Author: Yue Xiaoyu

As a Web3 wallet product manager and a direct practitioner in the Web3 wallet sector, I design various features every day and perceive the real needs of users on the front line. However, besides focusing on the work at hand, it is also necessary to look up and see the road ahead; beyond the micro-level operations, a macro-level perception is needed to go further. I have always believed that the wallet sector is an important infrastructure layer with a high ceiling. Wallets are the entry point to the Web3 world, and once you master the traffic, you can do many things.

Today, the wallet sector is also bustling with activity and competition is exceptionally fierce. There are established wallets like Metamask and TokenPocket, while exchanges are investing substantial resources into Web3 wallets. Now, there are also wallets entering from many segmented scenarios, such as the chain abstract wallet from Particle Network. It seems that the forms of wallets are becoming very homogeneous. So how can new wallet products establish their differentiated competitive advantages? What will the future form of Web3 wallets look like? The Web3 wallet war has entered its second half. Here, based on my perception of user needs, the latest technological trends, and market development directions, I will outline several possible development directions for Web3 wallets.

Direction One: Wallet + AI Agent = Smart Wallet

The combination of AI Agent and blockchain wallets can transform ordinary wallets into smart wallets.

Current wallets are still too simple, essentially just "feature phones" of the past, with only basic functions like making calls and sending texts.

However, with the addition of AI capabilities, is it possible for existing wallets to leap into the era of smart wallets?

By integrating AI technology, wallets can evolve from mere asset storage tools into intelligent systems that actively help users manage funds, optimize investments, enhance security, and provide personalized services.

This significantly enhances the functionality of wallets, achieving the transformation from ordinary wallets to smart wallets.

The integration of AI Agents with wallets will completely revolutionize the interaction methods of existing wallets.

I hope the wallet sector can welcome its "Apple moment" in the future!

Direction Two: Wallet + DeFi = Financial Management Wallet

Asset management is the first step. Once user funds are deposited into applications, the greater value lies in financial management.

The three core demands of the Web3 industry are asset issuance, asset trading, and asset management.

These three have a progressive relationship: first, solve the asset issuance problem; once assets are available, trading is needed, requiring effective trading tools; then, users need efficient asset management tools.

In asset management, beyond basic asset custody, the more important aspect is the opportunity for asset appreciation, which is financial management.

Users want their idle funds to earn interest without engaging in DeFi or trading.

Ideally, they want the simplest way to earn interest, such as depositing ETH or stablecoins, without additional operations, allowing for automatic interest accrual while still being usable at any time, similar to Yu'ebao.

Users need a true on-chain Yu'ebao!

In comparison to Alipay's current scale, the ceiling for financial management wallets is very high, capable of attracting substantial asset deposits and providing stable, high returns for the wallet platform itself.

Direction Three: Wallet + Crypto Card = Consumption Wallet

Crypto Card, or encrypted bank card, can also be called a U card, allowing users to deposit USDT/USDC and use it for daily transactions without needing to withdraw funds.

Integrating Crypto Card services into wallets is a very good combination.

Crypto Cards directly address the biggest pain point in the crypto space: withdrawals.

Due to the ease of receiving illicit funds, withdrawals are often subject to frozen accounts, making them more difficult than deposits, with significant wear and tear; some stable and reliable withdrawal channels have fees around 6%.

With the emergence of Crypto Cards, the issue of small withdrawals for crypto users is directly resolved. This card can be linked to third-party payment channels (like WeChat & Alipay) for daily consumption, treated as a normal foreign currency card in China.

The Crypto Card is essentially a prepaid card, where the issuer has a bank account with Visa/MasterCard. Users send stablecoins to the issuer, who provides a payment limit on the card, similar to supermarket recharge cards, which can only be used for payments and not for transfers; there is no fiat balance on the card.

Withdrawal and deposit services typically collaborate with OTC service providers, which have high KYC requirements, while Crypto Cards serve as a good supplement, allowing for small withdrawals indirectly, with decent profit margins, making it a promising business direction for wallets with synergistic effects.

Currently, Bitget Wallet has integrated Crypto Card-related services.

A recently popular brand is Infini Card, which stands out among U cards. One of its core secrets is its integration with financial management scenarios, allowing users to deposit U for consumption while automatically earning a 7% annual yield without additional operations, effectively achieving the capability of "on-chain Yu'ebao."

Direction Four: Wallet + Web3 Payment = Payment Wallet

Payments are a very high-frequency service and naturally have significant imaginative potential.

However, the biggest problem facing Web3 payments is the lack of scenarios, similar to the rise of online payments in Web2, which was driven by the booming e-commerce sector.

It was the emergence of Taobao that generated the demand for electronic payments, leading to products like Alipay.

For Web3 payments to achieve widespread adoption, a killer application scenario is needed to unleash the unique potential of blockchain payments.

Currently, in consumer scenarios for C-end users, we are still far from the widespread adoption of Web3 payments, making payment features in wallets seem to have a low priority.

However, Binance and OKX have made some attempts, such as Binance launching Binance Pay, collaborating with some merchants to allow payments in certain scenarios to trigger the Binance app for payment, providing an experience very similar to Alipay's Web2 payment application; OKX has directly entered the consumer scenario by creating the OKX House e-commerce platform within the OKX Web3 Wallet, allowing purchases to trigger payments directly.

In fact, beyond C-end payment scenarios, there are also B-end payment scenarios, which are more mature, such as cross-border payments and merchant collections, currently being met by some enterprise-level wallet service providers like Cobo and Fireblocks.

Direction Five: Wallet + Chain Abstraction = Chainless Wallet

Ordinary users have only one demand for Web3 wallets: can it make their on-chain surfing more convenient?

However, most wallets currently do not perform well enough; ordinary users must understand many concepts to use them effectively, such as private keys, gas, and cross-chain transactions.

Although many wallets have tried to smooth out the differences between chains at the application level, providing users with a unified experience—typical examples include OKX Wallet, which aggregates many chains, DEXs, and cross-chain bridges for one-stop operations—this does not fundamentally solve the problem, as users still need to understand various blockchain-specific concepts.

One bold and radical approach is to completely overhaul the current user experience, changing the user interaction model that seems to have become the "industry paradigm."

The complexity of wallets lies in the concept of "chains." There are simply too many chains now, and product-level efforts should focus on more encapsulation to provide a completely different product experience.

In this scenario, we can consider integrating "chain abstraction," which encapsulates the concept of chains, allowing users to operate without needing to understand the concept of chains, the existence of gas tokens, or the need for chain switching and cross-chain transactions, using a universal token to pay for fees across all chains.

This aligns with the common experiences of novice users in Web2 applications.

Currently, Particle Network is leading in this area. Looking at the development history of Particle Network, it has focused on product development from wallet abstraction to account abstraction and then to chain abstraction, deeply evolving in wallet technology services.

Overall, it iterates step by step based on existing users and products, addressing different stage problems and integrating many cutting-edge narratives from the Web3 industry.

Now, Particle Network has expanded into decentralized exchange services, with UniversalX essentially being an exchange form, combining chain abstraction + DEX + non-custodial wallets.

In the future, chain abstraction should become a foundational component, becoming standard for various products.

In Summary

These five directions for five types of wallets are not mutually exclusive; a wallet does not have to choose only one direction or possess just one attribute, often spanning several attributes.

So how can we capture users?

Here, I borrow a quote from the OKX wallet product manager shared at the OKX New Year's dinner: "Deeply explore scenarios, user first."

Demand is based on scenarios; only by deeply understanding the user's usage scenarios can we truly clarify their needs and provide the products they genuinely require.

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