Crypto giant Coinbase has announced the launch of its smart wallets, which it is calling Web3’s “iPhone moment,” aiming to onboard over a billion users onchain. This announcement was highlighted by Luke Youngblood, founder of Base-native lending application Moonwell, in an interview with Unchained.

Unlike traditional wallets that rely on passwords, third-party installations, or seed phrases to recover private keys, smart wallets offer enhanced security through passkeys. Traditional wallets use a private key to sign transactions, whereas smart wallets utilize passkeys often based on biometric identification methods like facial recognition or fingerprints.

Coinbase’s rollout of smart wallets is designed to simplify the onboarding process for new users who may not be familiar with crypto. “Onchain app developers today lose many of their new users during the onboarding process when they leave the app to install and fund a separate wallet,” said Sid Coelho-Prabhu, Coinbase’s senior director of product management.

Smart wallets allow individuals without existing crypto wallets to quickly obtain one and start using applications. To further support this initiative, Base is providing gas credits to help developers sponsor user transactions. For instance, developers can earn $15,000 worth of sponsored gas by adding a “Create Wallet” button to their application, as per Moonwell’s Youngblood. Alternatively, releasing a demo of Coinbase Smart Wallet integration can earn $1,000 worth of sponsored gas.

Youngblood compared the impact of smart wallets to the launch of the iPhone. “When the iPhone was launched in the 2000s and 2010s, it took off. Suddenly, anyone could use apps without needing a computer,” he noted. “We believe this will transition DeFi and onchain finance from niche tools used by the wealthy in developed countries to broad mainstream adoption.”

Passkeys, developed by Apple, Google, Microsoft, and the FIDO Alliance, offer a new method of logging in. According to a Coinbase blog post, “Passkeys are generated on your device and are not shared or stored on any server. The public key is stored securely on Coinbase servers, while the private key is securely stored on your device, protected by your device’s native authentication method, such as biometrics (e.g., Face ID or fingerprint) or a PIN.”

This smart wallet initiative coincides with the growing popularity of Coinbase’s layer 2 blockchain network, Base, which has surpassed 10 million total users in less than a year and nearly 321,000 daily users on a seven-day rolling average. Despite this growth, Base’s user count remains a fraction of Coinbase’s 110 million users.

Moonwell, the fourth largest protocol on Base with a total value locked of almost $95 million, is a day-one launch partner for Coinbase’s smart wallets. This partnership allows users with smart wallets to interact with Moonwell onchain without incurring gas fees.

Coinbase’s smart wallets are supported on several blockchain networks including Base, Arbitrum, and Avalanche. While Ethereum’s base layer is also supported, it is “not preferred for use, due to gas cost,” according to a dedicated smart wallets website.

By Impact Lab