Top 5 Best DeFi Wallets
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DeFi wallets are non-custodial, virtual wallets that can be accessed online. They store and distribute cryptocurrencies, and some of the popular wallets include Coinbase, MetaMask, ZenGo, Trust, and Eidoo Wallet. The term non-custodial refers to the online third-party holding and storing your cryptocurrency, meaning that you do not directly store your money. These come with their own set of rules and regulations, as well as benefits and drawbacks.
Let us break down the term DeFi wallet to understand the concept better.
DeFi: Short for Decentralized Finance
As the term denotes, DeFi denotes a financial system free from any authority’s restrictions and control. It substantially differs from the traditional financial system our world is accustomed to. The DeFi system means moving assets or credit without restrictions, transfer charges, or monitoring by central authorities. You operate anonymously in the system, and no one can track your activity.
In layman’s terms, a wallet is described as something in which you store your money. The idea behind these crypto wallets is the same, with several useful modifications which make them compatible with cryptocurrency. The two classes of crypto wallets are hardware wallets and software wallets.
Hardware wallets use a physical device such as a USB stick to store the data corresponding to your cryptocurrency, which you can keep with you. They are manufactured by companies such as Trezor Wallet, Ellipal, and SecuX.
Software wallets store your crypto assets on a network only you can access. It is a separate class DeFi Wallets fall into, which we will discuss further in this blog.
What is a Defi Wallet, and How Does it Function?
As discussed earlier, DeFi wallets will store your crypto assets or currency and require a password and a seed phrase. Seed phrases are confidential phrases (around 12-24 words long) that can be used to access the crypto assets stored on the virtual wallet and will be required for your verification. They bypass monitoring by the government as they are part of the Decentralized Finance System on the blockchain network.
The infrastructure of these wallets is based on smart contracts, which makes them extremely secure to work with. By integrating smart contracts, the wallet leverages the power of the blockchain network, which makes it highly secure and adds anonymity and restriction-free access to your money. This anonymity also provides users with the ability to conduct transactions without the barriers they would normally face in the real world because they do not fall within a predefined set of categories established by the regulatory body.
Additionally, under the supervision of authority, there are limits to your transactions, like the amount that can be transferred or the number of times you can make a transaction. DeFi wallets allow you to evade these limitations, create new crypto tokens, use any financial product, or even construct your own application.
How do I Start Using a Defi Wallet?
When you operate on the blockchain network, you choose between a hardware and a software wallet. In the case of DeFi wallets (software), you must install some sort of software or extension to initiate the process. If you use a phone, check if they have an application on the AppStore or PlayStore.
If operating from a computer, you must download a web extension or a software application, depending on the type of your wallet. You should then enter your credentials to sign up and start working. During this process, you will be given the seed phrase, which you must remember to maintain your account’s ownership.
Retain this seed phrase to access your wallet and any asset or currency it holds; losing it will render you penniless. Most wallets come from a crypto exchange which you can access to purchase cryptocurrencies and begin your journey on the blockchain platform.
If you wish to study crypto wallets further, check out our latest blog on crypto wallets.
So, What’s the Right DeFi Wallet?
With all the information thrown at you by people or wallet companies, it can be extremely challenging to pick a wallet that is just right for you. Hence, we have compiled a list of the top wallets and their specifications, which we hope you will find useful when deciding which wallet meets your personal requirements the best.
Best Crypto Wallets to Use
1. Coinbase Wallet
Available as an application for phones and an extension for computers (note: not the same as coinbase.com), Coinbase Wallet is absolutely free to download. It stores all crypto and NFTs under one account/name in one wallet. Keep updating the supported currencies based on their utilization.
The wallet is available in 100+ countries and is relatively easy to access. Like any DeFi wallet, it is a self-custody wallet, so you do not have to worry about trusting any third parties. As of February 2023, the Coinbase Wallet has no significant history of getting breached, so it is quite safe to use.
Moreover, it is well known for being easy to navigate, so if you are a novice at crypto, we highly suggest you start with Coinbase. The wallet is incorporated with the Coinbase Exchange, which means that you have more chances to get refunded in case of losses due to cybersecurity-related issues and threats.
The wallet also provides its customers with a crypto debit card in exchange for a small fee, which can be used in everyday transactions and cash withdrawals at a negligible cost. The official website has educational blogs and articles for business-oriented people looking to invest.
2. MetaMask Wallet
Available on AppStore and PlayStore alike, as well as an extension supported in numerous widely used browsers, the MetaMask Wallet offers prompt customer service, a user-friendly UI, and the capacity to back up your account automatically. The ‘Swap’ feature allows you to swap any Ethereum tokens you own with any token you want. It further optimizes this trade by finding you the most reasonable price with the lowest network fees and slippage.
The EIP-1559 gas fees allow you to select between low, market, and aggressive gas fees, which you can also preselect for your transactions and adjust your gas fees accordingly.
dApps predicated on the ETH blockchain, ETH-based games, crypto lending products, NFTs, and much more are accessible via the MetaMask Wallet. Users are limited to navigating only the Ethereum network; however, communicating with other networks is possible. The support only extends to Ethereum Tokens, so you cannot purchase other tokens directly from the wallet. On the other hand, you can buy cryptocurrency directly from your wallet across various networks such as Binance, Ethereum, Polygon, and Avalanche, to name a few.
The MetaMask Wallet uses highly encrypted and secure networks; breaking into the network to steal money is nearly impossible. However, there have been cases of people losing their funds because they gave up their seed phrase to phishing websites or hackers. Therefore, security is not an issue if you keep yourself safe.
3. Zengo Wallet
Available as an application in your Android or iOS, Zengo is the most innovative crypto wallet out there when it comes to the maximum security of your funds. It is widely recognized in the crypto community for its unique security mechanism, which does not require a seed phrase and instead uses two distinct security keys.
One is stored on your cloud, and the other on the wallet’s server. In case of a breach, the hacker must obtain both your part of the key as well as that of the servers. This feature makes it nearly impossible for the wallet to get hacked. It is called MPC cryptography and is part of the 3-Factor Authentication system.
However, the trade-off here is that you give up partial control of your assets to the wallet, making it partially non-custodial since you trust it with a part of your encryption key. Another drawback is that it is not available for desktop use directly, so you will need a phone to use it. Zengo offers a partial instant crypto exchange service as you can buy from various cryptocurrencies. However, the only currency you can sell as of February 2023 is Ethereum.
The Zengo Wallet allows access to dApps and a wallet connect feature that links you with various NFTs, dApps, blockchain games, and other DeFi applications. It also has the option to modify and adjust your transaction fees according to your needs, giving it more versatility and flexibility. Additional features include a user-friendly interface, lightning-fast customer support, and a built-in firewall.
4. Trust Wallet
Available as an application for your iOS or Android, Trust Wallet is a newly introduced extension that allows you to use the wallet on desktops. General provisions of buying crypto and NFTs, and surfing dApps, blockchain games, and other similar stuff are included in this wallet. Moreover, it allows the user to invest directly through the wallet and start earning.
Trust Wallet lets the user purchase tokens across several different blockchains, including ERC20. It means that users are much more likely to invest in a crypto asset or cryptocurrency that is gaining popularity or increasing in value over time. Trust Wallet is a better choice if you wish to do more than just store cryptocurrency in your wallet.
It even provides users with an integrated exchange system, which means that users can purchase cryptocurrency without connecting to another decentralized network. The wallet, thus, omits the need for increased gas fees, which can get unstable at times. This means that you can avoid the security risk of involving another platform, hence, saving both time and securing your funds.
Trust Wallet is a blockchain-based wallet that was introduced relatively recently. It had the advantage of learning from the errors of other crypto wallets and ensuring that it fills the void left by such applications, thereby, offering consumers a much better experience. Check out this MetaMask and Trust Wallet comparison to obtain an in-depth understanding of these two options.
5. Eidoo Wallet
Eidoo Wallet is also one of the most popular DeFi wallets today, widely used by crypto users around the world. It is available as a mobile device application on the AppStore or PlayStore, and a Beta version for desktop use. We recommend using the mobile application as it has been established earlier and serves as the wallet’s primary domain.
It provides general features and access to DeFi products and services, interconnects with many blockchain networks, and provides a rigorous security check, including multi-factor authentication and a recovery phrase to recover your data and count. It is well known for executing high-speed transactions, especially on dApps, and an exchange system to purchase most cryptocurrencies, which you can use in the dApps instantly. The most popular dApps integrated with the Eidoo Wallet include OpenSea, pNetwork, UNISWAP, 1inch, and Ledger.
This vast integration network grants Eidoo Wallet users an edge when moving their cryptocurrency. It lets users swiftly move their assets without having to deal with the hassle of connecting separately to external networks. Perhaps the most fun feature that sets it apart is its widgets — constantly updating you about the changes happening in the cryptocurrency world. Moreover, we think that it has the most user-friendly interface in the ecosystem as compared to other wallets.
When looking for a DeFi wallet, consider these wildly popular options we discussed in this post. While some wallets support a large number of assets, others promise tighter security and full control over your data and funds. Ultimately, the decision is yours.
However, we recommend that you go with a wallet that combines adequate security, swift transfers, versatility, availability on multiple devices, and, most importantly, compatibility with the cryptocurrency or crypto assets you are interested in trading and investing in.
The editorial content of OriginStamp AG does not constitute a recommendation for investment or purchase advice. In principle, an investment can also lead to a total loss. Therefore, please seek advice before making an investment decision.