The adoption of Web3 wallets is hindered by complex seed phrases and a poor user experience, according to Coinbase.
Crypto exchange Coinbase has launched a new business solution for enterprises looking to offer Web3 wallets to their customers — a move it says will help streamline the adoption of Web3 products and services.
Coinbase’s wallet-as-a-service, or WaaS, provides enterprises with the technical infrastructure to create and launch customizable on-chain wallets, the exchange announced on March 8. Specifically, WaaS provides a wallet application programming interface (API) that allows businesses to create wallets for simple customer onboarding, loyalty programs or in-game purchases.
According to Coinbase, Web3 wallets have struggled to gain wider mainstream acceptance because of their complexity, poor user experience and the challenges associated with maintaining mnemonic seeds.
When asked about how WaaS solves the complexities of Web3 wallets, the head of product at Coinbase’s Web3 Developer Platforms, Patrick McGregor, said the new solution provides “control over end-to-end product experiences,” a reduction in “implementation cost and complexity” and helps brands improve security while reducing risks.
“Today, companies are forced to push their users through confusing onboarding flows, often instructing users to download third-party self-custodial wallets,” he said. “This context switching results in high drop-off rates during onboarding, meaning a company is never able to deliver its product to users.”
Imagine your seed phrase is now public information. What do you do next? https://t.co/BNTEjaCMaM
— Cointelegraph (@Cointelegraph) December 20, 2022
The WaaS toolkit incorporates multi-party computation (MPC), a form of cryptography that allows multiple parties to jointly compute a function without revealing their inputs to one another. In practice, MPC is said to enhance private key security within Web3 platforms. An MPC crypto wallet allows users to store their digital assets more securely because their private keys are split into multiple parts and distributed among the parties involved in the protocol.
“The problems of key loss that plague the traditional self-custody world are avoided with WaaS’ MPC cryptographic functionality,” McGregor explained. “Our [software development kits] provide robust, user-friendly backup functionality to ensure that users continue to maintain access to their assets.”
The crypto exchange’s WaaS infrastructure is currently being used by companies such as Floor, Moonray, thirdweb and tokenproof.
Related: HyperPlay game aggregator alpha launched, features in-built Web3 wallet
Web3 infrastructure development appears to be heating up amid crypto winter, as startups, corporations and investors look to define the future vision of the decentralized internet. Although not everyone is convinced that current Web3 modalities are advancing the principles of decentralization, developments around MPC and decentralized privacy suggest many in the industry are taking it seriously.
McGregor noted that many companies are “seeking to build for Web3 ahead of the next bull market,” a period in which cryptocurrency prices generally rise. Coinbase is “seeing strong excitement about token-gated content (for both online opportunities and physical real-world use cases), moving loyalty programs on-chain, deep integrations between games and assets owned by users, and more.”