Building crypto apps require wallets to write data to the chain. Today integrating a wallet into an application requires evaluating two options:
- 1.Using a third party wallet, accessible via browser extension
- 2.Using an embedded wallet, accessible natively within your app
Third party wallets enable users are able to take their assets to applications because they bring their own keys to every application. Third party wallets are the industry standard but sometimes leave users to deal with complex UX.
Using a third party wallet in other applications requires the explicit management and use of another app.
Embedded wallets allow users to directly onboard into an application and offer cleaner UX. However users are unable to use the same embedded wallet across applications. This is because some embedded wallets issue unique wallets to each application, instead of to each user directly. This means users go through arduous export key processes in order to use wallets elsewhere (and often times, the original wallet is completely deleted from the first application).
Using an embedded wallet in other applications requires the following steps.
- 1.Wallet portability can often be confused with user churn. This is not the case. A user being able to login to an application via a third party wallet like Metamask preserves network effects. That means for developer building new applications, any end user with a Metamask wallet can easily log in
- 2.Better and more data with wallet portability. A user’s onchain history drives critical decisions like what features to prioritize next, what services to build within an app, etc. Onchain insights are valuable and used to prioritize product decisions (eg. Metamask adding swaps, Uniswap acquiring Genie, etc)
- 3.Wallet portability enables multi-app flywheels. Web2 flywheels usually exist within the context of an application. Web3 flywheels are multi-app. It’s common for users to swap tokens on one application, earn yield on another, and purchase NFTs with that yield in a completely separate application. Wallet portability saves on integration time, so users can transact across applications seamlessly
Wallet portability is like Single sign-on or SSO. SSO is session and user authentication that permits a user to use one set of login credentials — for example, a username and password — to access multiple applications. SSO changed UX and app conversion. Wallet portability works similarly.
Users are able to SSO into applications if they have a Capsule wallet, simplifying the process of acquiring customers. Users are able to do this even if Capsule is not integrated against applications. Capsule aims to make the SSO experience even more seamless by integrating with wallet aggregators like WalletConnect, Blocknative, Dynamic, etc.
To see an example of wallet portability, watch the demo below where a user is able to login to a 2nd application (CryptoMombies, 0:46) with the same email they created a wallet with: