How Coinbase Might Bring 1 Billion People Onchain Using Its Smart Wallet

How Coinbase Might Bring 1 Billion People Onchain Using Its Smart Wallet

June 7, 2024

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SUMMARY

Coinbase's smart wallet aims to bring 1 billion people onto the blockchain by sponsoring app transactions, covering transaction fees, and simplifying DeFi, while facing challenges with Apple's App Store restrictions.

• 00:00 🔑 Coinbase's Smart Wallet could bring 1 billion people onchain by sponsoring app transactions, operating as a smart contract on the ethereum blockchain, and eliminating the need for a private key or seed phrase.

  • Coinbase could use sequencer fees to sponsor onchain app transactions and continue sponsorship as long as the app is reputable.

  • Coinbase's Smart Wallet, launched with Moonwell as a day one partner, differs from traditional crypto wallets as it operates as a smart contract on the ethereum blockchain without the need for a private key or seed phrase.

  • Smart wallets, secured by a pass key, developed by the phto alliance, could solve the onboarding problem and bring 1 billion people onchain.

  • Enclave allows you to generate a signature to send transactions on chain without the need to trust a third party, potentially preventing issues like losing a seed phrase and making it easier for newbies to enter the crypto space.

  • Coinbase's smart wallet aims to eliminate the friction and complexity of onboarding new users to onchain apps by removing the need to download additional apps or extensions and simplifying the process of securing seed phrases.

  • Users often lose their money because they forget their seed phrase, so Coinbase aims to make it easier for people to access their smart wallet.

• 05:52 🔒 Coinbase's smart wallet could bring millions onto the blockchain safely, leveraging wide distribution and new pass key technology, with secure access across Apple and Google devices through iCloud and Google Cloud.

  • Coinbase's smart wallet has the potential to bring millions of people onto the blockchain in a safe and secure way, leveraging their wide distribution and new pass key technology.

  • Apple and Google devices are synchronized through iCloud and Google Cloud, with pass keys encrypted and secure, allowing for easy access across all devices.

  • Most people have their devices backed up automatically, which introduces some trust assumptions.

  • Adding a new device to your iCloud or Google Cloud requires two-factor authentication and biometrics, making it difficult for hackers to access your assets.

• 09:32 🚀 Coinbase's smart wallet will cover transaction fees for users, making onchain apps more accessible and secure, and partnering with sponsors to bring 1 billion people onchain.

  • Coinbase's smart wallet can bring 1 billion people onchain by sponsoring gas for apps, making transactions incredibly cheap and allowing for programmable smart contract wallets.

  • Coinbase's smart wallet will cover transaction fees for users, eliminating the need to acquire eth before using the app on chain, and other apps on base can participate in the gasless campaign.

  • Eliminating the need to buy ETH to use apps on social and gaming platforms by sponsoring gas transactions for users can make onchain apps more accessible and provide a web 2 experience without daily fees.

  • Coinbase's new feature, Magic Spend, allows users to use their Coinbase balance for onchain actions, making it more secure and reducing the friction of on-ramp processes for onchain apps.

  • Coinbase is making advancements in usability and is partnering with sponsors to bring 1 billion people onchain using its smart wallet.

• 14:20 📈 Coinbase plans to sponsor gas costs for onboarding new users and reputable apps, potentially generating significant sequencer fees to grow the onchain app ecosystem, while facing challenges with Apple's App Store restrictions.

  • Coinbase plans to sponsor gas costs for onboarding new users and will continue to do so for apps with a good reputation, using sequencer fees to fund and sponsor transactions on behalf of their users.

  • Coinbase may continue gas sponsorship for reputable apps, potentially generating significant sequencer fees to grow the onchain app ecosystem.

  • Coinbase wallet is accessible through a web link and can be bookmarked to the home screen, providing a secure browser environment, but the choice to not have a downloadable app creates onboarding friction due to restrictions from Apple and Google.

  • Coinbase has faced challenges with its wallet app being banned from the App Store due to Apple's dislike of apps with in-app browsers, but they are working on a workaround to bypass the overbearing App Store monopolies.

  • Moonwell is a borrowing lending protocol focused on creating accessible and easy to use financial onchain products powered by web 3, different from centralized lenders that blew up because everything is on chain.

  • Smart contracts on Coinbase's smart wallet provide transparent and stable lending without intermediaries, offering a different level of transparency than traditional centralized finance lending.

• 20:03 📈 Coinbase's retail distribution and smart wallet could bring 1 billion people onto the blockchain by simplifying DeFi, listing best collateral assets, and focusing on mobile user experience in regions with limited desktop access.

  • The speaker chose to work with Bas because of their previous experience at Coinbase, their friendship with the team, and the belief that Coinbase has better retail distribution, leading them to redesign their front end to be more user-friendly for Coinbase users.

  • Simplify jargon in DeFi to familiar fintech terms like lend, borrow, and credit limit to make it accessible to a wider audience.

  • Coinbase's retail distribution and strong alignment could bring 1 billion people onchain, with former employees now building Dows and other protocols due to regulatory constraints, and the platform being the largest lending protocol by TVL.

  • Coinbase plans to significantly grow its user base by listing the best collateral assets, supporting liquid staking tokens, and investing in full feature parity on its platform, offering more functionality compared to other players in the market.

  • Coinbase's smart wallet will attract more users and activity, with a focus on improving the user experience for mobile users in regions with limited access to desktop computers.

  • Defi is evolving to include people in countries with limited access to traditional banking, and Coinbase's mobile-first approach with low-cost payment options and stable coins could bring millions of people onto the blockchain.

• 25:21 📈 Unchained offers a redesigned website, President Biden vetoed the Sab 121 repeal, FTX settles $24 billion tax claim, Binance founder CZ begins prison sentence, Robin Hood plans to acquire bit stamp, and Kraken seeks fundraising for a possible IPO.

  • Unchained is more than a podcast, offering a redesigned website with news, analysis, and guides, and I trust Capital allows for tax-free gains on crypto in an IRA.

  • President Biden vetoed the Sab 121 repeal, citing consumer and investor protection as his reasons, despite the Senate's vote to repeal it.

  • FTX settles $24 billion tax claim with IRS for $885 million, while MicroStrategy and its founder agree to a $40 million settlement with the attorney general for the District of Columbia over allegations of evading income taxes.

  • Binance founder CZ begins prison sentence for money laundering charges, despite stepping down as CEO and holding a 90% stake in the company.

  • Robin Hood plans to acquire crypto exchange bit stamp to aid in its worldwide expansion, with the $200 million cash deal expected to close in the first half of 2025.

  • Kraken is seeking a fundraising round for a possible IPO, while Franklin Templeton is considering launching a crypto fund aimed at institutional investors.

• 31:32 📈 Coinbase aims to bring 1 billion people onchain using its smart wallet, with blockchain networks facing security issues, new upgrades to lower costs for validators, and predictions of ether reaching $22,000 by 2030, while celebrity meme coins and tokenized treasury products experience volatility and financialization.

  • Blockchain networks Linea and Cosmos Hub halted block production due to security issues, with Linea briefly halting production following a $6.8 million exploit on velor, and Cosmos Hub halting production for 4 hours to address a security vulnerability.

  • Validators implemented a patch to restart block production, a new upgrade aims to lower costs for smaller validators, and investment firm Vanek predicts ether will reach $22,000 by 2030 driven by ethereum's disruptive capabilities and substantial free cash flows.

  • Zync withdrew trademark applications for the term ZK after industry backlash, as Matter Labs prepares for the ZK sync token generation event with a substantial airdrop and the Salana blockchain witnessed the highest number of new token launches ever recorded.

  • Celebrity meme coins and tokenized treasury products are experiencing volatility and financialization, with Black Rock's Beetle fund distributing $1.7 million in monthly dividends to fund holders on Ethereum.

  • Galaxy Digital tokenizes a 1708 Stratovarius violin, owned by Anoka Brand's co-founder Yatu, using blockchain technology to unlock the value of unique real world assets.

  • Eric Wall shares his experience seeing Caitlyn Jenner promote a pump and dump coin, and expresses admiration for Iggy Azalea's understanding of web 3.

• 38:36 😲 Our hero is frustrated as he tries to purchase a coin that skyrockets, but thanks for joining and stay updated with the latest in crypto on Unchained.

INSIGHTS

Mobile-First Approach for Onboarding Users

• 🔒 Coinbase's smart wallet aims to bring millions of people on chain in a safe and secure way, reducing friction for first-time users.

• 📱 Most people are using iPhones, iPads, Mac computers, and Google Android devices, which are all synchronized to iCloud or Google Cloud.

• 📈 The ability for Coinbase to sponsor gas costs for onboarding new users could potentially bring 1 billion people onchain using its smart wallet.

• 🌍 We need to lean into the mobile-first approach, as our target audience is in places like South America, Africa, and parts of Asia where they don't have access to a desktop computer.

• 📱 Emphasizing a mobile-first approach is crucial for bringing millions of people on chain, especially in countries where people only have mobile phones and no access to a home computer.

• 💰 Vanek predicts ether to reach $22,000 by 2030, driven by ethereum's disruptive capabilities and substantial free cash flows.

Security and Accessibility of Smart Wallet

• 🔒 The smart wallet is secured by a pass key, developed by the phto alliance, ensuring on-device private key security.

• 🔐 Losing access to cryptocurrency due to forgotten seed phrases is a painful and horrible experience for users.

• 💸 Coinbase's smart wallet aims to eliminate the need for users to acquire ETH before using the app on chain, potentially revolutionizing the user experience.

• 🌐 Smart contracts on Ethereum operate without third-party interference and will live as long as Ethereum operates, providing a different level of transparency compared to traditional lending.