Coinbase introduces an embedded, smart wallet for developers

Coinbase is building two new wallet solutions focused on integrating and transferring Ethereum Virtual Machine (EVM) applications, targeting developers to the Layer-2 blockchain, Base.

Among the new solutions is a smart wallet that allows users to carry their balances in various EVM-compatible applications integrated with the Coinbase Wallet SDK. The second feature is an embedded wallet that allows developers to integrate unregulated white-labeled wallets into their apps.

According to Coinbase, both features are designed to reduce developers' pain points when it comes to user experience when building Web3 products.

“Last year we learned a lot from our customers and we've been working a lot to improve the product experience of all services, and what we've come to is the embedded wallet. So, it's been a really continuous effort for the last year,” Yuga Koehler, senior engineering manager at Coinbase Embedded Wallet, told Cointelegraph.

The move expands Coinbase's wallet-as-a-service product line, a model that allows developers to integrate digital wallets into their own apps without having to develop the technology from scratch. This type of solution helps companies that want to incorporate digital assets into their products and offerings.

“Just to compare this to the self-sustaining wallet model. […] If you go to a DApp like Uniswap or OpenSea, you generally need to have a Chrome extension or visit it with your own security app. […] And what we're trying to do is provide APIs that allow these DApps to create wallets on behalf of their users, but they still don't have to go natively outside of the DApp.”

Wallet-as-a-service is a popular offering in the crypto space. Crypto custodian Bitgo, for example, has a similar service that includes custodial and non-custodial wallets for enterprises.

Both Bitgo and Coinbase's solutions are powered by Multi-Party Computation (MPC) technology, which allows multiple participants to calculate results based on their personal data without disclosing results to each other or third parties.

“This technology doesn't use smart contracts. MPC encryption is completely off-chain. And it's a protocol, there are many different MPC protocols. Coinbase has one that we use in-house,” Koehler explained.

Coinbase recently dropped support for its native Bitcoin (BTC) merchant payment platform, Coinbase Commerce, citing difficulties in delivering the latest updates to the cryptocurrency payment protocol.

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