The right Wallet-as-a-Service (WaaS) provider makes the venture into Web3 a breeze for businesses. By enabling digital assets in their operations through WaaS, companies can open fresh revenue streams and welcome new customer profiles.
Traditional businesses can no longer ignore the accessibility and revenue streams facilitated by Web3 technology. Building a Web3-friendly service for customers starts with a Web3 wallet. However, Web3 wallet integrations might become overwhelming for businesses, especially if they lack the technical background in blockchain technologies.
This is where Wallet-as-a-Service (WaaS) providers like Magic come to aid in simplifying Web3 integration for businesses. This guide explores the basics of WaaS along with potential benefits and use cases for companies who want to take part in the growth of the Web3 ecosystem.
What is the Wallet-as-a-Service (WaaS)?
Wallet-as-a-Service (WaaS) is an end-to-end solution that simplifies integrating a Web3 wallet for businesses. WaaS offers the necessary infrastructure and tools so any business can offer a Web3 wallet to its customers without needing a team or knowledge to build a separate Web3 infrastructure.
WaaS providers facilitate the wallet service, allowing businesses and their customers to interact with blockchain-based applications, manage digital assets, and securely process transactions.
The cumbersome onboarding processes and impractical user interfaces are two pain points hindering the adoption of Web3 wallets. WaaS lowers the barriers for users lacking Web3 expertise by removing complexity from the infrastructure and offering a more straightforward experience on the front side. It helps Web3 to become accessible to a broader audience through businesses.
How does a Web3 wallet work?
In the world of Web3, each interaction with the blockchain -the underlying technology of Web3- is managed through wallets. Each time a user wants to make a crypto payment, the transaction is completed on blockchain. Establishing a reliable and functional wallet infrastructure is vital for businesses to start accepting crypto payments or offering a broader Web3 experience.
Web3 wallets are primarily split into two categories —custodial and non-custodial. Non-custodial wallets take a more “decentralized” approach and give users complete control over managing their funds, interactions and experience.
Custodial wallets, on the other hand, delegate asset control to businesses —often for simplicity and convenience for users. Businesses should decide if they want to be legally and operationally responsible for each individual user’s assets before opting for a custodial asset solution.
WaaS providers can offer services for both custodial and non-custodial wallets. After WaaS deploys a Web3 wallet infrastructure for a business, customers can sign up and create their wallets with identity verification by email, social accounts or even SMS. Service providers like Magic can make the onboarding process almost “invisible” for customers by hiding the complexities of setting up a wallet from the user-facing side.
Each transaction on the blockchain generates a cost to keep the automated system up and running. Called “gas fee,” it is a major headache hindering the overall Web3 experience. Normally, users can’t proceed with transactions before approving the gas fee tied to an on-chain order. WaaS offers a gas subsidy feature to enable gas-free transactions, dramatically improving the Web3 experience for both business and end users.
Which Web3 services are provided by WaaS?
As with many traditional infrastructure services, Web3 wallets can be leveraged as a white-label offering. Businesses can pick white-label wallet services from their WaaS to integrate their own brand identity into their Web3 wallets, providing a seamless experience along with a familiar environment for their customers.
During the integration, businesses can pick a specific service from WaaS providers or leave the majority of work to their provider. The bigger the library of services offered by the WaaS provider, the quicker the time to market becomes. This “one-stop shop” logic, provided by Magic, creates a cost-effective operational framework, resulting in optimized resources and streamlined workflows for companies’ venture into Web3.
Nonfungible tokens (NFTs), blockchain-based digital assets with unique properties, are becoming increasingly popular with both customers and businesses. Companies aiming to include NFTs as an essential part of the Web3 experience should look for features such as smart contract creation, payment processing, minting services, and in-wallet NFT viewing —all available through Magic’s WaaS solution.
Despite its wonders, Web3 still needs a bridge to the real world. After all, customers need to convert their fiat currency into crypto before using it in the world of Web3. This service is called a fiat on-ramp, and it’s offered by WaaS platforms as a direct link between Web3 and traditional finance.
Using WaaS solutions, companies can enable wallet users to hold, send, receive, and exchange cryptocurrencies like Bitcoin and Ether. For example, Magic also supports stablecoins, a special type of cryptocurrency with a value pegged to fiat currency such as USD or Euro.
With widget integrations, WaaS providers like Magic save time and effort for Web3 deployment. Widgets act as adaptable building blocks, run on the base layer and can be added with just a few lines of code.
Magic’s WaaS offering includes advanced analytics for businesses to provide insights into customer behavior. Organizations gain valuable insight into user preferences, engagement patterns, and market trends through analytics. They can create custom business strategies to address the ever-changing customer needs.
How to choose the right WaaS provider?
Web3 for businesses starts with the integration of blockchain-based transactions into established “Web2” processes. Thus, the initial process of deploying the Web3 wallet service into the existing payment infrastructure is crucial. It should be handled meticulously. Also, the management of the integration should be simple enough for the client to supervise wallet-related processes easily after the deployment.
Considering that customer assets are entrusted to wallets, the security and compliance measures of the chosen WaaS provider are vital. Robust security protocols and a comprehensive compliance framework are among the first features to look for in WaaS providers. A secure environment must be provided to manage customer assets in the Web3 environment.
Finally, customer support is what makes or breaks a WaaS offering. A good WaaS solution should offer SLA guarantees while ensuring continuous uptime. A WaaS provider with reliable and responsive support services minimizes disruptions and increases the operational efficiency of the business.
Unlike individual users, businesses have a reputation within an industry to uphold. A user can simply pick a Web3 wallet, try it and then switch to another one without any obstacles. On the contrary, businesses should pay close attention to the reliability and features when choosing a WaaS provider. A WaaS provider should have a consultative approach supported by specific blockchain and wallet services expertise. When the WaaS provider understands the needs of the business and produces particular solutions, it results in a better Web3 experience for the customer.
Featured image credit: senivpetro/freepik
