Why Smart Contract Based Wallets Are The Future?
The recap was edited for length and clarity.
- What are smart contract based wallets and why can they change users’ experience?
- Examples of the differences between smart contract wallets and other wallets.
- How Braavos differs from other wallets available on the market?
- How Braavos protects its users from the wallet hack on Solana?
- Are smart-contract wallets like Braavos only available on StarkNet?
Q: Can you define what smart contract based wallets are and why they can change users’ experience?
Today there are gazillion wallets across many chains, but they all suffer from the same problem. All of them offer a much inferior user experience than traditional web2 apps or even 100-year-old banks.
Nearly all web2 apps have basic features like two-factor authentication. These are areas where crypto still struggles to compete, particularly if it aims to maintain decentralization.
Today, self-custodial wallets use 12 or 24-word seed phrases in place of 2FA or biometric logins. However, these seed phrases often get lost, hacked, or phished. This creates a challenging user experience, especially when trying to transition regular web2 users into the world of crypto.
These burdens come from the fact that these wallets are client-side only. Users run wallets solely on their devices like desktops, laptops, or mobiles. There’s no server-side, which could offer more features.
But with smart contract based wallets, we can benefit from this “server-side” without sacrificing decentralization. Of course, it’s not a web2 server but a smart contract on the blockchain that can facilitate similar functionality.
You can think of smart contract wallets as divided into two parts.
You have the client side of the wallet, which is the app that you have installed, where you control your assets whether it’s on your mobile or on your browser.
And the second part is a smart contract on-chain that represents your wallet account. This smart contract, deployed specifically to your account, has the capability to run any logic we design.
Q: Do you have any examples of why smart contract wallets differ from other wallets?
One example that I hinted at before is two-factor authentication.
With a smart contract-based wallet, I can set requirements for multiple authentication factors before approving any transaction.
And I can decide to do that for each and every transaction or for transactions only above a certain amount.
Let’s say I decide to activate 2FA only for big transactions, and I want to sign with both my laptop and face ID on mobile.
First, I’ll sign the transaction as usual on my laptop, and then I’ll need to sign it again on my mobile device (either as a regular transaction or authenticated using the Hardware Signer and my face ID that will be verified on-chain).
And only if it’s approved, my transaction will go through. Of course, it can be more than just 2 authenticators if you want to be extra safe.
That’s a classic web2 example that will give peace of mind and security to web3 users. It’s a tiny illustration of smart contract-based wallets’ power.
Q: How does Braavos differ from other wallets available in the market?
Can you list the competitive advantage of the Braavos wallet over the old Argent X wallet?
It’s essential for those involved in StarkNet to understand the differences between these two wallet types.
Sure. Let’s start with the market, which is also the title of this Braavosian Talk: Why Smart Contract Based Wallets Are the Future.
In my opinion, smart contract based wallets are completely underestimated in the industry. As we discussed, the vast majority of crypto wallets that exist are client-side wallets only. This means that when it comes to security and user experience, these wallets have extremely limited capabilities compared to wallets based on smart contracts.
Braavos has seen rapid development over a few months. We’ve introduced innovative platforms and functionalities new to the StarkNet wallet ecosystem.
Here are a few examples of what we brought to StarkNet:
- Before we came onto StarkNet, there was no support for multiple browsers, you could only work with the Chrome browser. We introduced multiple browsers support.
- Before we released our NFT gallery, there was no way to see your NFT collectibles inside your wallet.
- Before we released the Transaction Explainer to let the user understand what protocols asked them to sign so it wouldn’t be a random set of numbers, there wasn’t such a concept on StarkNet.
- Before we released our mobile apps for Android and iOS, so you can have access to your assets from anywhere in the palm of your hand, there was no mobile wallet on StarkNet.
So our focus is to innovate both on security and UX fronts, to keep on moving forward and to push the boundaries of what’s possible with account abstraction and smart contract based wallets.
As for whoever follows, we are all more than happy to see alternatives in the market.
Some questions are related to the recent Slope hack, the Solana wallet.
Q: How can Braavos wallet protect its users from this hack?
So for people who do not know, the problem was that the Slope wallet sent information logs that contained the user seed phrase(!!!) to a central server, which is something that you should NOT do.
Not only did they do that, they sent them unencrypted, meaning they were easily readable.
So they sent users’ 12-word seed phrases, unencrypted, to a centralized server in an open way, which is a huge security flaw.
If a hacker managed to breach that server, they would gain access to the keys of every user’s wallet that had connected to Slope.
Q: Could we see the same situation happen on StarkNet with the Braavos wallet?
The simple answer is that this hack is absolutely not possible on Braavos.
First, because although it makes our development much harder, we decided that no logs/information will leave the users’ wallets to reach any server (other than transactions that go to the public blockchain of course).
Thus, there is nothing to hack or access.
Second, the security features that we are introducing (like the Hardware Signer) will allow users to be protected even if someone stole their seed phrases.
They could create a new seed and transfer the funds to a new wallet, using advanced cryptography under the hood but enabling the user to be in full control of their account easily.
Giving users the means to protect themselves and to recover from errors is a priority for us. We all know that in crypto, you make a small error and poof, the money’s gone, so we help users protect themselves from these errors.
Here is an example that can attest to our state of mind.
On your Braavos wallet, when you want to transfer funds from one account to another, it will warn you if you had a typo or if the account address does not exist on-chain.
So your money won’t get lost in the void.
Q: Are smart-contract wallets like Braavos only available on StarkNet?
The main advantage of StarkNet is that you can work with protocols only via smart contract based wallets (also called account abstraction).
This means that a transaction signed on your application goes first to the smart contract account on-chain and only then to the protocol (the account contract calls the dApp protocol contract).
So smart contract wallets are the native and only way to interact with dApps on StarkNet, this is a big benefit that makes all integration with protocols very smooth and increases security.
Now, it doesn’t have to be only on StarkNet, you can also do smart contract based wallets on Ethereum.
For technical people, EIP-4337 describes smart contract based wallets on Ethereum.
Hence they’re feasible on the Ethereum Blockchain as well, but not in a native way, not at the protocol level.
Besides not being embedded to the protocol, the biggest disadvantage is that if you do that on Ethereum, the cost will be extremely high. Because instead of your wallet talking directly to the protocol, let’s say Uniswap, now it talks to yet another contract with all sorts of programming logic before going to Uniswap.
All this logic will cost you a lot of gas fees for the transaction, which makes account abstraction feasible technologically. Still, it would probably cost too much in gas fees to be economically viable for everyday users on Ethereum.
Q: Next and last question is, when will Braavos become the most popular wallet in the world?
This is definitely our goal but this is mainly up to you, Braavosians.
You are the very early adopters of using smart contract based wallets in general, and particularly Braavos. As I previously mentioned, I believe that in the next bull run, we will see a major shift in activity from L1s to L2s because there will be a huge demand for fast transactions and low gas fees.
StarkNet has great potential to be one of the leading L2s, if not the leader, because of its underlying technology that can scale Ethereum dramatically.
Today we’re talking about 100 transactions per second, but we’ll hopefully reach 1000 TPS and 10,000 and so forth.
Braavos’ goal is to cater to all those who come with uncompromised security coupled with uncompromised UX and we will be very happy that you will join us in our journey.