Coinbase launches smart wallet to onboard the next billion users onchain
Each day, Coinrule will run through the state of the digital assets market for Blockbeat, your home for news, analysis, opinion and commentary on blockchain and digital assets.
Founded in 2012, Coinbase is one of the longest existing crypto companies with over 100 million registered users. Due to its simplified user experience and credibility within the space, Coinbase was the first stop for many of these users’ crypto journey. Their branding and user experience got millions of people dipping their toe into crypto’s centralised finance (CeFi) realm for the first time. Now they are taking it a step further with their focus shifting to onboarding their users into the unadulterated world of decentralised finance (DeFi).
Last August, Coinbase launched their own Ethereum Layer 2. Since then it has become the seventh most valuable chain with nearly $1.8 billion in total value locked, according to data analytics site DefiLlama. In May, Base generated nearly $7 million of onchain profit. This was over $5 million more than Optimism – the second highest. March and April were even more impressive with nearly $17 million and $14 million respectively.
Seed phrases and gas fees are some of the main barriers for newcomers entering the crypto market and accessing DeFi on chains, such as Base. For non-crypto natives, the idea of having to protect a 12 or 24 word seed phrase leads them to think it’s all too much hassle, and maybe this crypto thing is not for them. Changing gas prices and failing transactions further contribute to this. This leads to them staying in the limited world of CeFi with centralised exchanges. Coinbase’s new smart wallet aims to simplify crypto’s onchain experience and move the next billion users onchain.
Unveiled on Wednesday, Coinbase’s new smart wallet can now be directly funded from a user’s Coinbase account. This now ends the need for users to always have a chain’s gas token in their wallets to transact. Creation of a smart wallet will also take a few seconds. Wallet creation can even be done whilst interacting within supported applications. This is possible due to smart wallet security using Passkeys via Apple’s Face ID, Google Chrome profiles, Yubikey or fingerprint. To incentivise applications to integrate smart wallets, Coinbase is offering gas credits of up to $15,000. This will lead to smart wallet users initially not having to pay any gas fees on integrated applications. At launch, smart wallets will support Base, Ethereum, Optimism, Arbitrum, Polygon, Avalanche, BNB and Zora. Coinbase has also said they plan on adding more Blockchains to this roster.
If any crypto company were to onboard the next billion users it seems probable it would be Coinbase. Its credibility as a publicly traded company, along with the ‘survivorship bias’ of its 12 year existence, play a strong role in attracting and convincing doubtful newcomers. Now with their smart wallet, the barriers of accessing onchain crypto are the lowest they have ever been.
The views and opinions expressed in this article are those of the authors and do not represent those of City PM, its affiliates, or employees.