Web3 Wallet: From Asset Tool to Web3 Ecosystem Hub

The Evolution of Wallets

The world of digital assets is undergoing a profound transformation. Once merely simple storage tools, Web3 wallets have now evolved into central hubs that connect users with decentralized applications and manage on-chain identities. This shift not only redefines the role of wallets but also reshapes how users access the Web3 universe.

With the explosive growth of the crypto industry, the Web3 wallet market is迎来 unprecedented opportunities. According to Grand View Research, the global crypto wallet market revenue in 2022 was approximately $13.98 billion. More notably, by 2030, this figure is projected to rise to $482.7 billion, with a compound annual growth rate (CAGR) of 24.4%. This means that over the next decade, the market size for Web3 wallets will double, surpassing $33.71 billion.

Market Drivers: What Is Fueling Wallet Explosion

The rapid increase in Web3 wallet users is no coincidence. Multiple factors are driving this phenomenon:

First, favorable policies at the governmental level. The approval of Bitcoin spot ETFs has injected new confidence into the market, prompting traditional investors to enter the crypto space. Second, the surge of on-chain creativity has created new use cases for wallets—from BRC20 tokens to NFT artworks, from Ordinals protocol to various on-chain applications—these innovations all require wallets to support them.

The combined effect of these factors is extremely significant. According to Dune data, since early 2023, the market share of Web3 wallets has surged astonishingly—from less than 10% directly up to 80%. This figure alone demonstrates how urgent the market demand for Web3 wallets is.

On mainstream blockchains alone, over 2.5 million wallets are active daily, with Bitcoin and Ethereum networks accounting for over 80%, fully illustrating the importance of wallets as gateways to Web3.

Wallet Ecosystem: From Decentralization to Integration

The Two Major Camps

The Web3 wallet market clearly presents two distinct camps. One is user-controlled non-custodial wallets, and the other is centralized custodial wallets managed by institutions.

Non-custodial Wallets: Take Control of Your Assets

These wallets’ core feature is “your wallet, your control.” Users hold private keys and seed phrases, giving them absolute control over their digital assets. Mainstream products like Metamask fall into this category. They can be further divided into three technical approaches:

• EOA Wallets: The most traditional method, where users possess a single private key; this is the foundational wallet type in the Ethereum ecosystem.
• MPC Wallets: Using multi-party computation technology, private keys are split and stored across multiple parties, significantly reducing single-point risks.
• AA Wallets: Implement account abstraction via smart contracts, allowing users to define custom control logic through contract-level rules.

The advantage of non-custodial wallets is that security is entirely in the user’s hands. However, the downside is that if private keys are lost, no one can recover them—this high barrier is challenging for ordinary users. Hardware wallets, capable of generating private keys offline, are widely regarded as the safest choice.

Custodial Wallets: Balancing Convenience and Risks

Operated by exchanges, custodial wallets take a different route. Users trust the exchange to hold their assets, enjoying low barriers and quick, convenient services. But the cost is that the “balance” you see within the exchange system is just an on-platform digital record, not actual on-chain assets. This means you cannot directly interact with DApps through this wallet—it is essentially a virtual account within the exchange.

The security of custodial wallets depends entirely on the exchange’s risk management capabilities. If the exchange encounters issues, user assets are at risk.

Web3 Wallets Are More Than Just Wallets

Traditional decentralized wallets typically consist of three layers: underlying key management, address generation, and asset transfer functions. Modern Web3 wallets break through this framework, with application-layer innovations becoming the focus. The product goal is to enable users to enter the Web3 world in the simplest, most intuitive way.

The Four Key Value Dimensions of Web3 Wallets

A New Hub for Traffic and Transactions

In the Web2 world, Visa, MasterCard, and Apple Pay dominate the payment landscape. In Web3, wallets are playing a similar role. Over 2.5 million active wallets conduct transactions across multiple public chains daily, with the value of traffic incalculable. Compared to the billions of dollars in the Web2 payment market, the growth potential for Web3 wallets is nearly limitless.

Connectors for the DApp Ecosystem

The true value of wallets lies in their role as gateways to the DApp universe. Users connect various applications via wallets to perform transactions, lending, mining, and other on-chain activities. Currently, mainstream wallet products adopt two operational models—one is pure connection (like Metamask), responsible only for identity verification and signing; the other is integrated operation, embedding DApp display and Swap trading functions within the wallet, directly monetizing user activity.

Reinventing Financial Services

Just as people shifted from insurance companies to buying insurance via Alipay, wallets are becoming new platforms for financial services. Once users trust a wallet, they will naturally accept the financial products, derivatives, and services recommended by that wallet. This opens vast commercial opportunities for advertising, traffic diversion, and derivatives within wallet products.

On-Chain Identity Infrastructure

New features like DID (Decentralized Identifiers), SBT (Soulbound Tokens), and personalized NFT displays are being implemented within wallets. As account containers, wallets can naturally carry users’ on-chain identity tags, which are crucial for project ratings, community management, and credit systems. Although these features are still in early exploration, their prospects are broad.

Why Are Exchanges Developing Web3 Wallets

New Growth Point for Exchanges

Traditional exchanges mainly attract traffic by listing new tokens, but this model is gradually losing effectiveness. Web3 wallet services have become a new avenue for differentiation.

Advantages of venturing into Web3 wallets include:

1. Brand Image Upgrade: Developing Web3 wallets helps exchanges craft a more cutting-edge, decentralized corporate image, attracting new-generation users.

2. Technical Support: Mature technologies like MPC multi-party computation and account abstraction enable exchanges to offer safer, more user-friendly wallet services while improving their centralized image.

3. Competitive Pressure: Decentralized exchanges are narrowing the experience gap with centralized ones. Through micro-innovations like Gas fee sponsorships and routing optimization, exchanges must leverage wallet services to strengthen their competitiveness.

4. Regulatory Considerations: In an increasingly complex regulatory environment, embracing Web3 wallets and decentralized solutions helps exchanges respond to policy pressures.

5. Ecosystem Integration: Actively participating in decentralized environments aligns with industry development trends.

Major Exchanges’ Web3 Wallet Strategies

Gate Web3 Wallet

Gate.io’s Web3 wallet is a decentralized, multi-functional wallet designed specifically for the Web3 era. It emphasizes security and transparency—users have full control over their assets, with Gate.io providing technical support but not handling user assets. Features include easy one-click connection and multi-chain asset management.

Leading Platform Wallet Products

Other top exchanges have also launched their own Web3 wallets. Some wallets have achieved rapid growth by leveraging on-chain hotspots (like Ordinals ecosystem); others have integrated wallets within their apps to provide a one-stop DeFi experience; some professional wallets have been in development since 2018, accumulating years of experience to form a complete product matrix of “Wallet + Swap + NFT Marketplace + DApp Browser.”

All these products aim to provide users with comprehensive on-chain operation interfaces and financial services.

Three Major Bottlenecks in Web3 Wallet Development

Usability Challenges

Compared to centralized platforms’ “one-click” solutions, Web3 wallets require users to perform each step themselves. Users must understand concepts like private keys, addresses, signatures, and authorizations, which can be overwhelming for most newcomers. When issues arise, users cannot seek help from customer service—this self-responsibility model is extremely unfriendly to users unfamiliar with blockchain.

Security Concerns

Although wallet security is continuously improving, there is still room for enhancement. Risks like phishing attacks, authorization traps, and malicious DApps persist. Experienced users may not see these as major issues, but for beginners, these security risks form significant barriers.

Privacy and Regulatory Dilemmas

On one hand, users want to regain data sovereignty through decentralized wallets, escaping the information monopoly of big tech companies. On the other hand, true decentralization implies a lack of third-party oversight—if disputes or thefts occur, users find it difficult to recover assets through official channels. This contradiction between “freedom” and “security” is a challenge that the entire Web3 space cannot avoid.

Looking Ahead

Web3 wallets have evolved from simple asset storage tools into key infrastructure of the Web3 ecosystem. They not only connect users and applications but are gradually supporting on-chain identities, financial services, and community operations. Despite challenges in usability, security, privacy, and regulation, the momentum of Web3 wallet development is unstoppable. In the future, with technological advances and deeper user education, Web3 wallets will provide users with safer, more convenient digital asset management experiences, driving the entire blockchain industry toward a more open, inclusive, and mature future.