Selection of the right DeFi wallet is important as it helps you decide the ease with which you can store and transact in crypto; Read on to find more
Decentralised Finance (DeFi) gives the users and investors the chance to participate in the worldwide markets of crypto assets and deal in products like crypto assets, non-fungible tokens (NFTs) art and exotic derivatives. One of the important mechanisms in DeFi is a Defi wallet in which you not only can keep your crypto assets, but also you can transact through it.
What is a DeFI Wallet?
A DeFi wallet is a noncustodial wallet that can be used to store your crypto assets. Since the wallet is non custodial, it means only users with a private key can access it.
The purpose of a DeFi wallet is to facilitate the users to hold their crypto assets securely and in an accessible manner without relying on a third party. It gives the users full control of their money without the interference of an intermediary or an authority, and you can use your funds as you wish.
To open and maintain a DeFi wallet, you do not have to verify your identity or provide any background information unlike centralised wallets where the platform or the exchange requires you to verify your identity
Defi wallets are generally Ethereum wallets, as they are built on Ethereum blockchain, and they support ERC20 and ERC721 tokens, they also support most of the DeFI tokens, as they are built on Ethereum. However, there are wallets that support other blockchains also and you must do a thorough research before selecting one based on your usage.
Most DeFi wallets are based on web 3.0, and they tend to have similar features, some characteristics of DeFI wallets are
Users can send and transfer funds through these wallets securely.
As a user of a DeFi wallet, you will have your private key, that will be your login key and it is difficult to retrieve if lost
It is an important feature as all wallet are not compatible with all blockchains, wallets are working aggressively to improve compatibility
Nearly all crypto wallets can store numerous crypto assets in addition to the blockchain on which they are built.
How to select a DeFI wallet?
Following are the factors that you need to consider before selecting a DeFI wallet
The choice of wallet depends on the blockchain you intend to use it on, not all wallets are available on all blockchains and hence you should consider the assets that are supported on the platform, depending on your usage and requirements of the blockchain, you may have to use different wallets for different purposes.
Defi wallets are your access points to the greater defi ecosystem through decentralized apps (DApps). Some wallets are integrated with DApps so that you do not have to leave the app for making the transactions.
Feedback on Social platforms
Some wallets have their own communities on social media platforms, and looking at these will give you a good idea of the performance of a wallet.
Seed phrase or secret phrase is your initial entry in the wallet, this is your identity to the wallet and if you lose it, in most cases, there is no recovery. Some wallets give you a mechanism for retrieval.
How to use a DeFi wallet?
After installing and funding a wallet with crypto, all you will have to do is connect the wallet to a DeFi protocol by using the option termed connect wallet. The connect button can be easily spotted in most of the DeFi protocols.
Prominent DeFi Wallets
Below we have listed the popular Crypto wallets.
- Meta Mask
It is available as a browser extension and hence it can be used on a computer. However, metamask is soon launching a mobile application. It is built on the Ethereum blockchain and hence supports Ethereum-based assets.
It is one of the most friendly DeFi wallets, it is easy to transfer funds, buy and store tokens and interact with other decentralized applications. The wallet has no custody but its private key is stored on the desktop of the user and hence can be retrieved if lost. Coinbase is one of the few wallets to support Bitcoin.
Argent is a mobile-focused, decentralised app and is extremely friendly to users who are non-technical and are new to the world of decentralised finance. It has a security feature that allows the users to add guardians who can help to recover seed phrases and private keys if lost.