…And Why XDEFI Wallet Is Set to Become A Major Competitor
If there’s a single item that a new user needs when discovering what web 3.0 has to offer, it’s a self-custodial wallet. With Metamask as a household name over the last few years, competitors have sprung up looking to improve further and simplify the wallet experience and provide users with a suite of tools preparing them for the web 3.0 ecosystem.
In today’s article, we look at the growth in web 3.0 wallets. We use Metamask as an example of the exponential growth we’re currently seeing and then explain what XDEFI potentially does better. Last but not least, we take a look at the XDEFI token and how the token design will generate value for XDEFI token holders.
Why Do I Need a Wallet?
Before 2017, most of the crypto activity happened on centralized exchanges. Convenience and the complexity associated with being your own bank resulted in new users leaving their coins on exchanges. Only those technical enough or investors who had accumulated a large sum of money took the time to self-custody their assets. With the launch of simple cold wallet solutions like Ledger and Trezor, more people started to store their coins on-chain.
Metamask was the first browser extension that simplified this process even further. With a few clicks, users could create their own (hot) Ethereum wallet and store their coins outside of centralized exchanges. Without going into too much detail, Metamask allowed decentralized applications (DApps) to communicate with the Ethereum network by providing an intuitive interface.
This became increasingly popular with the advent of decentralized finance, which due to its non-custodial nature, required users to have their own web 3.0 wallet to interact with different DApps. Like DeFi last year, buying and selling non-fungible tokens (NFTs) again required users to have a web 3.0 wallet, which further contributes to the exponential growth phase we’re currently going through.
The Rise of The Red Fox
In a recent press announcement regarding a US$200 million financing round, ConsenSys said that Metamask now has a user base of approximately 21 million monthly active users, a 38x increase from 2020. Because it’s the first thing users have to install when going on-chain, it’s a substantial number watched by many in the industry as one of the key metrics to estimate crypto adoption. Arthur Cheong, the founder of Defiance Capital, even jokingly used the current growth rate to validate the now-famous supercycle theory, coined by Su Zhu, co-founder of Three Arrows Capital.
Until September 2020, it was unclear how Metamask would generate revenue from its growing user base. That all changed when they announced their native swapping feature, giving users price quotes from multiple DEX aggregators inside the app allowing users to trade on-chain without third-party interfaces. Although fees on trades (0.875%) were very high compared to the market standard, the swapping feature turned out to be a huge success so far. Within 11 months, more than US$10 billion in swaps were completed with a cumulative revenue of over $200 million. An impressive number given that their customer acquisition cost is close to or simply zero, according to a recent report written by Delphi Digital. Needless to say, with an average of less than 10,000 daily traders, there is much room for further growth.
SMetamask currently does not have its own token, but Consensys co-founder Joseph Lubin recently hinted that the option remains on the table. Given the current climate for a race towards more decentralization, one might say there is a reasonable chance that Metamask will eventually launch one. If this were to happen, it’s almost a given that the token will capture at least a share of this growing revenue which could potentially value Metamask in the billions of dollars.
XDEFI Wallet — A New Player In Town
‘Ledger and Metamask are the only thing keeping NFTs from mass adoption’ — @KennWattana
With this kind of growth, growing pains are unavoidable, and it’s nearly impossible to satisfy the demands of every single user. This means there is increasingly more room for competitors to further improve the web 3.0 experience and focus on features in high demand within certain market segments. One of those up-and-coming web 3.0 wallets is XDEFI.
One of the areas where Metamask lacks basic features is NFTs. XDEFI picked up on this and displayed NFTs from several blockchains in a single display. The app has built-in automatic NFT detection and a host of other features waiting to be released on top of the already wide-ranging support for DeFi and NFTs in general. The team’s scope of vision and speed of execution is widely celebrated on Twitter. With the recent successful IDO and backing by industry giants including Delphi Digital and Alameda Research, XDEFI looks well-positioned to establish itself as a competitive web 3.0 wallet on all fronts.
Another big feature of XDEFI is its multi-chain support, calling itself a chain-agnostic wallet from the start. This year has made it abundantly clear that the future will be multi-chain, and users should not be afraid to bridge their assets across blockchains. Although Metamask supports several chains, XDEFI takes it one step further and offers support for both Terra and Thorchain, on top of Ethereum and several EVM-compatible blockchains with many more to come later this year.
Native Cross-Chain Swaps
Like Metamask, one of XDEFI’s revenue sources will be their own multichain DEX aggregator from within the wallet. By leveraging Thorchain, token bridges, and other solutions, XDEFI wallet will create the best experience for users to swap assets without the need to connect to a third-party interface.
This feature is currently being tested and comes with several advantages for users like:
- No need for centralized exchanges to hop between blockchains
- No wrapped tokens
- No custodian
As discussed in the next section, a portion of the fees that are paid for swaps will accrue value to the XDEFI token because stakers will receive rebates depending on how long a user locks his tokens in the rebate vault.
XDEFI Token Design
XDEFI wallet’s token ($XDEFI) is an ERC-20 token designed by the most popular tokenomics researchers in the industry: Delphi Digital. The token is designed to bring users into a community and maintain a suite of products around the wallet. There will be four main utilities: staking, governance, building, and play-to-(l)earn.
Stakers have a dual role. First of all, staking $XDEFI into a so-called rebate vault entitles users to discounts when using the swap functionality. On top of that, depending on how long users lock their tokens, staked $XDEFI yields rXDEFI, a claim on a portion of the generated trading fees. The rebate vault will be available in the first half of 2022 directly in the wallet. Another portion of the trading fees will go into a community treasury, with which stakers will help decide the future of the product.
As the crypto market learned this year, tokens are incredibly useful for incentivizing specific behaviour. XDEFI calls to play to l(earn) and will incentivize users to learn about DeFi and discover everything web 3.0 has to offer. Last but not least, some of the XDEFI tokens will be used to support strategic projects growing DeFi and NFT ecosystems around the XDEFI wallet.
Regarding token strategy, XDEFI has a clear lead compared to Metamask and will be able to further strengthen the community by incentivizing the right behaviours. As Naval said in a recent podcast episode on web 3.0, tokens are self-marketing as users with skin in the game want to talk about it because their goals are aligned with those of the team.
The market for browser-based wallets is unlikely to be guided by a winner-take-all principle. Different users have different needs, and with the rate of innovation crypto has seen over the last couple of years, teams that listen to their users’ demands will continue to thrive.
Demand for in-wallet swaps is significant and still growing, even with relatively high fees. Coupled with a solid token design, XDEFI has made sure that the majority of fees flow back to XDEFI holders and stakers to keep building the future of web-based wallets together with our community.
This article is part of a paid content series the author is creating for XDEFI Wallet. This statement is intended to disclose any conflict of interest and should not be misconstrued as a recommendation to purchase any token or participate in any farms. This content is for informational purposes only, and you should not make decisions based solely on it. This is not investment advice. All market prices, data, and other information are not warranted as to completeness or accuracy, are based upon selected public market data, and reflect prevailing conditions and the author’s own views as of this date, all of which are accordingly subject to change without notice