DeFi Wallets for Asset Management

In order for DeFi to be successful, it’s crucial that the gateways for interacting with web 3.0 are intuitive, secure, and accessible for any user while maintaining the core nature of “be your own bank”. Asset management tools, such as non-custodial wallets, fit this bill perfectly and are the key to progressing web 3.0 to the mainstream.

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.

Non-Custodial Wallets

Non-custodial wallets are essential for maintaining the decentralized nature of crypto and the notion of “be your own bank”. With non-custodial wallets, users are able to safely custody their own funds without having to rely on third-party institutions to hold their assets.

In the earlier days, wallets such as MyEtherWallet and similar alternatives dominated the market while providing clunky UI/UX. Fortunately, within the past few years, many wallet providers have upped their game and are creating better interfaces with significantly better user experience.

Top Non-Custodial Wallets

MetaMask: Primarily used as a web browser extension, MetaMask is the gateway to easily access Web 3.0 through your web browser. It allows you to run Ethereum dApps right in Google Chrome without running a full Ethereum node. For the most part, MetaMask is the de facto wallet for interacting with Ethereum dApps through a web browser.

Brave: Created by the co-founder of Mozilla FireFox, Brave allows users to access Web 3.0 through a normal web browser built with privacy and security in mind. The browser has a load of features including Brave Rewards, Ad-blocking, tipping functionality for content creators.

Coinbase Wallet: A user-custodial digital wallet and dApp browser. Unlike Coinbase consumer application, Coinbase Wallet stores private keys directly on your device and not with a centralized provider. The wallet allows users to buy and store ERC20 tokens, collect NFT tokens and interact with decentralized applications.

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).

MyEtherWallet: One of the original Ethereum non-custodial wallets, MyEtherWallet (MEW) is a secure and intuitive way to store your ETH, ERC-20 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

InstaDapp: A one-stop shop for managing assets in a non-custodial manner. The platform allows users to deposit cryptos and easily earn the highest interest rates on the market, borrow capital or gain increased exposure on a crypto asset through leveraging. InstaDapp is pioneering usability in the DeFi space by creating this intuitive solution for users to leverage lending markets.

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) enable the creation of a non-custodial wallet that streamlines user experience to resemble traditional consumer-friendly banking solutions.

These are relatively new to the market but given the potential functionality, it would be no surprise if smart wallets become the standard for future providers. As outlined in an article written by DeFi writer, Lucas Campbell, smart contract wallets provide better features, including but not limited to:

Top Smart Contract Wallets

Argent Wallet: Aims to offer a “radically better crypto wallet” that allows users to enjoy the future of the web through smart wallets for Ethereum-based cryptocurrencies and apps. These smart wallets 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 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 MakerDAO and Compound Finance.

Gnosis Wallet: aims to provide all users with a convenient, yet secure way to manage their funds and interact with decentralized applications on Ethereum. By leveraging 2FA and multi-signature transactions, Gnosis offers a variety of products ranging from a personal edition to a team edition for funds that need to be accessed by multiple individuals.

DeFi Wallet Comparison

NamePlatformApp RatingDifferentiating FeaturesSupported Assets
MetaMaskWeb browser extension4.0Web browser-enabled transactionsETH, ERC-20, ERC-721
Coinbase WalletMobile iOS / Android4.7dApp Browser & Coinbase IntegrationCoinbase CEX supported assets (BTC, ETH, ERC-20, ERC-721)
BraveWeb browser extensionN/AData PrivacyETH, BAT
BurnerWeb BrowserN/AMeta-transactionsxDai
MEWWeb4.6Hardware Wallet IntegrationETH, ERC-20
MyCryptoWeb Browser / Hardware WalletN/AHardware Wallet IntegrationETH ERC-20
Trust WalletMobile iOS / Android4.8Binance integration & supportBinance CEX supported assets (BTC, ETH, ERC-20, ERC-721)
InstaDappWeb BrowserN/AManage DeFi assetsETH, ERC-20, ERC-721
ArgentMobile iOS / Android4.8Seedless Recovery, Meta transactionsETH, ERC-20, ERC-721
Gnosis SafeMobile iOS / Android5Gnosis Safe AuthenticatorETH, ERC-20

Wallet Features for Improved User Experience

Recovery Tools

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.

Daily Limits

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.

Account Freezing

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.

Meta Transactions

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.

In-app Liquidity

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.

Conclusion

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.