Metamask's Transition from Wallet to Wallet-as-a-Platform
Will Metamask continue its dominance? Or will it fade to obscurity?
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Overview of MetaMask’s performance & market share
A crypto wallet is essential for every individual in the crypto realm, as it serves as a vital portal to the blockchain.
According to CoinGecko, MetaMask is the leading wallet platform by far, with over 23 million downloads or 30% market share of the wallet space. This figure eclipses that of its closest rival, the Coinbase Wallet, by more than double
One of MetaMask’s standout features, MetaMask Swaps, allows users to swap tokens within the MetaMask extension directly. Since launching approximately 3 years ago, it has raked in over 228 million revenue and was the 10th highest revenue-generating dApp over the past 30 days.
MetaMask’s dominance is indisputable. However, history reminds us that even titans may fall to obsolescence one day - as we’ve seen with Microsoft Internet Explorer and Nokia – and I was of the opinion that MetaMask was on a path similar to theirs.
However, the recent introduction of MetaMask Snaps may have helped MetaMask avoid the fate that befell Internet Explorer and Nokia.
This post shall:
Why Metamask was losing market share
What is Metamask Snaps and how it affects the wallet landscape
Highlight the critical takeaways for builders and investors in the crypto wallet sector
Showcase 3 interesting wallet projects
Why MetaMask was Losing Market Share
MetaMask is categorized as a conventional wallet. It utilizes a seed phrase and a hierarchical deterministic structure, enabling the derivation of private keys, their corresponding public keys, and on-chain addresses. This design lets users generate a unique private key to sign transactions while also enabling the recovery of all keys using the seed phrase.
MetaMask has faced criticism for its perceived stagnation in innovation over the years. This has provided a window of opportunity for rivals within the conventional wallet sphere. Players like Trust Wallet, Coin98 Wallet, and the fast-rising Rabby, have sought to challenge MetaMask’s dominance by introducing better UI and a suite of enhanced features, ranging from multi-chain management to advanced security options.
Further complicating the landscape, MetaMask also grapples with emerging wallet categories, notably smart contract and MPC wallets, each bringing its own set of advantages and drawbacks. A case in point is the rise of smart wallets, which, following the introduction of ERC-4337 on 1st March 2023, have amassed nearly 850,000 accounts.
While MetaMask remains the champion of the wallet space, the increasing amount of wallet models and feature-rich wallet providers was threatening its dominance.
However, MetaMask is poised to reassert its dominance with MetaMask Snaps.
What are MetaMask Snaps
First discussed in 2019, MetaMask Snaps allows users to add features and functionality created by 3rd-party developers to their MetaMask wallet. Each Snap is like an add-on program that expands the capabilities of MetaMask. Like apps on iPhone or extensions on Google Chrome, Snaps turns MetaMask into a platform.
MetaMask Snaps Open Beta was finally released on 12th September 2023 with over 30 audited snaps across 3 categories:
Transaction Insights: Stay informed with insights before you confirm transactions in MetaMask. For example, Wallet Guard developed the Wallet Guard Snap that allows users to better understand the transactions they’re signing by simulating them in a human-readable manner.
Interoperability: Connect to non-Ethereum blockchains and dApps directly with MetaMask. For instance, Mystic Labs built the Cosmos Extension Snap that allows users to interact with all Cosmos SDK blockchains using MetaMask
Notifications: Stay in the know with web3-specific notifications directly in MetaMask. For example, Push Protocol introduced the Push Snap, enabling users to receive notifications from their subscribed channels directly in their MetaMask wallet
Snap isn’t a mere feature release for MetaMask. As Dan Finlay, MetaMask’s founder, eloquently put it, it represents a “dramatically more external collaborative posture”. This move signifies MetaMask’s transition from being just a simple wallet to connect with the blockchain, to embracing the vision of a wallet-as-a-platform - allowing MetaMask to become a hub for users’ Web 3 activities.
Analyzing the rise of Google Chrome provides insights into how the launch of MetaMask Snaps could not only solidify MetaMask’s leading position but also amplify its dominance within the wallet space.
The Rise of Google Chrome
In the modern digital landscape, Google Chrome stands as the colossus of web browsers, commanding a staggering 66% of the global market share. This dominance starkly contrasts with the landscape in 2008 when Microsoft Internet Explorer (now Edge) and Firefox were the market leaders, boasting shares of 60% and 30% respectively. Fast forward to the present, their shares have dwindled to a mere 4.6% for Edge and 3.9% for Firefox.
While Internet Explorer and Mozilla were both pioneers in their time, they were somewhat myopic in their vision. Their conception of a browser was a mere tool to navigate the web. Essentially, the Internet experience they provided in 2008 wasn’t vastly different from what users had in 1998. They were, in many ways, still thinking inside the “browser box”.
Google’s Chrome, however, was different right from inception. It didn’t view itself just as a window to the internet but as a platform for web applications. This distinction in vision led to a different approach in its design, architecture, and strategic decisions, ensuring they consistently offered a superior speed and user experience, allowing it to surpass its competitors to become the most widely used browser just four years after its inception.
Rebuilding from the Ground Up:
Unlike Internet Explorer and Firefox, which had to modernize and adapt within the constraints of their legacy technology, Chrome was engineered afresh. This facilitated the incorporation of advanced features like the multi-process architecture, where each browser tab functioned as an independent process. This innovation not only enhanced security (with a malfunctioning website in one tab not affecting others) but also stability (ensuring one tab’s crash didn’t bring down the entire browser)
Prioritizing Extensions and Web Apps:
Extensions are a hallmark of Chrome and one of the most critical contributors to its success.
In December 2009, Chrome rolled out its extension ecosystem, supporting familiar web standards that were easy for developers to build on, such as HTML, CSS and Javascript. In contrast, while Mozilla had introduced add-ons as early as 2004, their reliance on the less intuitive XUL and XPCOM frameworks made development steeper. This difference was palpable in the exponential growth of extensions; Chrome amassed over 3,000 extensions within just four months post-launch, whereas Firefox had 6,000 over a span of six years.
Moreover, while Firefox’s extensions were primarily tailored for browser customization, Chrome’s Web Store accentuated both extensions and web apps, reinforcing the narrative of the browser as a versatile application platform.
Mozilla only deprecated the XUL and XPCOM framework and made it easier to develop add-ons in 2015, and Microsoft only released extensions in 2015 with the rebrand into Edge – too little too late as this was 3 years after Chrome overtook them as the dominant browser.
There are over 137,000 extensions on the Chrome Web Store, but only 34,000 on Firefox today.
Going Open Source and Developing Chrome OS:
Google Chrome adopted an open-source approach in 2008, similar to Firefox’s strategy and a departure from Microsoft’s proprietary path with Internet Explorer. This decision welcomed a global cadre of developers to enhance the browser. For instance, the inception of bug bounty programs under the open-source banner ensured enhanced security. The Chromium platform enabled derivative browsers like Brave and Opera to emerge, and these, in turn, enriched the Chromium codebase.
Parallel to this, Google introduced Chrome OS, the backbone of its ChromeBook laptops. Unlike traditional OS designs that focus on native apps, Chrome OS championed a cloud-centric, browser-led computing ethos. With Google Chrome as its very user interface, the emphasis was firmly on web applications.
While the open-source strategy and Chrome OS may not singularly account for Chrome’s success, they undeniably echo Google’s unwavering commitment to craft Chrome as both a platform and a haven for developers. These strategic decisions not only broadened Chrome’s appeal but also entrenched its ecosystem
Relating to Crypto Wallets Today
In retrospect, Google Chrome’s rise is a masterclass in vision, innovation, and strategic execution. In less than half a decade, it transformed from a newcomer to a market leader, fundamentally redefining what users expect from a browser.
The crypto wallet industry has its own titans and rising challengers, with MetaMask taking center stage. However, MetaMask’s recent development mirrors that of Google Chrome over Internet Explorer or Firefox, and I foresee the following:
MetaMask is likely to defend its leadership and continue to capture market share
MetaMask’s stagnation in innovation paved the way for rival wallets to seize some market share. However, the tables are likely to turn with Snaps. This innovative feature empowers MetaMask to pool resources with external developers, likely ushering in a richer feature set than its counterparts that rely solely on their internal team for development.
While other wallet providers might venture to emulate MetaMask’s ecosystem blueprint, they’re bound to struggle with significant hurdle: MetaMask’s unparalleled brand recognition and user distribution prowess - critical assets in wooing developers. To genuinely challenge MetaMask’s dominance, these contenders would need to offer unmatched incentives or create an exponentially more developer-centric ecosystem - a challenge that’s easier said than done given that MetaMask is part of Consensys, which has a suite of blockchain developer products.
Most wallet providers will end up being a Snap in MetaMask’s ecosystem
We’ve already started to see standalone products that previously required users to download a separate extension being integrated into MetaMask as a Snap e.g Wallet Guard - the same is likely to happen to certain wallets.
Prior to the Snaps era, many wallet providers distinguished themselves from MetaMask with specialized features or supported non-EVM chains. However, the dawn of Snaps has substantially diluted this competitive edge. Given the unassailable importance of distribution in the digital landscape, I foresee many of these wallets finding it more strategic and eventually transitioning their unique features into the Snaps ecosystem rather than being its standalone wallet. Essentially, they’re at a crossroads: either assimilate into MetaMask’s flourishing ecosystem or risk becoming obsolete. Non-EVM chains too would rather integrate with Metamask Snaps than develop/back a new wallet solution, given that onboarding users are their key priority.
A similar phenomenon has already played out in the browser industry. Browsers such as Opera, Brave, and even Internet Explorer transitioned from their original codebase to build on Chrome’s Chromium.
Nonetheless, there’s a silver lining for some - wallets that have cultivated a distinctive UI/UX and fostered a loyal user base might find their niche and thrive. Similarly, wallets affiliated with centralized exchanges, such as Coinbase and Crypto.com, which have direct user access and are positioned earlier in the self-custody journey, may remain somewhat competitive – just like how Safari being the default browser for Apple’s ecosystem has allowed it to retain 13% market share and the spot of 2nd most-used browser.
Toppling MetaMask will require a radical reimagining of wallets
“Smart-contract wallets are the future!” indeed, and MetaMask is already charting its course to embrace this future.
“We have better UI than MetaMask!” – maybe for now, but MetaMask has recognized that critique and is proactively enhancing its UI, integrating upgrades like home screen widgets built upon the extensible UI framework they’re developing.
The point is, for any aspiring challenger, merely rolling out incremental improvements and keeping up with open-sourced developments like ERC-4337 for account abstraction won’t suffice to dethrone MetaMask. Safe is the only probable exception to this in the smart-contract wallet domain. Specializing in smart-contract wallets since 2018, they’ve established a noteworthy reputation and fostered a sizable user and dApp ecosystem, positioning them to compete with MetaMask for market share.
The playbook for newer entrants to succeed would necessitate a ground-up reinvention of the very essence of wallets. They’d need a vision akin to how Chrome transformed browsers - from mere gateways to the internet into dynamic, multifunctional platforms.
The heuristic for builders and investors in the wallet domain is to ask themselves: “Can this be built into a Snap?”
If the answer leans towards “yes”, then the project is not necessarily building a wallet competing with MetaMask but rather more suited to be viewed as a dApp business - much like an extension within the Chrome ecosystem. This shift in perspective helps with applying appropriate strategies and valuation.
If your answer is ‘no’, let’s connect and explore the potential further together!
Final Words
History has shown time and time again that even titans may fall someday. It’s not impossible that we all migrate to another wallet provider in the future and MetaMask becomes a relic of the past.
As mentioned above, existing wallet providers offering different and sticky UI/UX experiences, coupled with a loyal group of users may have the potential to stand up to MetaMask. This rivalry could mirror the Android versus Apple dynamic.
New entrants would have to take a radically different approach to wallets in order to stand out in this competitive, oligopolistic sector.
The journey wouldn’t happen overnight too, as even Chrome, with the enormous backing of Google, took 4 years to overtake Internet Explorer
Appendix: 3 Interesting Wallet Players
1) Rainbow
Rainbow started out as a mobile wallet and amassed a sizeable loyal community through its emphasis on superior mobile user experience. For example, users could manage their NFTs - images, audio and even videos - directly within the Rainbow mobile app
The recent launch of their browser extension maintained this user-centric approach, notably reducing blockchain interaction clicks via features like:
Token auto-discovery eliminating manual additions
Keyboard shortcuts for accessing Rainbow’s Magic Menu, switching wallets, and token transactions
Swap and bridge tokens, and manage NFT portfolio
Their tactical go-to-market strategy significantly aided in market share acquisition:
Released Rainbow Kit, which made it easy for developers to add a “Connect Wallet” feature to their website or dApp. Lists Rainbow Wallet on the top of the selection
Its SDK has become a dominant tool, featured as a crucial component in Web 3 Starter Packs on GitHub.
2) Backpack
While most wallets are tools used to interact with dApps, Backpack reimagined wallets as an operating system, allowing users to directly interact with dApps within their wallets
No need for laborious integration as dApps are tokenized as xNFTs (eXecutable NFTs), which users can install permissionlessly
For example, users can manage their lending/borrowing positions on Solend, or track the NFT drops they’re missing on DRiP - all within the wallet extension!
To date, there are about 113 xNFTs available, and Backpack has 58K extension downloads since its launch in May 2022, according to the founder
Backpack launched as a browser extension and recently released their mobile application
3) DreamOS
DreamOS takes the concept of a Web 3 native operating system even further transforming the user's entire desktop into a wallet
Though details are scarce now, notable features include:
NFT management is similar to handling computer files—enabling sending, tagging, or burning multiple NFTs simultaneously
download dApps from the Dream Store, enhancing security by averting risks from malicious URLs
DreamOS exemplifies a 'radical reimagination' of wallet functionalities, posing a potential challenge to established entities like Metamask
However, its adoption entails higher switching costs due to its novel OS nature, necessitating acclimation to new user behaviors amidst competition with behemoths like Windows and Apple
To foster initial testing, DreamOS must offer compelling incentives and ensure a significantly superior Web 3 experience to retain users. A desktop app launch could also smoothen the transition.
DreamOS is currently in Beta, and users can find out more and join the waitlist over here
*The above does not constitute an endorsement. Try them out at your own risk!
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