TokenInsight: 2020 Digital Wallet Industry Research Report
Summary
Summary
1. Wallets are the first channel for digital asset storage, and market activity is closely related to digital asset market performance. Since the arrival of the bull market in the fourth quarter of 2020, the activity of the digital asset market and the price of Bitcoin have reached new highs one after another, and the wallet market has also recovered due to the gradually strong demand for asset storage and transactions.
2. Among the top 10 digital asset wallets counted by TokenInsight, the total number of visits in 2020 will reach 140 million. In the second half of 2020 alone, visits increased by as much as 32%, from 22 million in July to nearly 30 million in December.
3. Wallet is an important user traffic entrance. In order to ensure the increasingly diverse needs of users, the industry is constantly enriching the number of supported public chains, and the ecological connectivity is gradually reflected. The wallet market supports an average of less than 10 public chains in 2019, and the wallet market supports an average of 25 public chains by the end of 2020.
4. With the popularity of DeFi at the end of this year, various wallets have followed the pace of the market, connected to the DeFi ecosystem, and gradually supported more new DeFi projects. For example, Kcash fully supports the underlying protocol of Uniswap, and Bitpay integrates DeFi applications to provide DAI payment support, etc.
5. The maturity and enrichment of wallet wealth management products is also the future orientation of the market. For example, AToken launched AAVE to aggregate real assets, and Biyin launched aggregate income products.
6. More and more wallets integrate the WalletConnect function that connects DApps and mobile wallets, providing channels for users to trade and transfer money in DeFi applications.
7. As more and more PoS projects start staking, the pledge staking service has also been responded by the wallet market, but due to income issues, wallets are gradually abandoning the pledge market.
Q1
1. Industry tracking
① The multi-chain smart wallet MYKEY supports MakerDAO debt auction and puts auction tools on the shelves;
② Madfish launched the Tezos browser plug-in wallet Thanos;
③ AlphaWallet and Bartercard cooperate to create a blockchain Qoin wallet and promote tokenization services;
④ Kraken claimed that the Trezor hardware wallet can be physically cracked by using a voltage fault, and Trezor responded by acknowledging the vulnerability;
Q2
⑤ The smart wallet Authereum has received 1.1 million investment from Coinbase and other institutions, and has officially launched the Ethereum mainnet.
① Smart wallet Argent will no longer pay gas fees for applications such as Compound, TokenSets, Uniswap V2, and Kyber for users;
② Trust Wallet has deleted the DApp web browser in the latest version of iOS to follow the guidelines of the Apple App Store;
③ Biyin Wallet has reached a strategic cooperation with Three Arrows Capital, and will launch the first phase of income products in mid-June;
④ The hardware wallet Ledger joins the "Universal Protocol Alliance";
Q3
⑤ Argent, the Ethereum smart wallet, launched version 1.0, deeply integrating 7 DeFi protocols.
① Blockstream launched a new mobile wallet AQUA;
② The MYKEY smart contract passed the Trail of Bits audit and released the first version of the protocol specification;
③ The cryptocurrency wallet Ledger has been upgraded to add functions such as privacy protection and transfer settings;
④ imToken has adopted GasNow as the data source of Gas Price on the Ethereum chain;
⑤ The Math Wallet App now fully supports Nervos CKB;
Q4
⑥ The Ethereum light wallet MetaMask will change from fully open source to some commercial use requiring authorization.
① A database containing personal information of 270,000 Ledger customers was leaked on RaidForums;
② US FinCEN may implement stricter KYC rules for non-custodial encrypted wallets;
③ Binance Labs led the Math Wallet B round of financing, with a total financing of US$12 million;
④ Italian private bank Banca Generali acquired $14 million in bitcoin wallet Conio;
⑤ Trezor was attacked by phishing, which is suspected to originate from Ledger's stolen database;
⑥ LVMH chief digital officer Ian Rogers has joined the hardware wallet Ledger team.
2. Ecological landscape of the digital wallet industry
3. Industry popularity
3.1 Market popularity
"In terms of overall market popularity, global wallet users will grow steadily in 2020, and the growth rate will be flat. There will be a slight increase in October and November; in terms of user visits, the number of visits in December will increase by more than 30%
According to TokenInsight’s statistics on global wallet users, as of January 11, 2021, the number of global wallet users in Q1 2021 has exceeded 60 million, reaching 64 million, an increase of 1,400 compared to the less than 50 million in Q1 2020. million, about 30%. Compared with the bear market period of Q1 and Q2 in 2019, it has increased by nearly 60%.
The best annual user growth performance was in November and December, with 4.67 million and 3.09 million respectively, and the increments both exceeded 5%.
Statistics on the growth rate of the number of global wallets, source: TokenInsight
Statistics on the number of global wallets in 2020, source: Statista, TokenInsight
3.2 User Visits
According to the actual user visit data of Similarweb, only among the top 10 digital asset wallets counted by TokenInsight, the total visits reached 140 million times. And it has increased by 32% in the second half of 2020 alone, from 22 million in July to 29 million in December.
Among them, there were some negative growth in September and October, but with the steady recovery of market heat, the number of visits to wallet applications also achieved a 32% growth in December.
2020 Q3&Q4 wallet user monthly access data, source: Similarweb, TokenInsight
Changes in the monthly visits of wallet users in Q3&Q4 in 2020, source: TokenInsight
The proportion of the total visits of digital wallets in different months of Q3&Q4 in 2020, source: SimilarWeb, TokenInsight
Top 11 annual visits ranking of software wallets [1], source: SimilarWeb, TokenInsight
[1] Page visits will be affected by other services provided by the platform. TokenInsight has made adjustments based on actual wallet page visits when making statistics, but the interference cannot be completely ruled out.
[2] Part of the Google Play ranking is limited to some countries, not an "absolute ranking", but the information is still of reference value.
Among the top 11 wallet websites with the most visits in the past 7 months according to TokenInsight, Blockchain Wallet ranks first with 57 million visits. On the other hand, Coinbase Wallet has experienced a sharp decline, with only about 2.5 million visits in the semi-annual statistics, ranking 10th.
From the data of page browsing time and number of pages viewed, the average browsing time of 5 wallets exceeds 6 minutes, and the number of pages viewed by 2 wallets exceeds 7 pages.
Browsing time and page count of top 11 software wallet visits, source: SimilarWeb, TokenInsight
4. Functional Dynamics
4.1 Function classification
TokenInsight divides the different functional services of the wallet into four categories: storage and transaction services, market information services, wealth management product services, and DApp browser services.
Classification of digital wallet functions and services, source: TokenInsight
The number of public chains connected to each wallet, source: TokenInsight
With the gradual improvement of the ecology of each public chain, the number of public chains connected to the wallet platform has also increased by multiples compared with 2019. In the data surveyed by TokenInsight, the average number of wallet public chains supported in 2019 was 4, and this number increased to 23 by the end of 2020.
During the data statistics, the number of public chains disclosed by the official websites of various wallets is relatively vague. TokenInsight adopts the method of enumeration and audit to confirm the exact number of public chains supported in its App one by one. Among them, Math Wallet, which supports the largest number, is also the wallet that supports the most complete public chain in 2019.
Statistics on the distribution of public chains connected to each wallet in 2019, source: TokenInsight
Statistics on the distribution of public chains connected to each wallet in 2021, source: TokenInsight
4.2 Transaction Services
Due to the high transfer fees of centralized exchanges, users will also face the risk of server downtime, loss of transaction records, capital outflow, theft and other centralized trust risks. Decentralized exchanges have become a window for many traders to avoid such risk costs . With the maturity of the DeFi industry, wallets, as an important user traffic entrance, provide various trading service products and make it easier for users to experience the advantages of decentralized transactions.
Wallet industry transaction services can be mainly divided into three categories: the first category is to connect with DEX services developed by centralized exchanges, such as Trust Wallet docking with Binance DEX. Unlike Connect Wallet scanning code to log in on the web, Trust App has built-in DEX trading services directly. imToken provides Tokenlon, a decentralized trading platform. The second category is wallet access to centralized exchanges, such as Bitpie. The third category is the DEX transaction that accesses DeFi projects, such as TokenPocket access to Bancor protocol, AToken access to Uniswap and 1inch, etc.; most wallets currently support the flash exchange function, and platforms using decentralized exchanges can provide different currencies It is a service of exchanging between two kinds at a certain exchange rate.
Digital wallet transaction service information, source: TokenInsight
4.3 Financial services
At present, the wealth management services provided by various wallets can be mainly divided into two categories: the first type is that the wallet platform acts as an intermediary similar to a "bank", launching regular and current wealth management products, completing fundraising activities, and custody assets for customers; the second type Embed the browser in the mobile application for the wallet to connect with DApp or third-party financial products. TokenInsight compared 4 wallets with rich wealth management products and made a list.
Functional introduction of wealth management products in each wallet, source: TokenInsight, statistical deadline January 10, 2021
Yield information of digital wallets on BTC, ETH, USDT wealth management products, source: TokenInsight
4.4 Wallet docking with DApp
As of the beginning of 2021, there are nearly 6,000 DApps that can be queried, the number of active DApps is about 643, and the number of active users is about 140,000 [3]. At present, DApps on the market can be divided into the following seven categories: financial services, exchange market, guessing games, social software, other games, high-risk investment and others, among which financial services account for the largest proportion. In addition to the mainstream public chains EOS, ETH, and TRON, there are more than 30 public chains of DApp including BSC, HIVE, IOST, and STEEM. The DApp market is becoming more and more abundant, which requires the active participation of users.
[3] Data source: DAppReview
As an important user traffic entrance, the wallet integrates various types of DApps in the market, which not only lowers the barriers to entry and use, but also provides a platform and traffic support for the large-scale development of DApps. At the same time, the transactions within the DApp can also increase the transaction volume of the wallet and increase the vitality of the wallet.
Display of three DApp access methods, source: imToken, KCash, Trust Wallet, TokenInsight
At present, there are three main ways for the mobile wallet market to connect with DApps:
First, through the DApp browser. DApp browsers are generally open Web3 browsers, and users can enter URLs to access any DApp. Wallets that include the DApp browser function include imToken, Trust Wallet, Coinbase Wallet, Math Wallet, Bitpie, etc. Among them, in the browser interface design of imToken, in addition to entering URLs to access DApps, there are also quick access entrances for different DApps on the public chain; the Math DApp Store interface designed in the Math Wallet browser not only supports various decentralized applications. Access, and other digital asset application modules are also listed, and the docked applications are classified according to DeFi, CeFi, transactions, tools, data, etc.
The second is the wallet aggregation DApp, which unifies the user ID in the wallet and integrates DApps of different public chain types in its own wallet App.
In addition to the first two connection methods, the third is to use WalletConnect to access DApp. Wallet Connect is a bridge channel for mobile wallets to connect to Web 3 DApps. Since most of the current DApps are based on Web3. limited. Wallet Connect realizes the interaction between mobile wallet users and web DApps through QR code scanning.
DApp access statistics, source: TokenInsight
TokenInsight compared the DApp browsers of Math Wallet, imToken, AToken and Kcash wallet, and aggregated the docking data of DApp, as shown in the figure below.
DApp aggregation wallet public chain application proportion statistics, source: TokenInsight
Among them, Math and imToken browsers have classified DApp applications on different public chains, including ETH2.0 pledge service to games, communities and other applications. Among the 65 public chains that Math Wallet is connected to, there are more than 400 applications on ETH, 175 on EOS, and 98 on TRON, making it the wallet with the most abundant DApp connections among all wallets.
DApp aggregation function wallet DApp function classification statistics, source: TokenInsight
AToken also classifies different public chain applications in the DApp browser. AToken has docked ETH, EOS, TRON and TOMO in total, Ethereum ETH applications account for about 80%, the number of applications is 57, and the rest are less than 20 in total. Compared with Math and imToken, although the number of public chain docking applications on AToken is more, the overall number of applications is less than Math and imToken.
DApp aggregation function wallet DApp quantity statistics, source: TokenInsight
Math Wallet, which also has the function of DApp browser, does not classify applications according to different public chains, but adopts a functional classification method to classify docked applications according to DeFi, CeFi, transactions, tools, data, etc. After experiencing rapid development in 2020, the DApp ecosystem has shown more activity than expected. The DeFi stablecoin, lending and exchange sectors led by MakerDAO, Compound and Uniswap have gradually matured. Therefore, the layout of wallets in DeFi hotspots is also very active. TokenInsight has made statistics on how Math, imToken, AToken and KCash wallets are connected to the top ten most popular DeFi projects.
4.5 Pledge Service Staking
Various wallets in the market have provided various pledge wealth management services since 2019. After the Ethereum 2.0 beacon chain was launched, it realized the transformation from proof of work PoW to proof of equity PoS. In Phase 0, earning rewards by staking has become a topic of market concern.
TokenInsight selected four representative digital wallets for staking service data statistics. In the surveyed digital wallets, the annualized rate of return for each currency pledge ranges from less than 1% to more than 10%, and the average rate of return for pledge is around 6.6%.
Support staking digital wallet service information, source: TokenInsight, statistical deadline: 2021.01.31
It is worth noting that among the wallets investigated by TokenInsight, the types and quantities of pledge services disclosed by many wallets’ official websites are slightly different from those provided by the actual App types. Most of the actual offers failed to match the official disclosure numbers. In addition to the hidden dangers that may be brought about by the staking service itself, such as network access and low security of the mining pool, the low profit of the wallet is also one of the reasons that hinder the development of the staking business.
A wallet project revealed to TokenInsight that the PoS proof-of-stake pledge service of 10+ currencies has been reduced to 4 currencies due to unsatisfactory profits, and these currencies will be offline one after another, and the staking pledge service may be banned. Wallets dropped from its product line.
5. Security Updates
Key security is the key element that wallets most need to guarantee for users. The main security risks faced by the key can be divided into three aspects: the first key randomness risk, the second key storage risk, and the third key use risk.
From the perspective of whether the keys are related, wallets can be divided into nondeterministic wallets and deterministic wallets. Each key of a non-deterministic wallet is independently generated by a random number, and each key is unrelated, such as Bitcoin Core; the key of a deterministic wallet is composed of a master key, which is the key seed (Seed ), since the keys of this type of wallet are interrelated, all keys can be found through the key seed, and the most common method used is the tree structure of hierarchical deterministic structure.
Deterministic wallets mainly generate many keys from seeds through different standards, and only need to enter the corresponding mnemonic words when backing up.
So from the first point of view, the software wallet needs to ensure that the random number of the private key can be generated in various environments in its algorithm design, such as in various browsers, IOS and Android systems. The second is to ensure that the repetition rate of the generated random numbers is low, so that the randomness risk of the private key can be effectively controlled; as for the hardware wallet, it mainly relies on its own security chip for random number generation. Some lists the random number generation methods of various wallets.
Random production of hardware wallet private key, source: TokenInsight
[4] International Common Criteria (CC) CC (Common Criteria) is the result of the unification of various existing criteria by the International Organization for Standardization, and is currently the most comprehensive evaluation criterion. CC divides the evaluation process into two parts: function and assurance. The evaluation grades are divided into seven grades: EAL1, EAL2, EAL3, EAL4, EAL5, EAL6 and EAL7. The higher the grade, the higher the security. EAL4+ is the basic evaluation level for financial security chips.
The second point, with regard to the storage risk of the private key, the biggest challenge for the wallet technology development team is to make a safe storage solution suitable for different operating systems, which includes cold and hot isolation, encryption protection (irreversible encryption method, local Data can be encrypted, etc.) biometrics (fingerprint recognition, face recognition, etc.) and other protective measures. In addition to the risk of network contact brought by hardware wallets using QR code scanning, Bluetooth, USB, etc. to interact with the network, the risk of equipment damage caused by external forces and physics also needs to be taken into consideration.
Finally, regarding the risk of using the private key, most transactions need to be operated online, so there will be HTTPS hijacking or DNS hijacking in the middle, and users are easy to be "phished". Two wallet phishing incidents occurred in the second half of 2020. Due to the leakage of user mailbox data, on October 26, 2020, hardware wallet manufacturer Ledger was attacked by phishing attacks. Some users received phishing emails and lost funds. . And this data leak also affected the competitor Trezor. On December 11, 2020, Trezors was also attacked by phishing. Users received information showing that their TREZ0R wallet had been disabled. Due to new KYC regulations, users need to be verified. Security experts have said that the Trezors phishing attack appears to have originated from the same database stolen from Ledger, with the same names and numbers, and has nothing to do with Trezors.
It can be seen that wallets still have a large number of hidden security risks that are difficult to solve, and as hackers become more sophisticated, no matter for software or hardware wallets, it is still necessary to strengthen development and research on the security of users' private keys. Ledger upgraded its software suite "Coin Control" in September 2020 to better protect user privacy, set up transfers and other functions, and claimed that this upgrade can help users prevent "dust attacks."
Ledger suffered phishing attack timeline, source: TokenInsight
6. Industry voice
AToken CMO Jolish
"The future of decentralized wallets is still long and full of hope. Decentralized trading platforms such as Uniswap have driven wallet decentralized trading scenarios. Decentralized financial management is just needed, and financial derivatives continue to stimulate centralized wallets. It will become more and more convenient.”
"The rise of DeFi has changed the pattern of wallet applications. Some wallets have gained many users because of the introduction of support for DeFi, but the most important thing for wallets is security and ease of use. Everyone underestimated the impact of institutions entering the market on the entire industry. It is of great help to the establishment of traditional investors' confidence. In the next few years, this industry will carry a huge amount of funds, and there will be more innovations in the DeFi field, especially DeFi applications on the second-tier network .”
Bixin Wallet COO Deng Keai
"Insist on blockchain development, innovate cutting-edge blockchain technology, and pay attention to industry risks after bubble growth. In short, the project is constantly improving its own capabilities to provide users with better services; users need to pay attention to financial risks to avoid losses."
Zhu Xuejiao, Founder of KCash
Math Wallet CTO Eric Yu
