The Future of Web3 Wallets: Innovations, Challenges, and Key Issues

The development of Web3 wallet is at a critical stage, evolving from the traditional Wallet 1.0 to the more advanced Wallet 2.0. This article delves into the current innovations of Web3 wallets, the challenges they face, and the key issues that need to be considered for future development.

The Current Situation of Web3 Wallets

Web3 wallet is a decentralized digital wallet that allows users to have complete control over their cryptocurrency assets without relying on third-party intermediaries. Currently, there are two main types of wallets on the market:

• Custodial Wallet: Managed by a third-party company that holds the user's private keys
• Non-custodial Wallet: Users have full control over their private keys, divided into EOA wallet, smart contract wallet, and MPC wallet.

Although Web3 wallets have advantages in security and decentralization, they still face some 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
• Different chains' wallets are decentralized, making management difficult.

Innovations Brought by Account Abstraction

The account abstraction of Ethereum (AA) has brought significant advancements to the Web3 wallet. The ERC-4337 standard introduces the following key features:

• Social Recovery Feature
• Atomic Multi-Operation
• Use ERC20 tokens to pay transaction fees
• Paymaster pays transaction fees

These innovations make Wallet 2.0 more user-friendly and secure, laying the foundation for the popularization of Web3 wallet.

Key Issues in Wallet 2.0 Assessment

When evaluating the Wallet 2.0 solution, the following key issues need to be considered:

1. Is it a sustainable business model?

2. Can it provide advantages 10 times greater than the existing solutions?

3. How to establish long-term competitive advantages?

4. Can unique distribution channels be found?

5. What are the key assumptions needed for success?

Potential Risks and Limitations

Wallet 2.0 still faces some challenges:

• ERC-4337 cannot solve the high gas fee problem.
• New security risks
• Limited cross-chain interoperability
• Legal regulatory uncertainty

Future Outlook

Wallet 2.0 represents the future of digital asset management. We can expect:

• More advanced and user-friendly Wallet design
• Better key management solutions
• New application scenarios
• Integration with Layer 2 and cross-chain technology

For developers of Wallet 2.0, they should:

• Establish a sustainable competitive advantage
• Focus on user experience and accessibility
• Prioritize security
• Looking for unique distribution channels
• Maintain technological innovation

Wallet 2.0 will become an important bridge connecting users with the blockchain world, and its development is worth our continued attention.