Is the web3 wallet space still winnable?

The Wallet Wars: Is There Still Room?

With hundreds of crypto wallets in the market, many assume the space is saturated. We believe account abstraction (AA) opens a new chapter in the wallet wars, creating opportunities for innovative teams.

Why Wallets Still Matter

Wallets are the gateway to Web3, and current solutions still have major limitations:

• Poor UX: Seed phrases, gas management, and transaction signing remain confusing
• Security Risks: Users lose billions annually to hacks and lost keys
• Limited Functionality: Most wallets are simple key managers, not smart applications
• Platform Lock-in: Different wallets for different chains and use cases

Account Abstraction Changes Everything

AA enables wallets to become smart contracts, unlocking new possibilities:

• Social Recovery: No more lost funds from forgotten seed phrases
• Batched Transactions: Complex operations in a single click
• Gas Abstraction: Pay fees in any token or have them sponsored
• Programmable Security: Custom rules for different transaction types

Winning Wallet Strategies

We believe winning wallets will:

1. Start with a specific use case (gaming, DeFi, social)
2. Leverage AA for 10x better UX
3. Build network effects through social features
4. Expand to become the "super app" of Web3

Investment Approach

We're backing teams that view wallets not as utilities but as platforms for the next generation of Web3 applications. The wallet wars are far from over – they're just beginning.