Coinbase, a leading cryptocurrency exchange, has been making significant strides in enhancing its wallet-as-a-service offerings by introducing two new innovative wallet solutions aimed at simplifying the development of Web3 applications.
These new features, designed with keeping developers in mind, focus on seamless integration and efficient balance transfer across Ethereum Virtual Machine (EVM) compatible applications, marking an important step in onboarding developers to its layer-2 blockchain, Base.
Streamlining Web3 development
The first of these groundbreaking solutions is a smart wallet that empowers users to carry their balances across different EVM-compatible applications seamlessly, thanks to the integration with the Coinbase Wallet SDK. This feature has addressed a common challenge in the Web3 space, where users frequently have to navigate cumbersome processes to manage their assets across various platforms. By enabling a more fluid transfer of balances, Coinbase is significantly enhancing the user experience within the Web3 ecosystem.
The second innovation is an embedded wallet that allows developers to incorporate noncustodial, white-labeled wallets directly into their applications. This feature is particularly noteworthy as it offers developers the ability to offer a more integrated and branded experience to their users, without the complexities traditionally associated with developing digital wallet technology from scratch.
Addressing developer pain points
Coinbase’s initiative comes as a response to the feedback and the challenges faced by developers in creating user-friendly Web3 products. Yuga Cohler, senior engineering manager at Coinbase Embedded Wallets, emphasized the continuous effort over the past year to refine and improve their product offerings based on customer insights. The introduction of embedded wallets is a testament to Coinbase’s commitment to simplifying the development process and enhancing the overall product experience in the Web3 domain.
The expansion of the company’s wallet-as-a-service product line is a strategic move that leverages the company’s expertise in digital wallet technology. By providing APIs that enable DApps to create wallets on behalf of their users in a native manner, Coinbase is eliminating the need for users to rely on external applications or Chrome extensions, thereby streamlining the user experience.
Coinbase leveraging MPC technology
Both Coinbase and other industry players like BitGo have also adopted multiparty computation (MPC) technology to power their wallet services. MPC technology allows for secure computations and transactions without the need for smart contracts, operating entirely off-chain. This approach ensures that private data remains confidential among participants, enhancing the security and privacy of digital transactions.
Coinbase’s decision to focus on MPC technology, while moving away from native Bitcoin support in its merchant payment platform, reflects the company’s strategic emphasis on developing advanced solutions for the EVM ecosystem. This shift underscores the challenges and opportunities in aligning cryptocurrency payment protocols with the evolving landscape of Web3 and blockchain technology.
Conclusion
Coinbase’s introduction of smart and embedded wallets represents a significant advancement in the wallet-as-a-service space, offering developers innovative tools to create more integrated and user-friendly Web3 applications. By addressing key pain points and leveraging cutting-edge technologies like MPC, Coinbase is poised to play a pivotal role in the evolution of the Web3 ecosystem, making it more accessible and efficient for developers and users alike.
