What is Binance's web3 wallet?

The Binance Web3 Wallet is a non-custodial cryptocurrency wallet — designed and developed by Binance — that works within the Binance app and is part of the popular exchange’s broader ecosystem. It’s designed to allow users to securely store and manage their digital assets and enable interaction with various dapps and DeFi protocols, and serves as a gateway to web3.

History of Binance web3 wallet

The Binance Web3 Wallet, officially announced in November 2023, is a relatively recent addition to the company’s ecosystem and part of its ongoing efforts to bring more people into the cryptocurrency space. The wallet was developed to cater to both crypto novices and seasoned users, and designed to facilitate access to web3's wide range of services and applications.

The wallet uses multi-party computation (MPC), which distinguishes it from other non-custodial wallets like MetaMask and Bitget Wallet. MPC is a cryptographic scheme that splits the private key into multiple parts. The Binance wallet stores these key fragments in three different locations: on Binance servicers, on a user’s device and in the cloud. This enhances security by reducing the risk of a single point of failure, and gives users a self-custody wallet experience without the need for a seed phrase.

Shortly after its launch, Binance integrated its web3 wallet with Binance Bridge, enabling token swaps across multiple blockchains. The ability to swap tokens across chains without leaving the wallet provided users with greater flexibility and convenience for managing digital assets across different networks.

In December 2023, Binance announced a $500,000 airdrop campaign to incentivize adoption of its  wallet. Registered Binance users who completed KYC and executed at least one token swap on the wallet were eligible for the airdrop, and winners were drawn at random.

Features and functions

The Binance Web3 Wallet allows its users the ability to self-custody their digital assets, rather than store them on a centralized exchange like Binance. Users bear the responsibility of safekeeping their assets without being exposed to third-party exchange risks like theft or hacks.

Binance attempted to make the onboarding process straightforward by eliminating the need for seed phrases. Users can create their wallet directly within their Binance app in just a few seconds.

Users can explore a curated selection of dapps including DeFi and NFT trading services in addition to other blockchain-based applications directly from their wallet. In this way, users can carry out token swaps, or stake or lend their tokens through various protocols. 

As for security, the wallet includes in-built risk controls such as alerts for suspicious addresses and potentially malicious smart contracts. While its curated list of dapps steers users to legitimate protocols. Further, the use of multi-party computation technology enhances security by reducing the risk of a single point of failure.

Binance Web3 Wallet also offers round-the-clock customer service, providing users with support whenever needed.

What’s needed for a Binance Web3 Wallet account?

To use the Binance Web3 Wallet, prospective users need to have a Binance account and the Binance app installed on their device. Users can then set up the wallet within the the app, where they will be guided through a process that includes backing up the wallet using cloud storage and setting up a recovery password. This setup is crucial because, as a self-custody wallet, Binance cannot recover the wallet if you lose access. The wallet is free to use.

Are there any risks to using the Binance Web3 Wallet?

While the Binance Web3 Wallet offers several security features, it also comes with certain risks inherent to self-custody wallets. Since users are in full control of their private keys, losing access to the key-shares or forgetting the recovery password could result in permanent loss of their assets. 

Additionally, interacting with dapps or smart contracts always carries some risk, especially if they are poorly designed or malicious. However, Binance mitigates some of these risks by providing pop-up alerts and pre-screening select dapps.

In summary, the Binance Web3 Wallet is a powerful tool for navigating the decentralized web, but it requires careful management to avoid the pitfalls associated with self-custody and blockchain interactions​.