Coinbase wants to simplify access to Web3 with its Wallet-as-a-Service

The web3 offers many opportunities for companies to better engage and serve their customers. This allows brands to create rich, immersive experiences, like Moonray, which incorporates the ability for its players to interact with digital assets and NFTs into its games. This opportunity has not escaped the attention of the exchange platform Coinbase, which is now offering its wallet as a white label to encourage businesses to explore the technological possibilities of Blockchain. The launch is also a way for the exchange to diversify its business, moving closer to the fintech and neo-banking model, while its historical business is suffering from the turmoil of the crypto market.

FACTS 

• Coinbase recently launched its Wallet-as-a-Service (WaaS) offering. It is a scalable and secure set of wallet infrastructure APIs, allowing companies to create and deploy wallets on a fully customizable blockchain for their end customers.

• Companies can offer users a wallet by integrating it directly into their applications to support transactions (exchange of objects or funds in a virtual world). They can also create loyalty and reward programs based on tokens (NFT). 

• End users can explore the web3 in a simple way. Coinbase's WaaS is underpinned by Multi-Party Computation (MPC) crypto technology:

• MPC allows cryptographic keys to be shared between the end user and Coinbase securely, even if the user's device is compromised.

  • MPC's advanced, automatic backup ensures that even if an end-user loses access to their device, their web3 wallet key can be securely stored to easily recover access to their account. 

  • Users retain full control over their assets, including the ability to remove their keys from the platform at any time.

  • Some of the brands that use WaaS are Floor, Moonray, thirdweb and tokenproof.

CHALLENGES 

• Creating new revenue streams and community-based loyalty 3.0 : retailers can offer personalized shopping experiences and next-generation loyalty programs on web3, while social enterprises can create stronger communities with the help of content creators. Web3 also allows companies to create new revenue streams (new offer, new distribution channel, ...), increase customer engagement and facilitate reward exchange between companies and customers.

• Simplify access to Web3 by helping players demystify access to the wallet to focus on the added value and not the technicality of this environment : a major challenge is the complexity of web3 wallets for end-users, which require the management of a real digital identity and the holding of crypto-assets. The challenge for Coinbase is therefore to make the notion of blockchain disappear for these users by managing the entire technical infrastructure on behalf of the brands. And to open this environment to non-crypto holders.

• Seduce companies interested in the Web3 transactional ecosystem : More and more brands are indeed looking to position themselves in this environment, but to do so, they have to understand all the technical complexity of this environment and do a lot of education with their customers. Coinbase's solution allows companies to avoid this R&D cost and rely on fully customizable APIs to create their own universe.

MARKET PERSPECTIVE 

• Coinbase has also launched several web3 projects, such as:

  • the "Base" project: an Ethereum Layer 2 (L2) network;

  • in addition to WaaS and Base, Coinbase also offers a paid SDK for converting cryptocurrencies into fiat currency;

  • trading APIs.

• The web3 continues to fascinate various ecosystems, from finance to retail. Players are constantly experimenting with different approaches to overcome the technical complexity of this new world. Recently, we have seen initiatives such as:

  • Communities and governments: after digital identity and digital currencies, several governments have taken the initiative to develop city replicas in the metaverse. As citizens are increasingly trying their hand at these virtual worlds, governments want to anticipate potential problems with cybersecurity and cybercrime. 

  • Insurance: Tokio Marine Nichido is adopting the metaverse as a new insurance distribution channel in January 2023. 

  • Banks: like the Polish bank PKO which imagines its future in the metaverse

• The web3 is also bringing about a real revolution in local commerce and e-commerce, notably thanks to virtual reality, augmented reality and 3D. Many retail players have entered the web3 in recent months:

  • Casino, which last year launched a range of NFTs for the customers of its Club Leader Price.

  • Decathlon, which created over the same period 2008 NFTs, an NFT for each of its shoes.

  • LVMH, which has launched into the metaverse and presented its first muse in 2022 

  • Or the initiative of Nike which has already welcomed 21 million visitors in October 2022.