A brief overview of the history of blockchain wallets and the market landscape in 2025.

1. Introduction

In the blink of an eye, I have been working in the wallet field for 4 years.

Many people believe that the wallet market in 2025 is already solidified, but this is not the case—it is still evolving. This year: · Coinbase launched its new CDP wallet, built on TEE technology; · Binance's MPC wallet introduced key sharding and hosting to the TEE environment; · Bitget just released its social login feature last week, also hosted on TEE; · OKX Wallet launched a smart account feature based on TEE; · MetaMask and Phantom introduced social login, essentially using key sharding and encrypted storage. While no truly groundbreaking new players emerged this year, existing players have undergone a dramatic transformation in their ecosystem positioning and underlying technical architecture. This shift stems from drastic changes in the upstream ecosystem. With the overall decline of the BTC and Inscription ecosystems, numerous wallets have begun to adopt a new "gateway" role, embracing emerging sectors such as Perpetual Contracts (PCS), RWA (equity-based), and CeDeFi (a combination of centralized and decentralized finance). This transformation has actually been brewing for years. Follow along in this article to delve into these quietly emerging players and their impact on future users. 2. A Review of the Development Stages of the Wallet Sector Wallets are a rare essential product in the blockchain industry, and also the first entry-level application outside of public chains to break through ten million users. 2.1 First Stage: The Single-Chain Era (2009–2022) In the early stages of the industry (2009–2017), wallets were extremely difficult to use, even requiring local nodes. We will skip this stage. Once usable, self-custody became the preferred choice—after all, in a decentralized world, "default distrust" is the foundation of survival. Well-known products such as MetaMask, Phantom, Trust Wallet, and OKX Wallet were among the leaders of this period. From 2017 to 2022, the market witnessed a boom in public blockchains/L2 blockchains. Although most chains still used Ethereum's EVM architecture, being a compatible and user-friendly tool was sufficient to meet the needs. During this period, the core positioning of wallets was "good tools." While the industry saw the commercial potential of them as traffic entry points and DEX entry points, security, ease of use, and stability were the primary requirements. However, from 2023 to 2025, the situation changed. Heterogeneous public blockchains such as Solana, Aptos, and BTC (during the Inscription era) completely dominated the user market. Although Sui itself was developing well, after the hacking incident, large funds hesitated due to the drawbacks of excessive centralization. Driven by the era of "fat protocols, thin applications" in financing, although VCs' returns were meager, the market landscape was indeed changing. 2.2 Second Phase: The Multi-Chain Era (2022–2024) Faced with the multi-chain landscape, even established players like MetaMask had to transform, incorporating built-in support for Solana, BTC, and others. Leading players like OKX Wallet and Phantom implemented multi-chain compatible architectures much earlier. The core indicator of multi-chain compatibility is the number of chains supported and the origin of transactions—this means the backend handles a significant amount of work, with the client only responsible for signing. From the user's perspective, it's about whether they need to find RPC nodes to use the wallet. Today, multi-chain compatibility is almost standard. Long-term adherence to a single chain is easily unsustainable because chain trends are constantly changing. A typical example is the Keplr wallet, which focused on the Cosmos ecosystem, but this sector never took off. Many application chains built quickly on Cosmos have gradually faded into obscurity after launch. As the barrier to entry for building EVM L2 becomes lower, the situation for single-chain wallets may ease, but their limits are limited. Once the basic tools are sufficiently user-friendly, users begin to realize commercial needs within their wallets! True asset owners not only need to safeguard their assets but also actively drive them—finding the best profit-generating venues and choosing interaction partners. However, users are also plagued by the complexity of various DApp interactions and must constantly guard against phishing websites. Given this, why not directly use the wallet's built-in functions? 2.3 The Business Competition Phase The focus of competition among wallets has shifted to the business level, typically through aggregating DEXs and cross-chain bridges. Although Coinbase explored integrating social functions, this demand was considered too pseudo-demand and remained lukewarm. Returning to basic needs, users require a single wallet entry point to complete multi-chain asset transfers. At this point, coverage, speed, and slippage become the core competitive advantages. The DEX field can further extend to derivatives trading: RWAs (such as stock tokenization), Perps (perpetual contracts), and prediction markets (which are expected to be hot in the second half of 2025, given the World Cup being held in 2026). Parallel to DEXs is the demand for DeFi yields. After all, on-chain APY is higher than that of traditional finance: Coin-based strategy: ETH staking yields approximately 4% APY, Solana staking + MEV yields approximately 8% APY (see the detailed research report: The Evolution and Controversies of MEV on Solana). More aggressive strategies include participating in liquidity pools (LPs) and cross-chain bridge LPs (see: Super Intermediary or Business Genius? A Look at LayerZero, the Leader in Cross-Chain Bridges, After V1 to V2). Stablecoin strategy: Although the returns are relatively low, combining cyclical leverage can increase APY. Therefore, this year (2025), at the peak of business competition, the wallet infrastructure is undergoing another upgrade. The reason is that the above transactions are too complex—not only in terms of transaction structure but also in terms of transaction lifecycle. To achieve truly high returns, automated trading is necessary: ​​dynamic rebalancing, timed limit orders (not just market orders), dollar-cost averaging, stop-loss orders, and other advanced features. However, these features were simply impossible to implement in the era of pure self-custody. So, should one prioritize "security above all else" or "profit above all else"? It's not a difficult question, because the market inherently has different needs. Just like during the Telegram bot boom, many users handed over their private keys in exchange for automated trading opportunities—a high-risk model of "if you're afraid, don't play; if you play, don't be afraid." In contrast, large service providers must consider brand and reputation when developing wallets. So, is there a solution that can securely hold private keys while relatively guaranteeing that the service provider won't abscond? Of course! This led to this year's upgrade in underlying custody technology. 3. The Upgrade Period of Underlying Hosting Technology Returning to the initial point about the industry's underlying technology upgrades, let's analyze them one by one. 3.1 Saying Goodbye to the Era of Complete Self-Hosting Firstly, the actions of pure wallet vendors like Metamask and Phantom are relatively lightweight, driven more by user experience. Social login only addresses user needs across devices and data recovery scenarios, rather than fully penetrating the specific application layer. However, their shift represents, to some extent, a departure from the era of complete self-hosting. Self-hosting has varying degrees, but no one can truly define what constitutes complete or incomplete self-hosting. Firstly, self-hosting inherently means that a user's private key can only be stored on the user's device. However, this has already caused many problems in the past. Locally encrypted private keys are vulnerable to brute-force attacks if the device is compromised; their strength depends on the user's password. When syncing and backing up across devices, copying is always necessary, making the operating system's clipboard permissions a critical threshold. I vividly remember a wallet vendor that only pasted the first few characters of the private key copy page by default, requiring users to manually type the remaining characters. This directly led to a 90% or more drop in private key theft reports during that period. Later hackers learned their lesson and brute-forced the remaining characters, effectively entering a period of resistance. After the Ethereum Prague upgrade, due to the extremely high permissions of Permit 2, its obscure signature, and even its potential for chain-wide impact, the high phishing risk of Permit 2 attacks resurfaced. Therefore, the root cause of self-custody lies in the industry context where users are not easily accustomed to having complete control over their assets. After all, having the private key with the user is not a problem. However, keeping an encrypted copy of the private key on the server prevents the predicament of losing all assets if the user's local device is lost. Can this still be considered self-hosted? Metamask and Phantom answer that it can. However, it's also important to prevent the service provider from acting maliciously.

3.2 Let's talk about Metamask first

Its approach is simple: users need to log in with an email address and set a password. These two elements combine to form something called TOPRF (Threshold Oblivious Pseudorandom Function), which is used to encrypt the user's private key. The encrypted private key can naturally be backed up.