Juggling with Private Key Management? Switch to Embedded Crypto Wallets

1. Juggling with Private Key Management? Switch to Embedded Crypto Wallets The rising awareness around blockchain and cryptocurrencies has resulted in a surge in crypto wallets and its users. If we look at previous year’s data, there were 84M+ global crypto wallet users, increasing rapidly. However, we expect the existing crypto wallet user base to be much bigger as cryptocurrencies are booming right now. So, what could be the main reason behind the slow or we can say less than anticipated adoption of Web3/crypto wallets? The answer is bad user experience, which is mainly caused through wallet key management. ‘Embedded Wallets’ are now coming to bring a solution to the challenges associated with key-based crypto wallets. Let’s dive in and understand the whole concept of embedded wallets. Before that. We’ll first look at the problems that frustrate crypto wallet users. The problem with traditional crypto wallets & adoption Most of the crypto wallets that are at present in use (including MPC wallets), are associated with critical risks and challenges, with: ● Single-signature wallets – A Single-signature wallet will make you lose your private key forever; if you upload the key to a wrong website, lose the device or forget the backup seed phrase. A small mistake can ruin the entire wallet setup and lead to issues like loss of funds, inability to access important information, and similar problems. ● Traditional Hardware wallets–

2. Hardware wallets are sort of outdated as they come with difficult to use, small buttons, and cozy screens. Also, these are hard to set up and maintain due to multiple, annoying update requirements. Security on hardware wallets can also be compromised easily. ● Multi-sig wallets– Multi-sig wallets pose the risk of ‘Lose one key, lose all’. That’s because Multi-sig wallets cannot work natively on different chains, like EVM, UTXO, or SOL networks. To enable native support, wallets need to do multi-sig setup, which is complex and also impacts user experience negatively. How Embedded wallets provide solutions to the above challenges? Embedded wallets, also known as abstraction wallets are designed to tackle all the above challenges that come in key-based crypto wallets, essentially wallet downloading, and installation process. A good example is ‘Secret keyphrase’ management. Of course, no one likes to write down 12-13 words long keyphrases that need every time to access the wallet, that too in a certain order.

3. Also, losing this keyphrase or private key will make you lose your wallet. This zero recovery option often forces users to give up on their wallet and accounts, negatively impacting the user experience while also compromising wallet’s security. Providing a strategic solution, Embedded wallets or keyless wallet offers a simplified wallet option, eliminating the need for private keys. This form of wallet is designed to eliminate the challenges with both the custodial and non-custodial wallet where former requires the user to give their private key access to a third-party and later requires the user alone to take the accountability for private key. Simply put, embedded wallets are a key innovation in the crypto wallet space. These wallets are integrated and operated with dApps. Using embedded or keyless wallets, users can sign transactions without the need of switching between applications multiple times. Hence, embedded wallets allow users to skip the tedious step of authorizing wallet access with secret keyphrases, making wallet login as easy as logging in to any web2 apps, for example- social media accounts. How Embedded wallets work in a nutshell? Embedded wallets work by integrating advanced cryptographic functions into wallet dApps, offering a significant improvement in user experience. This integration replaces key-based authentication with easy login through usernames and email accounts. Also, it allows faster approval and strong security guarantees without any involvement of third-party services for private key management, custody of funds, or any other critical operations. Top benefits of Embedded wallets: Enhanced User Experience Embedded wallets are backed by innovations such as OIDC accounts, which eliminate the need for external wallet apps, seed phrases, and private keys. These wallets make blockchain interactions as easy as logging in with an email, phone number, or social media account. Users can seamlessly access multiple dApps and conduct transactions without switching platforms. Walletless Interaction: Allow users to interact with dApps through their OIDC accounts without needing to install a wallet. Enhanced Security & decentralization Embedded wallets leverage advanced cryptographic techniques, such as Multi-Party Computation (MPC) to d securely store private keys across multiple sources. This reduces the risk of theft and unauthorized access. Also, features like two-factor authentication and robust recovery mechanisms further protect user assets and identities. Gasless Transactions With meta-transaction support, embedded wallets enable dApps to cover gas fees for users. This not only reduces transaction costs but also eliminates the unpredictability of fluctuating gas fees. This feature enhances the user experience, particularly for newcomers to blockchain technology.

4. Efficient Transaction Management Account abstraction-powered embedded wallets allow dApps to batch multiple user transactions into one, saving time and gas fees. This feature, coupled with the ability to execute transactions directly within dApps, ensures a smoother, faster, and cost-efficient transaction execution process. Developer-Friendly Approach Embedded wallets provide developers with critical tools like APIs, SDKs, and easy-to-use interfaces for integrating wallets into their dApps. Using these resources, dApp developers can efficiently manage wallet-based features, troubleshoot transaction logs, request testnet tokens, and define team roles, all across a unified environment. Cost Efficiency Although dynamic recovery options is the key offering of embedded wallets, they are also optimized for novel features such as gasless or sponsored transactions, batch transactions, account abstraction (ERC-4337), and many other custom requirements. By enabling this, embedded wallets remove the need for third-party services to be opted externally. Hence, application developers and users save on significant operational costs, both in short and long-run. Broader User Adoption Embedded wallets remove complexities from blockchain’s entrypoint with concepts like email and social onboarding. This makes dApps more user-friendly and approachable for all sets of users, including the beginners that are exploiting a wallet. By reducing barriers, embedded wallets attract a larger and more diverse audience, accelerating the adoption of decentralized technologies. Seamless Recovery Options Easy recovery mechanisms, such as email-based recovery and device-linked key reconstruction, or even multi-device accessibility ensure users can regain access to their wallets even if they lose their credentials. This feature significantly reduces the risk of permanent asset loss. However, a good keyless account is one that does not reveal any confidential information of an OIDC account on users’ end; like OAuth identifiers or email address. Branding & customization option: Embedded wallets are equipped with SDKs and stack that allow dApps to bring their intent-specific branding and customization into their user onboarding process. For example, a dAPp can have features like seamless payment, enhanced storage, or a different login approach. While this offers specific features for apps, it also allows them to stay competitive in the web3 ecosystem.

5. Embedded Wallet on LYNC: The Real Unlock! LYNC embedded wallet is a significant innovation for both the EVM-compatible and non-EVM blockchains. LYNC uses advanced techniques like OAuth and OpenID connect to offer keyless, seamless web3 user onboarding. This embedded wallet allows users to create and efficiently manage accounts on top blockchains like Move Network, Aptos, Fuel, and Metis. To do this, users need to use their existing OpenID connect (OIDC) based accounts, for example- ‘Sign in with Google’ or ‘Sign in with Apple’ rather than storing a secret key or mnemonic keys. Essentially, users’ account becomes an OIDC account, thus eliminating the traditional friction causing onboarding. In the future, Keyless will expand to support many Identity Providers (IdPs) that use the OIDC standard, starting with the providers mentioned.