A close look at Phantom, Solana’s take on MetaMask

Last week, the Solana blockchain — which promises speeds as fast as 65,000 transactions per second — went offline for 17 hours.

And while those running the blockchain, known as validators, took a lot of the strain, it was Solana’s most popular in-browser crypto wallet, Phantom, that had to deal with the anger and confusion felt by many of its users.

“It was definitely a difficult time; quite unexpected for everyone,” Phantom CEO Brandon Millman tells The Block. Since the wallet is most people’s touchpoint with the blockchain, he added, it was overwhelmed with support requests.

The episode epitomizes the current state of building on the Solana blockchain. The network’s high speeds and low fees are attracting a whole army of developers and consumers. This frenzy has seen demand for core Solana services, such as Phantom, skyrocket. Millman says the wallet has seen 100,000 new users per week recently, and that the wallet is about to hit 500,000 active users.

Meanwhile, there are only six developers and a couple of contractors behind Phantom trying to manage this demand, cope with an intermittent blockchain, deal with the support requests — and build out a whole host of new features. 

Here’s a look at how it all began for Phantom, how it’s going now, and what’s coming next.

From Twitter to Ethereum, then Solana

Talk about falling down the rabbit hole. 

Millman was a senior engineer at Twitter for four years before he joined the crypto space just prior to the 2017 peak (when bitcoin’s price hit $20,000 for the first time). Alongside a few others, he helped build 0x, an infrastructure for building decentralized exchanges that is currently responsible for more than $200 million in daily trading volume.

Throughout this time, the whole team all became avid users of in-browser crypto wallets — namely MetaMask, the established leader in the Ethereum ecosystem with 10 million monthly active users.

Over time, the team ended up with a wishlist of features that they felt would improve the wallet. Then Millman, and two other engineers, decided they would take this list and build their dream wallet.

With MetaMask so dominant on Ethereum and the team’s belief in a multi-chain world, they looked at the ecosystem more broadly and considered challenger blockchains like Cosmos and Polkadot before settling on Solana. In March 2021 they left 0x and started building Phantom.

“In terms of go-to-market, what we decided to do, instead of going straight for the Ethereum ecosystem, we wanted to really take a bet on a nascent ecosystem that really needed its flagship wallet,” says Millman.

Four months later, the team raised $9 million in a Series A funding round, with plans to expand to other blockchains and to release a mobile app. But that was when Solana really started taking off.

Overwhelming levels of growth

During late August and throughout September, the NFT market on Solana has exploded, with users flocking from other blockchains to buy and sell artworks at a much lower cost. This attention and demand for the solana token (SOL) to buy NFTs, saw its price shoot up from $70 to hit highs above $200 — propelling it into the top 10 coins by market cap.

This grabbed the attention of celebrities, including YouTube star KSI, who has a collection of Degenerate Ape Academy and Solana MBS NFTs, and TV presenter Steve Harvey, who picked up a Solana MBS NFT and made it his Twitter profile picture. It didn’t take too long before the blockchain saw its first-ever $1 million NFT sale.

But this surging demand, on a blockchain that wasn’t necessarily stable and still lacked crucial infrastructure became problematic.

“With that came a number of challenges. Things you would expect like various infrastructure around the whole ecosystem being stress tested but also things like being able to ramp up our support team to handle this huge influx,” says Millman. “With that number of users definitely comes some stress tests. Really challenged us.”

Despite the uphill battle, Phantom has evolved to provide a wide variety of services. It lets users swap a few Solana-based tokens and stake their SOL through a number of providers (the wallet has seen 1 million SOL staked at its peak, worth $180 million at the time). Plus it shows them NFTs that they own within the wallet. 

Dealing with scammers

One of the biggest problems in the NFT marketplace (and in crypto in general) is the prevalence of scammers looking to exploit unwitting users. These can be fake websites designed to steal your NFTs or supposed support workers in Discord whose only idea of support is helping to take your tokens.

With such a small team, this has been a particular challenge for Phantom. The first step was to get away from Discord. “Those discords end up being quite dangerous places for new users. Teeming with scammers,” says Millman. “We’ve taken our own steps to lock down our Discord and funnel everything through a service called Zendesk instead.”

The longer-term goal is to build out a support team as well as investing in education, Millman adds.

Another key debate has been over a feature that lets you auto-approve transactions for a specific website. The benefit of this is that you can be faster to mint NFTs — handy when they can sometimes sell out in seconds — but the downside is that if you give this permission to a scam website, they can empty your wallet equally quickly. 

Phantom initially said that it was removing this function but after a backlash on Twitter, including from FTX CEO Sam Bankman-Fried, now the team isn’t so sure. “This is an ongoing thing we are navigating. Toeing this line between servicing ‘prosumers’ and the more new folks, the next wave of users,” says Millman.

Phantom has added a feature to the wallet designed to give more clarity when making transactions. Instead of simply asking if you want to approve the transaction, it will try to show you what the transaction will do — such as moving all of your NFTs. This should make it easier for users to realise if they are getting scammed.

The wallet is also introducing blocklists, so that users can be prevented from interacting with websites that are known to be scams. 

Phantom’s path ahead

According to Millman, Phantom’s main priorities in the near future are improvements for users, such as those mentioned earlier, and finishing the development of its mobile app. This app has been in the works for four months and should be launched by the end of the year.

Phantom is also looking to provide support for more Solana-based coins in the near future. “We’ve been seeing really awesome growth around that. At our peak, seeing 29,000 weekly active swappers and a peak of $225 million swap volume weekly,” says Millman.

Currently the crypto wallet is not monetized, meaning that unlike MetaMask Phantom isn’t making a killing from taking fees from swaps. But eventually putting fees on swaps is a possibility.

Millman’s team is also looking at expanding the wallet’s support for more DeFi services, including more staking features and new features such as lending. 

But will it add a token? “It’s definitely on the table but no concrete plans at the moment,” Millman says.