Non-custodial wallets have surged in popularity, with MetaMask now serving over 30 million users on a monthly basis. This growth in usage, however, is nowhere near the levels of custodial wallets offered by centralized exchanges such as Binance and Coinbase. The reason? Like any nascent technology, there are several shortcomings during the ideation, development, and early adoption stages.
While MetaMask has long been the go-to Web3 wallet for DeFi users, its infrastructure design is based on the Externally Owned Account (EOA) model. In this design, accounts are generated on the Ethereum blockchain through MetaMask’s software and managed through a set of private and public keys. The main problem, however, with EOAs is that they are limited to generic operations such as transactions or basic smart contract interactions.
Of course, to some extent, this level of functionality has served its purpose, but with more and more people looking to join the DeFi market, there definitely is a need for more customizable non-custodial wallets. Existing EOA wallets suffer from being too technical for potential new users, not to mention the risks of losing all their funds if they happen to misplace or forget their private keys.
Account Abstraction: The Future of Non-Custodial Wallets
Innovation within the DeFi realm is one reason the market has been so resilient, to the point where naysayers, including traditional financial companies that were vehemently opposed, are now joining the ecosystem.
The non-custodial wallet ecosystem has not been left behind, either. Last year, Ethereum’s community, led by Vitalik Buterin, introduced the EIP-4337 standard, which primarily allows developers to design and customize smart contract wallets. This standard has today paved the way for what is now dubbed as ‘account abstraction’: unlike EOAs, non-custodial wallets based on this novel concept offer more flexibility and security.
Even MetaMask, despite commanding the largest market share, is embracing support for account abstraction. The wallet recently launched MetaMask Snaps to enable developers to leverage external applications to improve the wallet’s user experience. Currently, some of the additional functionalities that can be added through MetaMask Snaps include notification applications, transaction analysis, and interoperability with non-EVM chains.
It does not stop there. Account abstraction wallets built from the bottom up, such as Ambire, Argent, and Safe, could be the biggest game-changers in DeFi adoption. These MetaMask alternatives are gradually coming of age, thanks to their fundamental prioritization of UX and security, as is the case with most successful Web2 platforms. In other words, it is easier to onboard new users by focusing on a seamless UX and integrating several security options.
Are Smart Contract Wallets Ready to Compete with MetaMask?
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Whether smart contract wallets are ready to disrupt MetaMask’s dominance can only be conclusively answered based on future data; however, if you’re an avid follower of the DeFi market, you probably understand that trends move fast, and most of the time, users end up flocking to platforms where they can derive the most value.
As mentioned above, several non-custodial wallets in the account abstraction space are emerging as serious contenders in the DeFi ecosystem. One that has particularly caught my attention is Ambire; of course, this is not to say that the other smart contract wallets do not have an opportunity to be disruptive.
However, looking at the adoption in recent months and in-built features, Ambire stands out as the closest MetaMask alternative for three main reasons. At the core, this non-custodial wallet is among a handful of Web3 wallets that allow users to set up an account using an email and password. This means that users can easily recover their accounts compared to the situation with EOA wallets, where it is not uncommon for one to forget their private keys completely.
Additionally, Ambire features a gas prepayment feature, making it easier for DeFi users to manage future transaction costs better. The concept is pretty similar to the annual or periodical subscription offerings by Web2 brands such as Netflix and Disney+, which offer discounted prices for users who opt for the prepayment option. Estimates suggest Ambire’s ‘gas tank’ could help save up to 20k in gas payments for ERC20 transfers.
Finally, a transaction simulation option. Many times, a DeFi user blindly accepts transaction requests, only to be able to account for the full cost once the transaction is complete. Ambire’s simulation option solves this challenge; this account abstraction wallet allows users to run a transaction simulation to compute the costs upfront.
It would also be incomplete to finalize this section without mentioning what distinguishes the other account abstraction wallets, which have an almost similar potential for disruption. Argent, for example, is a Layer2-focused non-custodial wallet leveraging advanced smart contract capabilities, including high-speed batch transactions, fee payments in stablecoins, multi-signature support, and a social recovery system.
Safe, on the other hand, supports multiple EVM chains alongside account abstraction features such as an internal app store, transaction simulations, and multi-signature functionalities.
Conclusion
The DeFi ecosystem is bouncing back, with the total value locked (TVL) across various protocols now over $100 billion. What this means is that we’re bound to see an influx of users in the coming years. But is the non-custodial wallet infrastructure ready to support this wave?
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Although they have yet to go mainstream, account abstraction wallets are the closest DeFi has gotten to offering a bank-like account. Imagine being able to customize a spending limit on a smart contract wallet or integrate a combined management model. That’s the true promise of the EIP-4337, the fuel that was much-needed to make wallet interactions more realistic and relatable to the average person.
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