Choosing which DeFi wallet to store your cryptocurrencies on and use for trading options, yield, and stake farming, is one of the most important investment decisions you’ll make as a crypto investor. A DeFi wallet is the closest thing you have to the idea of being your very own bank. DeFi wallets give accessibility, freedom, and transparency and ensure that users are in charge of their finances. The number of DeFi wallets in the market is increasing, making it increasingly difficult for users to determine the one that fits them best. It, therefore, becomes crucial for crypto investors to weigh their options before making a choice carefully. Decentralized Finance wallets are considered one of the safest options for cryptocurrency storage; however, being in charge of your Wallet means there is almost no way to recover it if you lose essential login data.
This article looks at the key components of a good defi wallet and everything you need to know before choosing a secure DeFi wallet.
Key components of a good DeFi wallet
Before looking for and choosing a secure DeFi Wallet, it is critical to understand what comprises a good defi wallet. Safeguarding your crypto investments is important, but you also need a simple user experience. A good DeFi wallet allows you to access DeFi protocols without difficulty while also flexible crypto assets trading.
The essential components of a good DeFi wallet include:
Key-based
All DeFi wallets have a unique keypair underneath the hood. This unique keypair makes a DeFi wallet different from a centralized wallet as users are responsible for safekeeping their private keys, which is often introduced as a 12- word seed phrase. It is not a DeFi wallet if you do not have the keyphrase. The key pair is the most important trait in a DeFi Wallet.
Non-Custodial
Being non-Custodial means crypto users can transfer and send funds knowing that only they have access to the funds. By being decentralized, all DeFi wallets are Non-Custodial by nature. You get to own the private keys with a Non-Custodial wallet, which is the major difference between a custodial and a Non-Custodial wallet. It is not your cryptocurrency if you do not have the keys. Whoever owns the private keys to a wallet owns the cryptocurrency in it.
Browser Compatibility
Decentralized finance occurs on web3 applications, meaning that you have to access it from a web browser. All DeFi wallets are accessed by connecting a web3 wallet. Most mobile wallets have begun integrating dApps browsers to make connecting with DeFi applications easier without always leaving the app. A good DeFi wallet must be compatible with your DeFi protocols and web browser.
Accessibility
All Non-Custodial wallets can handle various assets, with Ethereum DeFi wallets enabling users to deposit Ethereum (ETH) simultaneously with stablecoins like Dai, ERC721 tokens like Axies, and ERC-20 tokens like KNC. A DeFi wallet must be compatible with the different types of tokens found on the different blockchains.
These are the core components of a good DeFi wallet.
How to choose a secure DeFi Wallet
When choosing the best and most secure DeFi Wallet, you should have a couple of considerations. Picking the appropriate DeFi wallet comes down to deciding on an answer to the following questions.
Multi-chain support
Multi-chain support is something the best DeFi wallets offer. The first choice you’ll have to make before choosing a secure DeFi wallet is the blockchain you plan on using it with. Every crypto investor is familiar with chasing the best and latest staking or yield farming opportunities and hopping from one blockchain to another. You would want a DeFi wallet that gives you access to as many chains as possible, so you wouldn’t have to download a new wallet for every chain you choose to conduct business on.
For example, one of the more popular wallets, Metamask, doesn’t natively support the Solana Blockchain. You would have to use another wallet like Phantom or Solflare to interact with Solana dApps. Other blockchain applications might require you to use their Wallet; for instance, you would have to use the Ronin wallet to access the play-to-earn game, Axie Infinity. You might use different wallets for different purposes, but they are free and quick to set up; remember to keep your seed phrase safe.
Asset accessibility
Another important consideration is that your wallet preference supports or backs your interested assets, as naturally, not every asset is supported by the Wallet a user is interested in. Some wallets better support certain assets. Some DeFi wallets don’t store Bitcoin (BTC), which is not an ideal choice for someone who only holds Bitcoin (BTC). DeFi wallets are access portals to the vast DeFi community, so your Wallet of choice must be aided by the product you want to use.
Security
The ideal DeFi Wallet should be Non-Custodial and open-source. Open-source means that the wallet software is available to the public. Anyone can review malicious codes and potential bugs. Also, consider what steps the wallet provider has taken to ensure the user’s safety. Some wallet providers seriously prioritize security. Argent is an example of a DeFi Wallet with top security. Argent lets users nominate “guardians” who can help them recover access to their wallets if they ever forget their private keys.
Gnosis allows for transactions that different people have to confirm simultaneously, also known as multi-signature transactions.
Functionalities and Features
One thing about DeFi Wallets is that they usually have one or more unique and interesting features that differentiate them from others. Some wallets offer accessibility to yield and stake farming, while others may not. Some wallets have unique features like an easy user interface, a more compact design, convenience, ease of access, or cost lower than others.
The standard crypto wallets enable you to transact and store your coins. However, some DeFi wallets do much more than just transferring and Storing your crypto assets. Some wallets enable users to swap coins, stake (invest), trade or buy crypto with fiat currencies, interact with decentralized applications on supported chains, etc. For example, the metamask Wallet does not visualize the NFTs in your Wallet, but others, like the rainbow wallet, allow users to see the NFTs they hold in their account.
Some wallets are integrated with DeFi apps, allowing users to perform trades and interact with DeFi protocols without leaving the Wallet.
Social status
You also need to evaluate the social status of the DeFi wallet you’re interested in. Any well-recognized DeFi wallet will actively use social media and connect with its community.
You can check out the social media accounts of the wallets you’re interested in to see their level of activity and engagements if you’re skeptical about them.
Ease of use
The ideal DeFi Wallet should be as user-friendly as possible, particularly for beginners. It should be simple and uncomplicated.
The way the DeFi market stands, users are still confronted with a gaping lack of industry knowledge on how to get started, including intricate details like managing transactions on DEX (decentralized exchange) and using multi-asset LP tokens or navigating new techniques and solutions. The Wallet should be so easy to use that even a total dummy should be able to set it up and use it by just following basic instructions. Also, the features should be easily accessible with a clear and simple user interface.
New users mainly desire simplicity and ease of use. It would help if you were interested in whether the wallet company’s system is streamlined to assist customers’ queries about the value, strength, and time to use their solutions.
So ensure you do proper research on the Wallet you’re interested in. To mention a few, these are some of the best DeFi wallets available today:
- Coinbase wallet
- CoinStats
- Metamask
- Eidoo wallet
- Trust wallet
- Brave Wallet
- Binance wallet
- Gnosis
- Argent
Another important thing you must consider and remember is your seed phrase. It is impossible to recover your Wallet and all the funds therein in several situations if you lose your seed phrase. It is essential to remember your seed phrase, or perhaps write it down and stand it somewhere safe and protected. You can store your seed phrase on your laptop, computer, or mobile phone.
Conclusion
DeFi wallets are varied and keep increasing in number daily. However, every user needs to ensure that their Wallet of interest serves their needs before picking it up. Considering the required safety measures and its reputation is one way to identify how safe and secure a wallet is. You can then use the Wallet to store your assets or tokens once you’ve ensured its safety. Decentralized finance is here to stay, and you should seriously consider some of the best DeFi wallets available to have complete control of your assets.
