Chainfeeds Briefing:
In the crypto industry, every product will ultimately become wallet-integrated, meaning products and platforms will develop towards end-to-end vertical integration, no longer relying on the current user experience of injected or external wallets. As thresholds lower, front-end dominates, and infrastructure becomes commoditized, project teams will integrate wallets as part of their products.
Article Source:
https://x.com/valerio_mnt/status/1945421175255122027
Article Author:
valerio
Perspective:
valerio: As crypto infrastructure becomes increasingly standardized and front-end experience becomes more crucial, wallet integration has become a key direction for the next generation of crypto product design. So-called WalletFi refers to each crypto application embedding its own wallet system, no longer relying on external wallet plugins like MetaMask. Behind this is not just a consideration of user experience, but also significant economic incentives - especially the Payment for Order Flow (PFOF) mechanism: once an application controls its own wallet, it can exclusively access user transaction data and sell these transaction sequence data to block builders for profit. Currently, platforms like MetaMask and various Telegram trading bots (such as Maestro) have already adopted similar strategies, transforming their wallet capabilities into stable income sources. Controlling the wallet means controlling the order flow, thus mastering valuable data assets and substantial Maximal Extractable Value (MEV) income. With the development of high-frequency trading, complex interactions, and new user needs, the logic of wallet as a product is gradually dominating the entire crypto industry's product architecture. Owning user wallets not only allows projects to economically benefit from order flow but also gives them control of the true asset entry point. Wallets are highly sticky products; once users deposit assets into a wallet or manage assets through a product, that user is essentially locked in. This also means products can expand an entire ecosystem of services around their wallet. For example, Infinex has achieved end-to-end user control through "embedded wallet + simplified authentication process (like Passkey)" and opened Infinex Connect, inviting other dApps to build on top of it; Safe has also attempted to expand its smart contract wallet platform into an ownership infrastructure ecosystem. The ecosystem effect of wallets is emerging, with products transforming from functional tools to fundamental entry points, where other developers, protocols, and service providers will integrate, collaborate, and expand traffic around these wallet-integrated products. This trend will gradually blur the boundaries between wallets and applications, platforms and ecosystems, pushing towards an era of wallet as a platform. To enable more products to integrate wallet functionality, numerous B2B wallet infrastructure service providers have emerged, such as Privy, Turnkey, and the open-source solution Porto funded by Paradigm. These solutions are mostly based on OAuth and WebAuthn standards, implicitly generating wallets through email, Google login, etc., achieving an embedded wallet experience that significantly reduces development and user entry barriers. Privy has even been acquired by Stripe, demonstrating the strategic value of wallet infrastructure. However, many Telegram trading bots also adopt a "self-hosted" mode, directly generating keys for users and storing them in backend databases, thereby bypassing intermediary service providers to maximize performance and data control. While this approach brings higher revenue and control, it also carries enormous legal compliance and hacking risks. Therefore, product teams need to find a balance between performance/control and security/compliance. Overall, whether using commercial B2B wallet services or building self-hosted systems, the battle for wallet control has become a core component of crypto product business models and ecosystem strategies.
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