- Custodial wallets
- Non-custodial wallets
- How the wallet works
- DeFi wallet history
- Cryptocurrency wallets. Selection criteria
- The best DeFi wallets
The best wallets for cryptocurrency is something everyone chooses according to their own criteria. But four of them are the most used in the world. Note that the choice is always up to you, but before you make it, assess the level of security and secrecy you need.
Crypto asset wallets are divided into custodial and non-custodial wallets. The former are called centralized and are owned by platforms. Their big disadvantage is that the owner is the platform, not the user. So, the account can be blocked and funds can be withdrawn bypassing the cryptocurrency owner. On the plus side, if the user forgets the password, the support team will help restore access.
To open an account, you first need to confirm your identity and fulfill “know your customer” requests. This completely de-anonymizes the cryptocurrency holder.
Non-custodial, or decentralized wallets like MetaMask are not subject to storage. Simply put, MetaMask is an interface that allows you to create and import accounts, as well as display and manage cryptocurrencies that are stored in the chain.
Such services place the responsibility for access on the user but provide full control over their funds. The owner of a non-custodial wallet has full ownership of his or her assets and is responsible for them himself or herself as well. If a password is lost, a 12-word recovery phrase or private key is used. No one can help restore access if this data is lost.
How the wallet works
Most DeFi protocols or DeFi applications are built on the Ethereum network. In order to execute and validate a transaction, you must pay a network fee for the computation required to verify and validate the transaction. It is usually paid in the network’s own token.
For example, the Ethereum network requires ETH to send, exchange, deposit and withdraw ERC20 tokens. The amount of payment depends on the speed of the blockchain’s consensus mechanism, network traffic, and the complexity of the transaction.
The history of all modern crypto development, including DeFi wallets, begins with bitcoin. To overcome the limitations of its script programming language, developers started looking for other ways to create more advanced decentralized apps using blockchain.
Wallets have developed and can now be integrated with more decentralized apps and protocols. Early DeFi wallets were clunky, slow and rather simplistic. Bitcoin-Qt was the first bitcoin wallet to become a full client, which meant you had to download the entire blockchain history for it to sync.
There are numerous types of DeFi wallets. Securing funds is extremely important and should be at the top of the list of priorities when choosing one. The data in a crypto wallet is very valuable. The best sign of a good wallet is that it is compatible with different devices.
Remember that some wallets might not support certain coins, and some are designed to store only one token. Therefore, you should check if the wallet supports the currencies you plan to store.
Trust Wallet is a decentralized, anonymous, multi-blockchain, open-source wallet that helps users store, send and receive crypto assets. In it, you can earn interest on your assets, view collectible NFTs, and track charts and prices. This is DeFi’s mobile wallet available for iOS and Android. Currently, it has over 25 million users.
It was released in November 2017, and the following year the Binance exchange acquired the development. Trust Wallet supports multiple coins and tokens.
Ledger launched Nano X and Nano S, which allow users to store crypto on a physical device that looks a bit like a USB drive. Hardware wallets, such as Ledger, store private keys and do not expose them to anyone else.
Ledger’s private keys are so secure that even the owner does not know them. They are stored inside the device itself and protected by a PIN code. If the device is lost, a recovery phrase is also used to restore access.
Ledger owners automatically gain access to Ledger Live, a DApps management app, and allows them to manage various crypto accounts, including sending, receiving, exchanging cryptocurrency or even just checking balances. Ledger supports over 1,800 coins and tokens.
MetaMask was founded by Aaron Davis, a ConsenSys developer, in 2016. ConsenSys is an American company that builds infrastructure for Ethereum tokens.
The wallet allows users to store, send and receive crypto and interact with dApps. It has over 21 million users and supports Ethereum and all ERC20 tokens, including USDT, MANA, DAI and Uniswap token. You can add certain tokens or blockchains to MetaMask manually, even if they are not officially supported.
Coinbase launched its wallet in 2018. The standalone app helps you manage your private keys and store your crypto assets directly on your devices without a centralized broker or exchange. That means that a Coinbase wallet cannot be connected directly to a bank account, and users cannot buy and sell crypto with U.S. dollars or other fiat currencies.
Coinbase Wallet gives users access to a lot of DeFi features. You can use it to buy and store various tokens on the Ethereum network, collect NFTs, and browse dApps at stores that accept crypto.
Coinbase Wallet is very similar to MetaMask or Trust Wallet but has a slightly different feature set. You do not need a Coinbase account to use the wallet.