Binance, the cryptocurrency exchange, has unveiled a Web3 wallet designed for engaging with the decentralized finance (DeFi) ecosystem. This new offering, compatible with 30 different blockchain networks, was introduced during the Binance Blockchain Week conference in Istanbul.
CEO Changpeng ‘CZ’ Zhao emphasized that Web3 wallets are more than mere storage solutions for digital assets; they are integral components of the Web3 framework, granting individuals the power of self-sovereign finance. Binance’s Web3 wallet will enter the competitive arena, challenging existing players like MetaMask and Trust Wallet, the latter of which this exchange acquired in 2018. Recently, this exchange also added a futures market for Trust Wallet’s native token (TWT), causing a 7% price drop within 24 hours.
Other centralized exchanges like Coinbase and OKX also offer Web3 wallets. Users can create a wallet through this exchange’s mobile app, which will also serve as the platform for DeFi activities like staking, lending, and borrowing. Whether a know-your-customer (KYC) procedure is necessary for wallet creation remains uncertain.
It’s worth noting that Web3 wallets are frequent targets for hackers and exploiters, as gaining access to a private key allows them to irreversibly drain all associated funds. This exchange aims to address this security challenge through multi-party computation (MPC), a method that eliminates the need for users to memorize seed phrases while maintaining robust security and self-custody. MPC divides a private key into three parts, known as key shares, with the wallet owner controlling two out of the three key shares.
Binance’s Opposition in the Crypto Trading Industry
Binance’s foray into the competitive DeFi market positions it as a challenger to well-established entities. This includes MetaMask and Trust Wallet, the latter of which this exchange acquired back in 2018. The introduction of a futures market for TrustWallet’s native token (TWT) underscores Binance‘s commitment to fostering a diverse DeFi ecosystem. Recognizing the growing significance of DeFi, major centralized exchanges like Coinbase and OKX also offer Web3 wallets.
Binance’s mobile app serves as a portal for various DeFi activities, such as staking, lending, and borrowing, providing users with a familiar interface. The question of whether a know-your-customer (KYC) procedure is necessary for wallet creation remains uncertain, as this exchange strives to strike a balance between user-friendliness and regulatory compliance.
In addition to optimizing security and the user experience, Binance has implemented multi-party computation (MPC) within its Web3 wallet. This innovation eliminates the need for users to remember intricate seed phrases while maintaining a robust security and self-custody framework. MPC divides a private key into three segments, with the wallet owner holding control over two of them, introducing an additional layer of security. Binance’s entry into DeFi with its Web3 wallet represents a significant milestone in the evolution of the cryptocurrency industry.