6 years, 1 million hardware users, 15 million wallet users, what is SafePal, once labeled "Binance", going to do next?
Written by Tyler
When talking about "hardware wallet" today, what is your first impression?
Is it an established overseas manufacturer like Ledger and Trezor, or a latecomer that is more familiar to the Chinese-speaking region like OneKey and imKey?
Over the years, although Ledger and Trezor are well-known, they have long been criticized for their user experience. Everyone should be familiar with Degen on the chain. As early as 2019, SafePal launched a new hardware wallet product, using its background in software and hardware and mature supply chain resources to solve the problems of Ledger and Trezor being "difficult to use" and "too expensive".
Although SafePal currently seems to have a low voice among ordinary users in the Chinese-speaking region, it has actually accumulated fame and brand overseas and is also highly recognized among domestic crypto hardcore players. In particular, in 2021, SafePal released SFP through the Binance IEO Launchpad, and became further known to many Chinese-speaking users.
It is worth mentioning that SafePal is the earliest hardware wallet project incubated by Binance. It is also the only wallet project that has been invested by Binance and listed on Binance Launchpad. In its early development process, it benefited from its close ties with Binance. To date, it still has a unique advantage in deeply integrating Binance services (spot contract trading, fiat currency deposits and withdrawals, etc.).
As of the time of writing, SafePal’s business has covered hardware wallets (S1, S1 Pro and X1), software wallets, browser plug-in wallets and compliant banking services, which can meet the needs of different users and provide a full range of crypto asset management solutions, especially the newly launched cryptocurrency-friendly bank channels and Visa cards, which plan to further expand the boundaries of Web3 wallet financial services.
So how did SafePal enter the wallet market in 2018? Why did it choose the relatively unpopular hardware wallet in the beginning? How did it gradually expand to the entire product line? What considerations and plans did it have for the compliant bank account service that it would launch in full next?
This article recently conducted an exclusive interview with SafePal co-founder and CEO Veronica Wong. The transcript of the interview is compiled here for readers.
Entering the market at the end of the bull market, "Wallets are the key link in the sinking of Web3"
Q: What was your job before you came into contact with Web3? What opportunity led you to the crypto industry and the Web3 wallet track? What made you want to work on the SafePal project?
Veronica Wong: Before getting involved in Web3, most of the core members of SafePal's founding team had worked in Web2 technology companies for many years, and they were generally more of a "tech geek" group.
I came across the Bitcoin white paper in 2017, and from a technical intuition I was very interested in the decentralized form described in it, especially the part about users having complete asset and data rights, which actually subverted the traditional Internet business model of "based on user big data monetization". At that time, some friends also discussed with me not to ignore Bitcoin. As we all know, 2017 was also a big bull market, and the price of Bitcoin was in a "rising" rhythm. The market was full of stories and atmosphere of getting rich quickly.
When we explored the direction of Web3 entrepreneurship at the end of 2017, the ICO bull market was actually coming to an end. However, we observed an interesting phenomenon. As the secondary market took a sharp turn for the worse and people were suffering, the number of independent addresses on Bitcoin and Ethereum continued to grow exponentially. This confirms our judgment that "group consensus is irreversible." Combined with the tamper-proof and middleman-free properties of blockchain technology, we believe that its adoption may become mainstream in the future. Once decentralization and on-chain asset circulation become mainstream, wallets will play the most important role as portals and channels, and are the key link in reaching users.
Q: How was the core team of SafePal formed? What is the current member structure?
Veronica Wong: As mentioned earlier, most members of the SafePal team have many years of Web2 background. In addition to working experience in major Internet companies, they also have supply chain experience in hardware R&D, etc. This is also our advantage in the entrepreneurial structure of the team.
Currently, the team has about 100 members from different countries. After all, an international background helps to meet the needs of users in different regions. The overall atmosphere is dominated by production and research, and there is a strong technical atmosphere. Among them, 70% are product and R&D personnel, and 30% are marketing personnel. The cooperation between everyone is also tacit. Even if working remotely, the iteration speed of releasing a new version every two weeks can be maintained.
Why choose to start with "hardware wallet"?
Q: SafePal was the first to launch hardware wallet products in its early days and was one of the earliest players to enter the hardware wallet market. What were your considerations at the time for taking the lead in entering the hardware wallet field?
Veronica Wong: This is also the first thing we considered after we decided to enter the wallet market. Objectively speaking, there are almost no major technical obstacles to developing a software wallet with basic functions, so starting with a software wallet is indeed a relatively easy entry point, and most wallet players have followed this path.
However, SafePal chose to start with hardware wallets for several special considerations:
First of all, we think that the hardware wallet market at that time was not fully competitive. If we look back at the beginning of 2018, we will find that there are many players in the software wallet market, such as Trust Wallet acquired by Binance, MetaMask, and imToken, which is well-known in the Chinese-speaking region; however, there are only two companies in the hardware wallet market, Ledger and Trezor.
We also purchased and tried the products of these two hardware wallet manufacturers at that time. Our first impression was that they were too expensive. I remember that the products of Ledger and Trezor were priced at as high as US$99. If shipping and tariffs were added, the cost would be even higher. In addition, the user experience of these two companies was not satisfactory, especially their key input method. For many users who were not used to it, entering passwords was simply a disaster.
Secondly, our team has both software and hardware R&D capabilities, as well as many years of supply chain resources and advantages. We are confident that we can create differentiated and competitive products in the hardware wallet field. This is why we chose to enter the hardware wallet field from the beginning.
In addition, before the start of DeFi Summer, the business model of software wallets was not clear, while the profit model of hardware wallets was very clear, similar to e-commerce sales, which gave us huge opportunities.
That’s why we decided to start with hardware wallets. Once we have established a foothold in the hardware market, we will gradually expand to software wallets.
Q: Can you tell us what dimensions SafePal's product lines currently cover? What is the development rhythm of these businesses?
Veronica Wong: I can briefly review it in timeline.
In 2018, we started with hardware wallets and began designing and auditing the first hardware wallet.
In May 2019, SafePal S1 was launched online and became profitable on the first day, which made the team feel at ease.
In May 2020, our software wallet was launched, and users can use it normally without purchasing a hardware wallet;
Before the DeFi Summer bull market started in 2020, we gradually laid out on-chain Swap and cross-chain bridge functions. Therefore, after the launch of DeFi Summer, the number of users grew exponentially and soon exceeded the 2 million threshold.
In 2022, the SafePal plug-in wallet will be launched. At this point, the full product package of the wallet will be fully laid out, and users can get a consistent experience on both the APP software and the plug-in side;
Later in 2023, we will also launch the Bluetooth hardware wallet SafePal X1. Its Bluetooth protocol is open source and audited, aiming to provide users with diverse choices. By 2023, the entire product line of SafePal wallet will be gradually completed.
This year we have made some bold attempts. For example, in March, we were the first to open banking services in Europe, providing users with compliant Swiss bank accounts with the same name, which can be bound for daily consumer payments. This solved the pain points of users' compliant deposits and withdrawals, and connected the channels of fiat currency and cryptocurrency, which is of strategic significance.
In addition, we will soon launch a small wallet on Telegram. This is the fourth wallet form after hardware wallets, software wallets, and plug-in wallets. It aims to solve users' pain points such as asset transactions in multiple chains and multiple scenarios, making the product closer to users.
In general, the core of our product design is to focus on user needs and solve user pain points. For example, in terms of fiat currency deposits and withdrawals, we have opened up circulation and transfer channels in the multi-chain ecosystem, including Swap and cross-chain bridges. At the same time, we have also launched some small functions, such as the "gas station" function that can realize the conversion of different currencies, and set up a Gas payment function in Swap to help novice users solve the problem of having no Gas and being unable to move forward.
We are constantly improving our products. We don’t plan the development for each year from the beginning, but make adjustments based on user needs and problems encountered during the process. Six years later, we have formed our current layout.
Binance, an accelerator for SafePal’s early development
Q: SafePal became a hardware wallet project invested and supported by Binance as early as 2018. It has subsequently been deeply integrated into the Binance ecosystem in terms of wallet transactions and other functional services. So for SafePal, what specific changes and advantages has Binance’s investment brought?
Veronica Wong: Wallets, especially hardware wallets, are a long-term business that requires continuous accumulation of brand reputation and trust. The leading hardware wallets in the overseas market started brand building very early, so based on the first-mover advantage, they have a certain market penetration in North America and Europe.
In September 2018, SafePal was selected as the only wallet brand for Binance Labs' first incubator program and went to San Francisco for a 10-week incubation. Subsequently, it received investment from Binance at the end of 2018 and officially launched our first hardware wallet product in the first half of 2019.
Binance’s early investment provided us with a strong brand credibility endorsement, greatly lowered the user trust threshold for SafePal, a “newborn calf”, improved the conversion rate, and enabled us to gain a large number of seed users and fans in overseas markets, especially in North America. This is also the reason why many domestic users still think we are an overseas brand.
Since then, we have been able to access the best ecological resources in the industry, including close cooperation with Binance in many aspects and in-depth linkage at the product level. Friends who have used or are familiar with SafePal may know that our wallet is deeply integrated with Binance's spot and contract functions, and also lightly integrated with Binance's fiat currency deposit and withdrawal channels, which means that you can share Binance's trading liquidity and deposit and withdrawal channels in a one-stop manner in the SafePal wallet, which can basically meet daily trading needs.
In addition, many Chinese-speaking users may have heard of us for the first time because we were the first wallet to respond to the Binance chain construction and support the BSC ecosystem. This also brought us a large wave of on-chain traffic and attention. At that time, PancakeSwap users who wanted to transfer assets from Ethereum to BSC also chose SafePal as their first choice. It has helped users transfer nearly US$1 billion in assets from Ethereum.
Q: Regarding the current status of SafePal’s business development, is there any information you can share in terms of data dimensions (user scale, partners, etc.)?
Veronica Wong: Currently, our total number of users has exceeded 15 million, of which hardware wallet users account for a small proportion, only about 1 million, while software wallet users account for the vast majority.
In terms of geographical distribution, users in Europe and North America together account for more than half, with the majority being North American users. This is not difficult to understand, because the United States and other developed countries such as France, Germany, Italy, and Spain are our main markets.
The Asia-Pacific region accounts for approximately 25% of our user base, while South America is one of the fastest growing regions for our users. This distribution may be related to our previous early hardware wallet strategy and the team's greater focus on overseas market expansion, and of course, it also benefits from the international background of our team.
6 years, full-stack wallet product, zero security incidents
Q: Security is undoubtedly the lifeline of a wallet. SafePal has gone through multiple rounds of bull and bear markets and has never had any security issues. What technologies and measures do you think SafePal has used that play a key role in security?
Veronica Wong: In fact, after we started the project to build our first hardware wallet in 2018, we completed the production of the first prototype and passed the functional test in less than half a year. However, our first hardware wallet S1 was not officially launched until May 2019. During this period, we actually spent a lot of time doing security attack and defense testing and security audits.
At the Chaos Communication Conference held in Germany in early 2018, a European white hat team publicly cracked the hardware wallet products of Ledger and Trezor. Before our hardware went into mass production, we also invited this white hat team (later renamed KeyLabs and also joined Binance Incubator) to conduct multiple rounds of security audits for us covering hardware and software levels. We also found problems after the audit and made optimization and corrections, and added more security measures. Therefore, from product project establishment, prototype production, actual product mass production to the final release in May 2019, it took a year and a half, and we have been constantly polishing the product and consolidating product security.
With the launch of our products, our hardware products have gradually gained attention in Europe and the United States. In 2020, the security laboratory of the exchange Kraken also conducted a black box test on our hardware wallet. What is more interesting is that they purchased several hardware wallets from the official website as ordinary users without notifying us in advance. It took about 5 months to conduct a comprehensive test, and then contacted us to inform us of the situation. They also stated that they would disclose the report to the public later. No high-risk risks related to private keys and authorization were found in the report. This report can still be found on the Internet. SafePal also gave an official response and further explanation to this report in the blog at the time.
These incidents all demonstrate that our hardware wallet products have high security both at the hardware and software levels.
Q: As the on-chain "dark forest" continues to evolve, what measures can be taken or investments can be made from the perspective of effectively ensuring the on-chain security of users?
Veronica Wong: Security attack and defense is an ongoing process. With product iteration, the security system also needs to continue to evolve and enhance. In our view, security is a three-dimensional project. It cannot be simply generalized by the security of a certain function. It includes at least three dimensions: product security, internal security, and user security. Product security has actually been mentioned before, and it is also what everyone subconsciously pays the most attention to. However, the latter two dimensions are actually the parts that have been ignored by everyone, and are also the main source of most hacking and fraud in the industry.
For example, in terms of internal security, we have learned from the internal security and risk control mechanisms of the financial industry, and designed different aspects such as permission management, system isolation, risk control warning, abnormal movement tracking, operation records, data disaster recovery, etc., to prevent internal security vulnerabilities from becoming sources. At the same time, in the face of external hackers, phishing and malicious contracts and other security issues, we also actively carry out external cooperation to jointly combat malicious attacks. For example, we jointly built a database with GoPlus to provide users with timely security information reminders.
In terms of user experience security, we feel that it is not enough to just ensure product security. Due to the non-tamperable nature of blockchain transfers and non-custodial properties of assets, user behavioral security and good crypto asset management habits are equally important, and may even require more attention than product security. For example, we found that most of the money loss issues reported by users are actually human factors, such as wrong transfers or lost private keys. Therefore, we have been embedding a variety of security reminders and user education mechanisms into our products. For example, for scenarios where users may transfer to the wrong account, authorize a contract for the first time, access suspicious DApps, copy suspicious addresses, receive unknown airdrops, etc., we will provide additional security guidance and reminders in the App to eliminate security risks from the source of user chain interactions.
At the same time, SafePal is also actively cracking down on fake accounts and reporting them regularly until they are removed from the shelves. Since January of this year, we have reported and banned more than 800 phishing links, malicious DApps, fake accounts, etc. In addition, we are also actively carrying out user safety education-related publicity activities with ecological partners to educate users, and have invested a lot of energy to improve user safety awareness. We also take cautious measures in providing phishing emails and social media information, and do our utmost to protect user privacy and security.
If you ask me to summarize why SafePal has not had any safety accidents in the six years since its establishment, it is mainly because we maintain a sense of awe, constantly update our knowledge, regard safety as a three-dimensional protection project, and comprehensively consider the safety issues that users may encounter in their usage scenarios.
Q: Compared with the hardware wallet products such as OneKey that everyone is familiar with now, what is the difference or uniqueness of SafePal's hardware wallet?
Veronica Wong: Unlike hardware wallet products such as OneKey that are commonly used by many new players in the Chinese-speaking region in the past two years, SafePal does not use a USB connection to a PC for signature interaction, but mainly uses mobile APP + QR code offline signature technology to achieve secure transactions. This method avoids the security risks that may be brought by wired connections and ensures that the user's private key is always offline, thereby enhancing security.
At the same time, SafePal's hardware wallet also supports being associated with the plug-in side, but it adopts a more "mobile-friendly" approach. After the SafePal hardware wallet is bound to the App, the App can connect to our plug-in side by scanning the code to authorize the connection, which is very similar to WeChat's desktop authorization login. But the private key does not leave the hardware wallet during the entire process. When signing is required, the plug-in side will push the request to the mobile phone for Face ID or fingerprint recognition signature, and the result will be synchronized to the desktop side; if it is a Bluetooth hardware wallet, the phone can be signed after automatic matching when it is turned on, and the signature result is transmitted to the chain interaction at a millisecond reaction speed.
With the popularization of mobile wallet experience and the connection of various terminals, users' experience of managing Web3 wallets across platforms and devices will be smoother in the future. For example, the on-chain interaction center will be concentrated on the mobile terminal, the PC terminal will conveniently provide information assistance, and transaction signatures will also be centered on mobile phones.
Wallet service should be a universal Web3 public security product
Q: With a complete wallet product line, what are the strategic considerations behind SafePal's upcoming bank deposit and withdrawal services?
Veronica Wong: SafePal's brand positioning has never changed, that is, it is committed to providing Web3 users with safe, reliable and convenient non-custodial wallets to help coin holders protect and grow their crypto wealth. With this concept, we have created a full-stack wallet solution of hardware, software, plug-ins, and mini-programs, providing functions and services covering flash exchange, trading, deposits and withdrawals, DeFi and other scenarios. In the context of future industry compliance, we believe that the next step to bring new hundreds of millions of users to the industry is the smooth interoperability of fiat currency and crypto assets. Therefore, we are actively looking for reliable solutions in this direction and invested in Fiat24, a Swiss bank with a full banking license last year. We integrate banking functions directly into the SafePal App, allowing users to open an account online directly and have a Swiss bank account with the same name as their own, and smoothly perform fiat currency deposits and withdrawals in full compliance. At present, we have opened application channels in more than 70 countries and regions, and Chinese passport holders can also apply. Next, users will also receive Master virtual cards, which can be bound to WeChat and Alipay for payment and consumption. We believe this is of great significance to connecting cryptocurrency assets and real life.
Take a French colleague in our team as an example. After receiving his monthly salary in stablecoins and paying taxes, he often needs to exchange the stablecoins into euros. However, he often encountered problems when exchanging fiat currencies through third-party service providers, such as bank accounts being restricted or closed.
After using SafePal's wallet bank account service, all these problems are solved - it only takes a few minutes to open an account, and the bank account is free of annual fees. The cryptocurrency in the wallet can also be recharged to the bank account, converted into legal currency for direct consumption, and then converted into other legal currencies such as US dollars and Swiss francs, and no additional transfer fees are required.
In addition, for users in mainland China, in the past, if they wanted to convert cryptocurrencies into legal currency for daily consumption, or purchase overseas services that do not support Chinese bank cards, there were certain barriers. Based on our banking services, users can have a compliant Swiss bank account without leaving home, and the cost is extremely low (no account opening fee, no annual fee).
Currently, users in mainland China can open an account with their passport or ID card, so that they can use the account to receive and save money, and can also bind the account to WeChat Pay and Alipay for daily consumption, saving the trouble of deposits and withdrawals. Since it is also in the promotion period, we have just launched the "Open an account without commission for deposits and withdrawals" activity. All users who complete the account opening before December 31 this year will enjoy a 90-day commission-free period by default (free deposits and withdrawals), and the commission-free period will increase by 30 days for each successful invitation of a friend to open an account (KYC passed), and can enjoy more rights and interests corresponding to the points level. Everyone is welcome to experience it.
Q: SafePal’s 2024 vision and future plans, and (founder/team’s) views and forecasts on the Web3 wallet track.
Veronica Wong: As mentioned earlier, SafePal’s positioning is to provide users with a safe, reliable, and convenient non-custodial wallet to help users protect and grow their crypto wealth. Therefore, all our plans are centered around this positioning, including:
In terms of asset security, we hope to provide users with a variety of secure, open source, code-audited non-custodial wallet solutions, so that users can choose the right way to manage their assets. Taking hardware wallets as an example, our goal is to create top-level secure hardware wallets for everyone, while being friendly, inexpensive, and affordable for everyone. Because in my opinion, security is the basic right of currency holders, not a privilege for wealthy users. Currently, SafePal's entry-level hardware wallet only costs US$49.99, making it the most user-friendly entry-level hardware wallet on the market. Based on the idea of "making a hardware wallet that everyone can afford", we continue to carry out activities such as "free hardware wallets" with top partners including Binance and Circle, so that everyone can easily own a SafePal hardware wallet to protect the security of their assets.
In terms of user experience, we believe that the next direction of the wallet track will be to eliminate gas and make private keys invisible.
"De-gasification" means that users no longer need to consider the issue of Gas when transferring or authorizing, and can operate as smoothly as bank transfers. The premise for the realization of this technology is that smart wallets are continuously iteratively developed, making functions such as Gas tokens and batch transfers possible. The current EIP7702 standard of the Ethereum ecosystem aims to seamlessly transform the EOA wallet into a smart wallet and realize the functions mentioned above, which is very helpful in improving the user experience. We are also closely following the application and development of such technologies.
"Private key-free" means that users no longer have to worry about personal custody of private keys, the presence of the private key backup process becomes low or even zero, and social recovery or retrieval of private keys is supported. We are deeply studying the cutting-edge trends of account abstraction wallets (AA wallets) and MPC wallets. Although the front-end experience has not yet launched related products, we have conducted internal testing and will launch products in due course after conducting relevant security audits.
In terms of product functions, I think the competition in the wallet market will enter a deeper stage. The wallet team cannot simply rely on temporary new functions or hot publicity to retain users, but must continuously iterate and innovate in terms of security, experience, and functions. In addition to launching compliant banking services this year, we will continue to explore and introduce more compliance-related functions and products in the future. At the same time, we will also bring our products to more public chain ecosystems, such as the wallet app that will be launched on Telegram soon, so that users can enjoy the SafePal product experience at any time.
