The world's largest crypto exchange, Binance, has announced the launch of its first Web3 wallet. The wallet is integrated into the Binance app and can serve as a bridge between the exchange and Web3, CeFi and DeFi. It supports over 30 blockchains, enabling users to stake, lend, and borrow directly through its interface.
According to the company, this is a self-custody wallet, utilizing multi-party computation (MPC). This means your seed phrase is split into three key shares, stored separately: with Binance, on your device, and encrypted with the recovery password you set, then backed up to your personal cloud storage like iCloud or Google Drive.
To get into the wallet, the user is required to possess at least two of the three key shares. This approach aims to mitigate situations where the entire seed phrase is lost, leaving no way to access the wallet.
This wallet also comes with built-in risk controls, meaning when users interact with smart contracts they can receive alerts if a token or blockchain has security risks. This includes protection against incorrect address input and detection of malicious contracts.
As it stands, the new wallet appears to be available exclusively to Binance users, which suggests that KYC may be necessary. However, if and when these access restrictions are relaxed, it remains to be seen if KYC will be mandatory for those seeking wallet access without using the exchange. This is particularly relevant for users in the United States, who are prohibited from using Binance.
Binance is no stranger to the wallet space, having acquired the popular Trust Wallet in 2018. However, news of this new wallet launch was unexpected for Trust Wallet token holders, striking like a bolt out of the blue. Following the announcement, the value of Trust Wallet Token (TWT) dropped by nearly 25%.
Until now the perception has been that Trust Wallet was Binance's flagship wallet and that they would focus all their efforts on promoting and integrating it into their ecosystem. However, the launch of this new wallet suggests that may no longer be the case.
Despite Binance launching multiple new products this year, the exchange has seen a decline in its market share. Presently, the exchange handles 37.7% of all spot crypto volume, a decrease from the 62.25% market share it held in February. This downturn could be linked to Binance's regulatory issues with the SEC and other global regulators.
Whether the launch of a new Web3 wallet will help Binance attract new users remains to be seen. We will continue to Observe.
