokens, i.e. the ones that many active users are airdropped, while there are no protections on a blockchain level, these should be sent to “trash” addresses. Same for NFTs, anything that you didn’t ask for should be sent back, preferably with a note “don’t ever send this again”, and a smart wallet can have several levels of action that can be taken to protect the tidiness and integrity of a wallet.
Some of these measures might take weeks to develop, some months. Some ideally require foundational blockchain changes, such as moving to zero-knowledge proofs or mixers being built right into every transaction, which might take years at the current stage. However, safe, secure, and smart wallets will make people richer and their lives easier and more fulfilling.
We're back with the 25th edition of Paragraph Picks, highlighting a few hand-selected pieces from the past week or so.
@tch writes about how smart wallets can achieve mainstream adoption through better opportunities for financial growth, robust social recovery mechanisms for access restoration, and advanced protection features to ensure privacy and security in the evolving blockchain ecosystem. "Safe, secure, and smart wallets will make people richer and their lives easier and more fulfilling." https://paragraph.xyz/@0x2e70f8a381efd5142474e8ce61fa3d05d3ce0576/musings-on-the-future-of-actually-smart-wallets
@macbudkowski points out that rather than attempting to onboard the next billion users to Ethereum through a single mainstream app, the focus should be on building hundreds of well-targeted apps that solve specific problems for smaller groups of users, creating incremental growth and paving the way for broader adoption. "What Ethereum needs is 100s of apps targeting 100k-10 million users." https://kanfa.macbudkowski.com/onboarding-next-billion-users-ethereum
@papa writes about how the rise of pseudonymous tools and zero-knowledge (ZK) applications on decentralized networks like Farcaster demonstrates the potential for private, verifiable communication and collaboration, blending individual privacy with trust in digital identities. "Pseudonymity has allowed individuals to share ideas & truths unburdened by fear of retaliation." https://paragraph.xyz/@papajams.eth/farcasters-zk-anons
@tomu writes about how Farcaster is pioneering programmable social networks, integrating onchain actions into social interactions through AI agents and open graphs, creating seamless, collaborative ecosystems where engagement drives economic activity. "Agents turning social posts into onchain actions are creating a new way to communicate that wasn’t possible before." https://tomu.xyz/programmable-social
Nice piece :) I have long wondered where the web3 (fun!) games are. Seems like a lot of potential for mechanics and particularly cross-party metagames i.e. you level up INT in an RPG by doing winning a Catan game or whatever
Truly enjoyed this!!
Musings on the Future of Actually Smart Wallets 4 upvotes, submitted by @tch