Smart Wallets are Changing Growth Strategy

Dilemma of Smart Wallet and Different Approaches

Writer: Xiang Yao

From Subscribe: Smart Wallet Trend

Hi, friends. It’s been two months since the last update. Yield farming has attracted so much attention and also has a significant impact on the development of Smart Wallets. As I mentioned in the last column, the Smart Wallet operators will stop unrestricted subsidy, and they need to find new approaches for continuous growth. Several means were proposed, such as using targeted subsidy, building a billing system, and finding L2 integration solutions.

Response to congestion

The good news is many smart wallets are taking positive actions.

Gas policy updated

• Dharma has ended unrestricted subsidy for all transactions except for specific ones. link
• Authereum has asked the new users to pay the deployment fee. link
• Argent only pays for security operations.
• Dapper will no longer be subsidizing gas for non-Dapper Labs developed games. Some non-core CryptoKitties functions and will no longer subsidize gas for the ‘approve’ function on CryptoKitties. link

Layer 2 solution integrated

• Gnosis just released the Safe Multisig on the xdaichain. link

New blockchain supported

• MYKEY features TRON Network as the third smart contract layer. link

A new competitor with a low-cost creation feature

• Loopring updates optimized the wallet smart contacts reducing the cost of creation. link

What did wallets do?

I’ve been keeping an eye on each smart wallets’ development, especially on their response to the high network fee problem. This section will talk about my observation about active smart wallets and thinking in the next section — sort by the number of registered users.

Dapper Labs

It seems that Dapper Labs is making a concentrated effort to build its public ledger, Flow. However, they still own the most users among all smart wallets, reaching 38,000, and has a stable growth(nearly 40 new users per day) not affected by the congestion. One reason is the contract is quite simple and only spend 135k gas, less than other wallets. Many new users come in most congestion days, such as Sep. 3rd, nearly 150 newcomers signed up to enjoy free transactions.

However, like other wallets, Dapper cut the subsidies. It only provides limited free transactions for Crypto Kitties, and users need to pay for the transaction pass for other types of transactions.

Argent

The number of Argent users increased from 20,000 to 30,000 rapidly in only two months starting from June, which seems they can get the first chair over Dapper soon. The unexpected congestion blocked the process. In the beginning, all transactions in the Argent app is free, but the “painfully high gas price” cost them $400K only in July. They used three ways to achieve balanced costs and revenues.

• Users need to pay for most transactions. The transfer and Dapps’ actions will charge users in ETH, DAI, USDC, BAT, ZRX, WBTC, REP. However, Dapps can offer free gas to Argent users, as Maker does.
• Explore Layer 2 solutions. Argent announces that they’re researching Layer 2 opportunities and working with the best team in the space. This would benefit for the high cost of the gas fee.
• Introduce commissioned aggregated trade. Argent launched a massive upgrade that users can trade any token pair at the best market rate, earning a 0.15% commission fee from each transaction.

MYKEY

MYKEY is deployed in multiple public chains based on KEY-ID protocol. On Sep. 9th, it features TRON network as the third infrastructure after EOS and Ethereum and reaching 6,000 new users in the first month.

TRON’s integration makes it cheaper to deposit and withdraw USDT. The cost will be covered by MYKEY relayer, so users enjoy the free transaction.

Gnosis

Gnosis has a partnership with xdai. As part of the partnership, Gnosis has invested in the xDai Ecosystem Fund to become significant holders of the STAKE Governance token. The xDai chain is an EVM based Ethereum sidechain following Proof-of-Authority consensus.

After that, Gnosis released the Safe Multisig on the xdaichain to provide instant transactions with low network fees.

Dharma

Dharma is against the trend that in the most congestion period, subsiding Uniswap trade transactions since July 30. “Never miss a trade. Never pay for gas.” The slogan ends on Oct 23, defining “Never” as 86 days.

However, the free use of Uniswap brings unexpected trouble. Uniswap airdropped 400 UNI to all users who had been using its product. Unfortunately, Dharma users are not eligible to claim UNI token because only addresses which directly called the Uniswap contracts were considered users. 2,833 Dharma users were affected. Dharma carried out a Retroactive Airdrop proposal to retroactively distributes 400 UNI to 12,619 distinct addresses who interacted with Uniswap via a proxy contract. Now it’s in the voting stage.

In the meanwhile, Dharma has updated Q4 Roadmap. The infrastructure is reconfigured, and after that, Dharma is purely a Smart Wallet rather than a DeFi product.

• 1. Debit Card Deposits will be unavailable for 1–2 weeks while we build out the new feature set mentioned above
• 2. dTokensare being deprecated permanently as a means of earning yield in Dharma
• 3. Our Compound integration (aka Yield tab) and P2P payments system are being temporarily retired

Monolith

Monolith integrates fiat-to-crypto exchange to close the loop on DeFi.

It seems there’re no new users since June 1st in the DuneAnalytics. However, it’s a feature to avoid high gas fee. Monolith breaks new wallet creation in two steps: first, create accounts when Ethereum gas price is low; second, initialize when the user registers. The initialization spends much lower gas than deployment, enabling Monolith unaffected by high gas price. And I think it’s a good model case for other projects.

The most important thing for me is TokenBrice, the community manager of Monolith, is stepping down. Best wishes to him!

Authereum

After changing gas policy three times 123, Authereum announced Authereum V1. However, new users need to pay for registration, and the transfer is not free anymore.

Loopring

Welcome to the show! Loopring wallets are still delivered to beta-testers, so I cannot make a reasonable evaluation. See the post and look forward to the public version.

Around the wallets

• Snapshot added support for EIP-1271 so users can vote from a smart contract wallet. However, I failed and got “Wrong Signature Error.” Now the issue is being fixed.
• EIP-3023 was proposed to provide a registry for checking if a contract is a user wallet. This can avoid sending mistakes and statistical errors.
• Layer 2 solutions based on zkRollup have rapid progress.
• Matter Labs and Curve unveiled a zkSync L2 smart contracts testnet with Curve Finance as the first resident dapp.
• Hermez published its whitepaper.
• StarkWare delivered Cario, the first production-grade platform for generating STARK proofs for general computation. Also, they spoke out their consideration of L2 interoperability and Optimistic Rollup.
• Aztec announced Aztec 2.0, a scaling solution with privacy allowing users to send token privately with ~300 tx/s.

What’s the next step?

The gas price is quite low now but we’ll never go back. As I mentioned in the last post, we can’t enjoy free transactions on Ethereum anymore, unless…? Layer 2 solutions? ETH 2.0? Or? Leave your comment plz.

About Smart Wallet Trend

Smart Wallet Trend is a newsletter where you can find news, insights and fresh ideas about Smart Wallets.

My name is Yao Xiang, currently a researcher of MYKEY Lab.

Feel free to contact me via comment or send 📧email to me directly.