Coinbase Adds 'Smart Wallet' Feature, So Lengthy Seed Phrases Aren't Needed
The smart wallet will be an addition to Coinbase Wallet SDK, and the embedded wallets feature will be powered by "wallet as a service."
Feb 29, 2024 at 3:00 p.m. UTC:format(webp)/cloudfront-us-east-1.images.arcpublishing.com/coindesk/KMVEI3EFUFHRZHLCQBI76KC2XA.jpg)
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Coinbase, the publicly traded U.S. cryptocurrency exchange, is coming out with two new wallet solutions that are supposed to make the onboarding of new users into crypto easier.
The features, known as their smart wallet and embedded wallets, aim to overcome hurdles that often come with the clunky user experience when creating crypto wallets.
The smart wallet will be an addition to Coinbase Wallet SDK, a software toolkit that allows developers to create a wallet instantly inside of decentralized applications with passkey, meaning no complex systems like using seed phrases or any extra steps will be needed.
The wallet is built on top of Coinbase’s layer-2 network Base, and is currently in testnet. It makes use of a popular blockchain technology, known as account abstraction, which gives users recovery options in the event that they lose their keys. Coinbase also said in a press release seen by CoinDesk that they will give out credits for gas fees with their Account Abstraction Kit.
The Base team shared in their blog post that one of their goals for 2024 is to make smart wallets the default. “Smart wallets will help solve the key challenges in security and usability that are holding back on-chain adoption today – bringing more users on-chain and letting builders offer simple onboarding and better experiences,” they wrote.
The embedded wallets will be powered by “wallet as a service,” or WaaS for short, the idea that companies can customize blockchain wallets for their own customers.
The new feature will “allow developers to create white-labeled embedded wallets that abstract away the complexities of crypto in favor of familiar email and social login flows,” Coinbase wrote in the press release.
“Building the next generation of on-chain experiences will be critical to bringing a billion users on-chain, and we believe that evolving wallets are a critical step,” Coinbase said.
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Margaux Nijkerk reports on the Ethereum protocol and L2s. A graduate of Johns Hopkins and Emory universities, she has a masters in International Affairs & Economics. She holds a small amount of ETH and other altcoins.