The Wallet and UX Stack to Build Web3 Applications for the Masses by Nichanan Kesonpat | Devcon SEA

[Music] hey everyone um great to see you here um yeah so my name's Niche uh I'll be talking about the wallet in ux stack today um to build applications for the masses um I'm a uh researcher at 1kx on the investment side focused on middleware and what do we mean by middleware why did we you know see this as an investable um sector is because we asked ourselves the question what accelerates Innovation and adoption in web 3 right and so the two things that does this is one smart contract developer tooling that improves the developer experience and two it's wallet infrastructure that um helps us improve the web3 user experience um so we'll be talking about how these two things have evolved over the past few years and why it's there's no better time now to build um a web 3 application than today um so let's talk about Dev tools um if you look at uh what the developer experience was like to build on ethereum from 2016 till now back in 2016 you had to run and maintain your own node you have to write your own token contract there was no you know erc20 there was no token standards for you to just import you have to implement your own wallet connector so you know be opinionated about the wallets that uh users have to download and use to in order to connect your application and then you have to Wrangle with really raw onchain data and basically be an expert in um blockchain like how the core protocol Works before you even get to implement your application right today thanks to all these uh tools the time taken has gone from to for you to deploy your appap has gone from hours to days to literally minutes um and you know you can come in as a a web 2 developer and pretty much get started right away uh building applications on web 3 so um if you look at how web 2 developer tools removes the barrier to Innovation and the impact that this had in the mid 2000 you had the the Advent of uh cloud computing right which democ democratized uh access to to powerful Hardware so people who are building websites didn't have to think about running their own servers anymore to connect to the internet and this unlocked you know the wave of early web2 apps Netflix Myspace and so on and then you had API driven development that allows you to um connect to third party uh databases and do programmatic data reads and writes so you don't have to implement your um you know every service in house from scratch so if you look at things like plaid this uh payments rails allowed uh fintech apps like venmo and Robin Hood and shopy to be to be built then you have development Frameworks allow you to uh reuse pre-written code and you know scaffold performance and responsive web apps uh without without having to start it from from scratch and in web 2 this this took over two decades to get to where we are today for the experience um to to get to where it is today for the 14 million um JavaScript developers that are out there compared to you know the tens of thousands of uh of of uh blockchain devs um so in web 3 we've seen new abstractions and and Dev tools improve the developer experience as well from you know the first icos and ethereum launching in 2015 to um you know uh infu and and consensus mamaso on allowing devs to Outsource the node infra so people don't have to run their own nodes anymore to token standards you know trle ganach if people have were developing uh developing daps in 201 uh 16 remember those um uh scaffolding Frameworks and you know uh protocol apis like chain link the graph allowing you to read from the blockchain without having to Wrangle with uh with low-level uh blockchain data um continuing to today we had early D5 Primitives in um 2019 with things like a uh Unis swap allowing you to scaffold and compose on these open def5 protocols and build on these uh dexes and build uh more and more um subsequently complex applications to things like you know Foundry launching getting easier to build and test um and now like over the past two years we had account abstraction Technologies which we'll go into uh more deeply in a little in a little bit that completely changes and flips um the user onboarding Journey onto web 3 on its head right um it's even getting easier to navigate docs so uh you know developers are going to a website and learning what like what it is that a protocol does now ai tools are allowing um you know chat GPT like interfaces for for you to uh learn about learn about how to get started on uh a Dev tool right away um so if we think about how user have onboarded onto web 3 in the past the most successful um crypto businesses have been centralized exchanges right um people on board onto binance coinbase okx and they just stay there and they you know never kind of funnel into the self- custodial stack and then use daps um and the most successful self- custodia of daps have been these exchange owned wallets because they're like the most defensible top of funnel for people to go in um and then you have things like portfolio trackers which is like just a small percentage of people who are uh on board onto like binance and so on so why is this right because it's because exchanges have been the best at helping users actually you have a very common goal for entering uh crypto so far which is buying and trading and holding tokens and the usability of uh exchanges is you know pretty much topof the line uh right you have the familiar email-based onboarding seedless Fiat on ramping it's gas abstracted it's chain abstracted there's been you know there's a lot of uh talk on you know chain obstruction and account obstruction centralized exchanges have been you know uh offering this experience from the be the beginning but then what makes a user then funnel down the the the the line onto onto self custody and dabs right it's lucrative onchain opportunities that aren't offered by these exchanges so this uh has differed for each cycle you know we had defi summer back in 2020 we had uh nft Mania uh and then we had you know ordinals we had meme coins uh you know uh right now and like Point farming and airdrops so the opportunity for daps uh to be built um you know you can you can use account obstruction and wallet infrastructure to onboard users into your application right away without having to uh require them to go to a centralized exchange and or even um download uh Standalone wallets so here we have like a few examples of daps um uh onboarding without without you know like going through centralized exchanges but the technology that allows you to do so are is wallet infrastructure right if you look at how you interact with daps to even make before you even make your first transaction back in uh 2018 you see this uh confusing um you know wallet selector screen where the user has to navigate out of your dap download a separate application that they don't know on board to a centralized exchange to get gas top it up with their wallet before they even you know get to connect and like interact with application nowadays with um embedded wallets and onboarding sdks you're creating embedded Wallets on on behalf of the users um and you know without having uh to uh make them navigate out um to uh to a third party app and also you know the the wallet is created on the user's behalf directly and this is this is like a a very very meaningful change right uh this is an excerpt from coinbase's Q3 uh investor report um ever since they implemented the uh their smart Wallet account abstraction wallet in their daps the daps onboarding time has reduced from what was 2 and a half hours before the user made their first transactions to eight minutes and when you compare it to web2 adaps this is kind of web2 applications this is still kind of average right but you know it's a a drastic improvement from how you would um how users would uh interact with their daps um just from a few years ago and so every layer of the wallet stack removes um user friction and points of churn right so you have key management and signers um allowing users to uh do signature abstraction and and interact with um each chain without having to be chain aware and do uh seedless onboarding through their emails and familiar web tool logins to Smart accounts right uh where you can do really scoped you can really scope out the security features of your wallet and do things like recovery multiactor and sub accounts uh to account modules um this is a an emergent sort of uh development pattern we've seen where the the users or the daps can install a like a a a normal a regular smart account wallet but then subsequently extend on the feature through modules that are being built by third party developers so the wallets are now becoming more like developer platforms where you can install these features um without having to uh like onboard onto another wallet um to creativity and communication you know helping you do things like transaction bashing where you don't have to um where you can do do multiple transactions uh in one click and also permissioning and session keys where you don't where you don't have to like do uh confirmations with every interaction that you do on chain um some things that we're seeing on Horizon are things like personalization apis that um allows wallets to um uh give notifications to users alerting them of things that they can do on chain personalized to what they've done before right so this is things like available nft mints um uh art uh collections that they can do quests that are they're eligible for um and these things are very useful for uh improving retention and um improving the uh sort of transacting users on wallets um to things like policy expression uh prerequisites on who and how you want to interact with uh onchain protocols uh to things like chain abstraction this is aggregating your liquidity across multiple chains and it just helps you know uh helps us being uh like removing the requirement of being chain aware in this multi-chain sort of multi-layer 2 uh Universe um things like data Pipeline and warehousing to to make more performant deps um if you look at the uh adoption of smart accounts you know with there's been um a lot of discussion about 4337 and account abstraction here it's it's grown it's grown pretty uh fair over the past year and a half or so uh after the entry point contract launch but what's really exciting that's on the horizon is uh something called EIP 7702 right um so uh if you look at the account abstraction sort of 4337 adoption relative to the hype that it created last year uh it could be a little bit underwhelming sometimes but this is because 4 through 37 requires daps to sort of um deploy new accounts for new users and it's very very high friction for users with existing eoas to migrate their assets and their identity to a new wallet right and the daps have have existing eoa users already there's like little incentive for them to do that but with 7702 uh which is coming in q1 uh next year it allows EAS to deploy code um to the address and upgrade itself to a Smart account um so then users can experience the benefits of account abstraction uh which are primarily gas sponsorship uh transaction uh batching pass keys and uh we think that the top wallets will likely mement this but um require users to opt in instead of enabling it by default cuz this still doesn't sub subvert the the pass keys and Seed fre risk of uh of EAS so you still need you know actual like native account abstraction for for that to happen but it also can improve improve security via session keys right um yeah so we think users will opt into this if they want to use a Dap or feature that requires AA features um and embedded wallets will actually uh play a key role in this because it allows it puts this decision on developers instead of users uh without waiting for uh yeah users to enable 7702 for their Standalone wallets um yeah so in summary you know all of these abstractions both on the devx and ux side uh increase the pace of innovation and adoption better smart contract developer tooling um increases devx more developers more applications and then wallet infrastructure enables better user experience um better apps and hopefully more users and yeah that's the that's the talk um happy to answer any [Applause] questions I think we have one question so far um you guys still have time to submit questions if we can do so quickly uh the first one is what is your thought on on the kind of chaotic standards and implementations of account abstraction combined with the friction of L2 in ethereum um the chaot I'm not sure I understand the question I I don't think I understand either um uh if we have any other questions or if whoever asked the question uh wants to elaborate what do you think would be the end game of onchain experience and how are are we from there um yeah so if you think about when you're using adap today um and the amount of time you're spending doing things other than using the DB so for example like right now if I'm if I want to use if want if I want to use like an nft um you know art um marketplace right historically I have to download a wallet and and top it up with gas and if it's on the wrong chain I have to migrate and so on so that's like not helping me achieve my goal of buying nfts right I think the the endgame the endgame is reducing the amount of time that I'm that I have to like work like think about blockchain stuff uh versus using the DAP as uh as little as possible how do you think the hardware wallet ecosystem anything you are interested I'm going to mark that as the answered um the the hardware wallet I don't think Hardware wallets are going to go away um it's you know like our Hardware wallets um is definitely found PNF with users who wants to keep their assets super safe but things like uh smart accounts and and multi- signature wallets I think is something that um I'm most excited about because with Hardware wallets like if you lose that then that's still a single point of failure right I think Hardware wallets are uh great as signers to something like a like a safe um what is a good way to onboard very casual dap users who want to hold either zero or very tiny amounts of crypto that need low to medium level security and upgrade the security as the balance grows I think onboarding sdks and embedded wallets are a great solution for this um so embedded wallets um to the user they come up as these modals that allows you to either sign up or log into the DAP with their emails they create a wallet on their behalf and right now embedded wallets are very powerful uh a very powerful player in the market because they can aggregate different products and services like Fiat onramps um swaps um uh off-ramps and and things like that so so um and you can also sponsor gas for the users as well so the gas sponsoring on L2 has become a user acquisition cost now for adapts because uh gas is low enough for you to just uh do that on behalf of users and allow them to do make the first transactions so I think um yeah that's an easy way for you to uh that's an easy way for you to onboard casual users um and you you're seeing now like different chains offering um gas subsidies for dap developers to build on their chain and use their uh Services uh if you're Building on Base for example they have their smart wallet their onchain kit and they have their pay masters as well I think like giv away around 30k in in gas credits um for you to build on them so yeah there's a lot of optionality now as a that you have as AAP user can you give a good example of a smart account implementation to raise the penetration of a web 3 game um uh I I think the so smart account implementations are pretty agnostic in terms of what what types of use cases they they enable um but there are so gaming gaming developer uh platforms for example that have uh uh Dev tools for you to scaffold your game like nft marketplaces and and embedded wallets have these um embedded wallet Solutions on on behalf of their platform so I look into those think this is a good one uh what customizations could l2s do to reach ux endgame faster than L1 so we're starting to see specialized l2s now um versus generalized um so by generalized versus specialized I'm talking about uh things that came out you know 2020 2021 like optimism arbitrum uh and so on um that's kind of doing a wide blanket of the uh the types of daps that they want to be built on their ecosystem but now we have consumer Focus layer twos like abstract uh which is built by the py penguin team that is specifically focused on consumer apps so this comes with everything from uh comes with everything from native account abstraction to gas sponsorships to embedded wallets and you know uh that optimizes for the types of apps that you want to build for consumers so I'd look uh into things like um yeah abstract chain is there any possibility to help user navigating through deps more safely um yeah so a lot of wallets now are uh going away from the blind signing pattern where users are signing things and they actually don't know what it is um to you know uh having a clear and verified uh human readable like information that pops up that allows a user to to be really aware of what it is that they're signing for um and then yeah there was a there's some like uh small tools like fire which I think was is now um Cerberus that warns you if AAP that you're interacting with is um is is dangerous or malicious or not um so yeah there's these like Registries of trusted contracts that you can install within wallets or within your browser extensions to uh to to do like a double check what standard do you think will get the lowest friction in the years to come uh St the lowest friction I I mean I mean with 702 I think it's uh it's like a like a step forward from 4337 right cuz 4337 you still have to um deploy a new wallet what are your thoughts on differentiating wallet types or front-end experiences for users g a wallet that a wallet address is like a bank account number for many which increases friction um yeah so uh there's a few like identity protocols that allow you to have different addresses mapped to a human readable name um so like these you know things like ens and things like clusters which allows you to have aliases on different chains and that maps to a wallet um would improve the user experience a lot because yeah I don't think uh addresses are are that meaningful to the to the vast majority of users whereas I can just say you know niche. e um and have people send tokens to me there how do we solve the fact that embedded wallets are siloed to the app where they are created is that really web 3 um so the DAP specific the DAP specificy uh specifity and um The Silo The Silo issue wasn't an issue in the past but um think uh projects like capsule and privy are have now launched uh Global wallet embedded wallet features where if if you create uh a wallet within one dap you can sign in with the same login and that wallet will be imported to another dap so this was this was an issue in the past but um the embedded wallet providers um are launching or have launched these features uh in the past V ones since web 3 daps tend not to analyze user events via tools like mix panel Sentry Etc this does affect user experience is there a web 3 alternative to conduct user analytics while sticking to web three ethos um the r tool the r tools for for dap analytics like uh Telemetry performance um uh showing showing the adap developers analytics of like where the users are dropping off but this is quite nent um it's it's offered at a uh primitive level I I Believe by things like Alchemy and uh there's a few there's a few um web3 analytics protocols that are starting to do that but since things since a lot of things are on chain um the the dab developers are being Savvy and kind of doing these analytics themselves because they're I think we haven't reached the scale where developers are willing to pay for for these tools um in terms of like the the revenue they're generating from their deps um so yeah we haven't seen sophisticated analytics tools yet what about ux and a and account extraction Beyond evm yeah so I think um yeah uh so you uh the concept of AA is very evm sort of centric right salana has a different completely different account model where this uh account obstruction features are baked in from scratch and you can have um other parties natively pay for your gas so for some like non-m uh sort of chains this is kind of a mood point because it's natively baked into their to their uh protocols which is what ethereum t uh aims to do with Native account abstraction how do we do away with seed phrases and private keys can an alternative be secure yeah so that's what Native account abstraction aims to do right uh we want the smart accounts to be the default thing uh we want users to be able to sign with any keys that they want like pass Keys um social login um email add addresses Hardware wallets and so on um the alternative is so why the alternative is more secure is because it's removing the central point of failure right the point of removing seed phrases is removing this point of failure and having like redundancy in terms of like what keys can be used to move assets out of your account um and then you can scope the different uh permissions or capabilities based on each of these Keys uh so yeah that's why smart accounts where you can install where you can have features like multi signature and session Keys uh and Recovery uh we want to make that the the default way that people interact on chain that's uh all the time that we have for questions right now um thanks you guys for asking a ton of questions a lot of questions yeah if um if they want to ask questions is there anywhere that they can reach out to you after yes um I think can I go back to the slide well you can just find me around here okay or like yeah um but can we give a final round of applause for nich thank you