In order for DeFi to be successful, it’s crucial that the gateways for interacting with web 3 are intuitive, secure, and accessible while maintaining the core ethos of “being your own bank”.
Over the past few years, we’ve seen drastic improvements to wallets and other asset management tools, allowing investors and users to safely and easily access the next generation of financial technology.
Why Non-Custodial Wallets?
Non-custodial allow users to safely store their own funds without having to rely on third-party institutions to hold their assets.
In the earlier days, wallets such as MyEtherWallet dominated the market while providing clunky UI/UX. Fortunately, within the past year, many wallets have upped their game and are creating better interfaces with significantly better user experience.
The vast majority of DeFi applications are accessed using non-custodial wallets, so let’s dive into the top ones in the sector today.
Top Non-Custodial Wallets
MetaMask: Primarily used as a web browser extension, MetaMask is the gateway to easily access web3 through any internet browser. Different plugins can be built directly into MetaMask, allowing it to take on a number of roles across different applications.
Coinbase Wallet: Unlike Coinbase’s consumer application, Coinbase Wallet stores private keys directly on your device. This allows users to buy and store any ERC20 tokens, collect NFT tokens and interact with decentralized applications all without losing custody of the underlying asset(s).
Authereum: Providing a cross-browsers wallet experience, Authereum is geared at offering non-technical users an intuitive onboarding experience by using Dai as a default provide familiarity with USD-like denominations.
Brave: Created by the co-founder of Mozilla FireFox, Brave allows users to access web3 through a normal web browser built with privacy and security in mind. The browser leverages a native token – BAT– and comes with Brave Rewards, Ad-blocking and tipping functionality for content creators.
MyEtherWallet: One of the original Ethereum non-custodial wallets, MyEtherWallet (MEW) is a secure and intuitive way to store ETH, ERC20 tokens and other Ethereum-based assets. MEW offers support to major hardware wallet providers including Ledger and Trezor. Over the past year, MEW has made significant improvements to the wallet since its market dominance in 2017.
Burner Wallet: Austin Griffith’s Burner Wallet provides a quick and easy way to carry and exchange small amounts of spending-crypto using a mobile browser. The Burner Wallet essentially acts as cash in your pocket and should not be used to store large holdings. The Burner Wallet runs on the xDai Chain and uses xDai, taking advantage of low fees and fast transaction times. The most notable feature of the Burner Wallet is the use of meta transactions (more on this later).
InstaDapp: A one-stop-shop for managing assets in a non-custodial manner. The platform is pioneering usability in the DeFi space by creating this intuitive solution for users to leverage lending markets like Maker and Compound.
MyCrypto: A spinoff of MyEtherWallet, MyCrypto is an open-source client for generating Ether wallets and handling erc-20 tokens. Unlike MEW, MyCrypto supports ETH, ETC and other similar Ethereum-based networks.
Trust Wallet: As the official non-custodial wallet for Binance, Trust Wallet supports leading crypto assets such as BTC, ETH, LTC, and of course, BNB. The wallet also has integrated the Binance DEX and Kyber Network to allow users to easily trade tokens in a decentralized fashion.
Introducing Smart Contract Wallets
Smart contract wallets (smart wallets) are a spinoff of non-custodial wallets that streamlines user experience to resemble traditional consumer-friendly banking solutions.
They come preloaded with access to a number of DeFi products and have a multitude of benefits which can be found here.
Top Smart Contract Wallets
Argent Wallet: Argent offers a “radically better crypto wallet” that boast no paper backups, simple addresses, and free transactions. Argent’s mission is to help everyone benefit from the decentralized web and is said to be inspired by the potential to reverse the massive concentration of wealth and power of today’s internet.
In recent developments, Argent Wallet has been at the forefront of integrating DeFi applications for users to directly use in the wallet. As it stands today, Argent users can directly leverage the lending capabilities of Maker and Compound.
Looking to try out Argent? Shoot us a DM on Twitter (@DeFiRate) with the message “Argent2020”
Gnosis Wallet: Gnosis leverages 2FA and multi-signature transactions along with a personal and team edition for funds that need to be accessed by multiple individuals.
DeFi Wallet Comparison
|Name||Platform||App Rating||Differentiating Features||Supported Assets|
|MetaMask||Web browser extension||4.0||Web browser-enabled transactions||ETH, ERC-20, ERC-721|
|Coinbase Wallet||Mobile iOS / Android||4.7||dApp Browser & Coinbase Integration||Coinbase CEX supported assets (BTC, ETH, ERC-20, ERC-721)|
|Brave||Web browser extension||N/A||Data Privacy||ETH, BAT|
|MEW||Web||4.6||Hardware Wallet Integration||ETH, ERC-20|
|MyCrypto||Web Browser / Hardware Wallet||N/A||Hardware Wallet Integration||ETH ERC-20|
|Trust Wallet||Mobile iOS / Android||4.8||Binance integration & support||Binance CEX supported assets (BTC, ETH, ERC-20, ERC-721)|
|InstaDapp||Web Browser||N/A||Manage DeFi assets||ETH, ERC-20, ERC-721|
|Argent||Mobile iOS / Android||4.8||Seedless Recovery, Meta transactions||ETH, ERC-20, ERC-721|
|Gnosis Safe||Mobile iOS / Android||5||Gnosis Safe Authenticator||ETH, ERC-20|
Wallet Features for Improved User Experience
By assigning trusted devices or people, any smart contract wallet owner can recover their funds without a private key or seed phrase through a common vote. Argent’s version calls these trusted devices and individuals, guardians. These guardians could be any other ETH address including other devices or wallets you own, professional custodians or trusted friends and family.
It’s important to note that none of the guardians have access to your account or directly hold the private keys, rather they simply grant approval that you should be the one who is able to reaccess the account.
The shift away from a paper back-up to this recovery mechanism is a drastic improvement and is one of the major features needed to move crypto forward.
By setting daily limits, the chance that an attacker could receive the entirety of your funds reduces dramatically. If any withdrawals are above the daily limit, the user must either (1) wait some predetermined amount of time before the transaction is sent or (2) must be approved by the guardians. Here’s a demo of the daily limits feature at CogX 2019.
Smart wallets enable the functionality for users to freeze their accounts in the instance of any malicious or fraudulent activity, similar to normal credit or debit cards. The account can be unfrozen by the approval of guardians.
While all of these components are necessary for the DeFi space to succeed, abstracting some of the complexities and obsessing over user interface is what will propel DeFi forward. This is what drove Amazon to become a trillion dollar company – focusing on the consumer experience.
One of the biggest drawbacks when interacting with a public blockchain is the obligation to pay transaction fees. Generally speaking, transaction fees are needed to align economic incentives for validating and processing transactions in a decentralized system. However, this can lead to a terrible experience as users are required to have ETH in order to interact with web 3.0 applications. This ultimately creates a high barrier to entry unattainable at scale for average application users.
Meta transactions solve this issue. Meta transactions abstract the transaction fee by requiring the developers to pay the fees and in turn, providing a seamless experience for the user.
If you’re interested in understanding meta transactions, feel free to read this blog by Austin Griffith.
Liquidity is vital to DeFi. The more liquidity, the more efficient the underlying market is. Many wallet providers are beginning to integrate liquidity aggregators such as Kyber Network and 0x to provide wallet users with an easy mechanism for swapping tokens directly in-app. This is a huge improvement as it eliminates the costly step for sending funds back and forth between exchange accounts and non-custodial wallets.
Crypto users can now benefit from a seamless interaction web 3.0 applications all from a single interface without having to worry about losing their crypto in the midst of all the transfers.
It goes without saying that asset management tools are absolutely essential to the long term success of DeFi. These tools allow users to intuitively manage their assets in a secure manner while also interacting with DeFi and other web 3.0 applications.
The rise of smart contract wallets provide the much needed improvements in accessibility for users with the introduction of seedless recovery tools, daily limits, and other legacy banking functionality. When the complexities of blockchain technology and decentralization are abstracted, asset management tools act as the foundation for banking the unbanked and building an open financial system.
We’ll continue to regularly lookout for new asset management tools as they begin to pop up. If you’re creating a non-custodial wallet and would like to be featured on this page, please feel free to fill out our contact form.