Main Takeaways
Mass adoption of any innovative technology requires scalable and user-friendly identity systems.
Today, most crypto wallets suffer from the same fundamental issues hurting Web3 adoption: complicated setup, fragmented wallets for different chains, poor seed phrase security, and a clunky user journey.
Our latest product is a DeFi wallet designed to solve many challenges in Web3’s current identity system.
Explore the ongoing discussion surrounding identity and adoption in Web3, and discover Binance DeFi Wallet — a robust DeFi wallet built directly into the Binance app and secured with MPC technology.
The issue of identity has been a persistent issue for the Internet since its earliest days (known as Web1) when IP addresses were used for identification. Adoption only began to flourish once Web1 introduced URLs.
Web2 brought new problems, as each site and application needed its own identity system, resulting in weak passwords, fragmented accounts, and lower usage. Google, Facebook, and Apple tackled this with federated identity systems based on OAuth, ushering in a new era of Web2 applications.
Web3 faces similar identity-related hurdles today, including complicated wallet addresses, MEMOs, cross-chain issues, and inadequate wallet security protocols. By addressing these challenges, we can unlock Web3’s full potential and provide users with a seamless, secure, and user-friendly experience.
Challenges Today
Saying what makes a sound identity system is, of course, easier said than done. There are several challenges in executing the “perfect” identity system today:
Centralized exchanges (CEX) have their own disparate identities. DeFi uses blockchain-dependent wallets, which are significantly harder for first-time crypto users to adopt.
The user experience for Web3 identity could be more user-friendly, like Web2. For example, passphrases, hardware keys, and browser plugins are typically cumbersome to use, especially for newcomers.
Users must complete several know-your-customer (KYC) processes to use different centralized finance products. DeFi currently does not require KYC, but this may change once regulations catch up.
Currently, no identity scopes are available in Web3; everything is an address. For DApps, this is a challenge because they cannot differentiate the users they want to target from the rest. How can we preserve the privacy and openness of Web3 while still preventing misuse and fraud?
Wallets Are the Key to Web3
If you want to experience the full potential of Web3, you need to own a crypto wallet. As such, a powerful wallet is also the key to addressing many of the challenges Web3 faces today.
While there are hundreds of options available today, from hot to cold wallets, most suffer from the same fundamental issues that are hurting Web3 adoption:
Complicated setup
Fragmented wallets for different chains
Poor seed phrase security
Clunky user journey (memos, copying long addresses, and picking the right network)
Our industry has made some progress towards improving these issues, such as developing multi-party computation-based (MPC) wallets and Ethereum's smart contract-based protocol for wallets. However, there are still several features we need to implement:
A trusted identity provider. Ideally, one that has hundreds of millions of users in the same vein as what Google and Apple provided for Web2.
Excellent customer support so that if users lose their keys or device, they feel confident they can get a trusted partner to recover them.
An intuitive, accessible user experience that includes one-click flows for registration, funding, and transfers.
Cross-chain support instead of wallets being exclusively attached to a particular network.
Extensible software development kits (SDKs) that anyone in the ecosystem can adopt. Wallets are only the beginning of the journey.
A level of control in which users can nominate trusted custodians to address the challenges above.
Introducing Binance DeFi Wallet, Powered by Binance ID
Binance DeFi Wallet is built directly in the Binance app with the latest standard of multi-party computation. This cryptographic technique enables a group of individuals or parties to perform an operation without revealing their private keys to each other. In other words, no party can access the complete private key or any other part of the key besides their own. The private key remains secure even if one of the parties is compromised.
On top of best-in-class security, we’ve embedded the Binance DeFi wallet with a suite of advanced features such as Binance ID, biometric authentication, Wallet Connect support, and SoulBound Tokens (SBT), to name a few. Let’s take a closer look at some of the tangible benefits Binance DeFi Wallet offers.
One-click setup
Experience a frictionless onboarding process with just one click and gain access to a robust DeFi Wallet. Setting up your wallet takes place on a user-friendly platform with no complex or time-consuming steps, unlike other Web3 wallets that typically include clunky user interface design and confusing instructions.
Cross-chain support
Binance DeFi Wallet will support Ethereum and BNB Smart Chain (BSC) from day one, with new chains being added in subsequent weeks.
Wallet recovery
If you lose your device, simply log in with your Binance ID and provide your multi-factor authentication to recover your DeFi wallet.
From CeFi to DeFi
Transferring funds between centralized and decentralized finance has never been easier. With biometric authentication, you can securely send and receive funds with just a few taps.
One device, all of DeFi
Binance DeFi wallet fully supports Wallet Connect, a widely-used protocol that allows you to interact with any DApps on Ethereum or Binance Smart Chain. This means you can manage your DeFi portfolio and trade your favorite assets without switching between different wallets or platforms.
Stay private with SoulBound Tokens
Access a wide range of DeFi services while maintaining complete control over your data. Binance SoulBound Tokens (SBT), one of our DeFi wallet’s advanced features, are digital identity tokens that allow you to prove your identity on-chain without compromising sensitive information.