DeFi – Decentralized Finance has been seen as an alternative to centralized finance (banks), mainly because it gives accessibility & control of money back to its users.
The processes and systems that conventional banks follow are decades, if not centuries, old. And, not everyone has easy access to their facilities.
On the other hand, anyone with an internet connection has access to Decentralized Finance (DeFi) and its wide array of benefits. Decentralized Finance is a new technology that’s largely based on distributed ledgers, not much different from the decentralized blockchain of cryptocurrencies.
In order to use Decentralized Finance, you would require a DeFi Wallet to store your currency. There are a large number of DeFi wallets available in the market and to help you decide I have prepared a list of the best DeFi wallets.
There are multiple DeFi applications that witness millions of dollars flowing through them. And this is not going to stop anytime soon. So, to summarize, here are a few reasons why Decentralized Finance is attracting the attention of users & investors from all across the world.
- It offers a decentralized alternative to banks and increases the accessibility of financial services to anyone with an internet connection.
- You, as a user, are in complete control of your money. Instead of storing your money in some bank account, you store your money in highly secure digital wallets.
- You can carry out domestic as well as international transfers within minutes, instead of waiting for hours and days, sometimes. That too without paying exhorbitant bank charges.
Before I begin with the list of the best DeFi wallets, let’s look into a couple of things to look for when choosing one.
- What to Look for When Choosing Decentralized Finance (DeFi) Wallets?
- Hardware DeFi Wallets
- Exchange DeFi Wallets
- Software DeFi Wallets
- 4. Metamask (Software DeFi Wallet)
- 5. Argent (Software DeFi Wallet)
- Best DeFi Wallets: Over to You!
What to Look for When Choosing Decentralized Finance (DeFi) Wallets?
The DeFi ecosystem is growing exponentially and it can be challenging to choose the right digital wallet. And it’s not just because there are many different providers, DeFi wallets come in different forms. Some come as browser extensions and mobile wallets while others come as hardware wallets and web wallets.
DeFi wallets give you access to a wide ecosystem – DeFi applications & assets, the ability to borrow & lend assets, and much more. Besides, these wallets are non-custodial wallets which means that you are in complete control of your wallet via a private access key. And your holdings aren’t stored in some bank’s or any central authority’s servers but in your browser extension, hardware, mobile or web wallet.
Having said that, here are a few things that I looked at while deciding on a DeFi wallet for your usage:
- Security: The first thing that you should also look for in a DeFi wallet is its reputation for its security protocols. Because DeFi wallets are non-custodial, you are in complete ownership of your holdings. So, if a DeFi wallet is secure enough to protect your holdings from being hacked or stolen, you should go for it.
- Access to DeFi Applications: Another thing you should look at is a DeFi wallet’s ability to connect you with DeFi Apps & Assets. A few wallets support only the popular ecosystems while others don’t have such limitations. So, you can look at the DeFi apps and assets supported by a digital wallet before choosing it.
- Ease of Usage: This is the incing on the cake as I still believe that a certain section of users don’t understand DeFi, in its entirety. Therefore, a wallet’s ease of access and simplicity become important factors to consider.
Now that you are familiar with things to look for in a DeFi wallet, here are the Best DeFi wallets safe to use. I have categorized the wallets into categories of Hardware, Software and Exchange wallets and have listed the 2 best options from each except Exchange wallets.
Hardware DeFi Wallets
Next on the list are Hardware Wallets. These are the most secured DeFi wallets of all because your Private is kept securely with you and the seed phrase is not exposed either. Following are the most famous Hardware wallets available in the market today:
1. Ledger (Hardware DeFi Wallet)
Ledger is the most secure form of self-custody DeFi wallet – a hardware wallet. It, being a hardware wallet, is widely recommended as the smartest way to store, exchange, buy and grow your crypto assets such as Bitcoin, ETH and ERC20 tokens, Litecoin or Zcash, and many more.
Like most non-custodial wallets, Ledger also requires you to save a 12-word long Recovery Phrase that can be used to recover your device and access your holdings.
So, if you have a huge amount invested in crypto assets, I recommend you to go with Ledger. Here’s why. It stores your private access key completely offline with zero possible connection to the online world. This makes it the least prone to any and all attacks.
Besides, Ledger also provides you options to grow your crypto through HODL and STAKE processes. HODL is nothing but buying and holding a crypto asset to watch its value appreciate over time.
STAKE, on the other hand, works like getting interest payments on your specific crypto holdings.
Other than this, Ledger has recently started to work on its interaction with the DeFi network. For instance, it allows its users to lend coins directly from their hardware wallets using its LedgerLive app.
Moreover, other wallets like MetaMask allow you to create a separate account that is connected to hardware wallets like Ledger. This makes it even more DeFi-friendly.
Undoubtedly, Ledger is one of the most favourable options when it comes to security, it still has a few cons. One of them is its physical nature. Users have to use a hardware device to access and store their crypto holdings.
2. Trezor (Hardware DeFi Wallet)
Similar to Ledger, Trezor is a highly secured hardware wallet. Often termed as “small single-purpose” computers, Trezor wallets are very popular in the market.
Trezor comes in two models, Trezor One and Trezor Model T. Trezor Model One is an affordable option but in comparison to Trezor Model T, it supports a lesser number of coins. Further, Trezor is compatible both with Smartphones and Computers.
Trezor Wallets look like an early mobile phone with an OLED display and two keys. Trezor T comes with a touch screen. I do not really like the design of a Trezor Wallet but it is not the design we are concerned about when it comes to the safety of cryptocurrencies.
For the time being, Trezor supports 1800+ cryptocurrencies. You can take a look at the complete list of coins supported by Trezor here.
Yet again, you have to ensure the complete safety of your seed phrase for the device for obvious reasons.
Exchange DeFi Wallets
3. Coinbase Wallet (Exchange DeFi Wallets)
Coinbase is one of the largest crypto exchanges. So, it becomes almost impossible to ignore Coinbase Wallet in the list of the best DeFi wallets. The best part about the Coinbase wallet is that it not only lets you access the DeFi network but also allows you to store all your holdings (including cryptocurrencies and NFTs) in one place.
Here are the key features of Coinbase Wallet:
- It is a self-custody digital wallet that allows you to store all your holdings in one place.
- This wallet supports the entire world of Dapps (Decentralized Apps) as well as over 4,000 assets.
- It has one of the best-in-class security measures in place. It also allows you to fully access the decentralized web on your mobile phone.
To get started with Coinbase wallet, you can either download its mobile app or install its browser extension. It also provides you with the option to import all your holding from other wallets such as TrustWallet.
One of the key attractions of Coinbase wallet is its world-class security. Other than the default 12-word Recovery Phrase, it also uses biometric and PIN to completely secure your holdings. In case you are wondering, you don’t have to be a Coinbase customer to use the non-custodial Coinbase wallet.
You can access Dapps and multiple DeFi protocols using the Coinbase wallet such as Compound finance, NUO Network, Uniswap, and many more.
Besides having huge social proof and great security features, Coinbase Wallet is also known for its simplicity. For instance, you can send crypto to other users just by typing in their username instead of the popularly used 12 digits Hexadecimal code.
As a self-custody wallet, Coinbase doesn’t have many cons. Some users, however, raise concerns over the centralized part of Coinbase and the higher fees of its crypto exchange.
Software DeFi Wallets
We will discuss two famous wallets in this category:
- MetaMask and;
4. Metamask (Software DeFi Wallet)
MetaMask is one of the most popular open-source, non-custodial DeFi wallets. Besides being a DeFi wallet that allows you to store your crypto assets, MetaMask also works as a web3 browser for Dapps.
MetaMask has two primary features:
- It allows you to buy, send, store, and swap tokens.
- MetaMask provides a simple and secure platform for its users to browse & interact with blockchain-based apps.
You can download MetaMask wallet’s extension for browsers like Chrome, Brave, Edge, and Firefox. Or you can download its iOS/Android app to start using it.
MetaMask, with a user base of 21 million worldwide, takes pride in its swap feature. It connects its users to a wide range of decentralized exchange aggregators to get them the best value with the lowest network fees. And you know what the best part is? It does this at a fraction of cost to users!
The security of MetaMask wallets is also quite praiseworthy. MetaMask wallet provides a 12-word long Security Recovery Phrase that you, as a user, can use to protect your holdings. I recommend that you store this phrase on a piece of paper, not some digital note. Because if someone gets access to it, they can rob you.
Besides, if you lose access to your Security Recovery Phrase, MetaMask can’t help you restore access to your crypto holdings.
In face of multiple benefits of MetaMask, it also has its cons. Here are a few cons of the MetaMask wallet.
- If you want to keep all your crypto assets in one place, MetaMask might not be the right choice for you. Though new networks can be added to MetaMask but it is a little tedious to setup for other networks. As originally it supported Ethereum-based tokens & assets.
- MetaMask is not a hardware wallet and is prone to hacks if your seed phrase falls into hackers hand.
5. Argent (Software DeFi Wallet)
Argent is the first non-custodial wallet that does not require a seed phrase to keep your funds secured. It does so by a highly creative method that we will discuss shortly.
Argent is an Ethereum based wallet. Your assets get stored on the blockchain itself and only you can access them. In a nutshell, no one including Argent can access your funds. Only you can access your funds. Further, in case the company stops functioning or disappear, you can easily transfer your funds to other wallets.
Argent is available for both iOS and Android.
What happens if you lose your device?
If you lose your device and aren’t able to claim it back then Argent has a very creative (though not new) way to get your funds back. Unlike recovering through a seed phrase like with other software wallets, here you can use guardians.
Guardians are the people or applications that will provide confirmation about your device and Argent. These are of three types:
- Trusted Contacts – 2 of your known contacts who are using Argent app
- Hardware Wallets like Ledger and Trezor; or
- MetaMask Wallet
One of the downsides of Argent is that it is focused on Ethereum for the time being and the company hasn’t made any statement of its expansion onto other networks.
Best DeFi Wallets: Over to You!
Most DeFi wallets MetaMask & Coinbase wallets, at a certain stage, end up showing your Security Phrase on your devices’ screen. This makes these wallets prone to hacks and scams. Argent on the other hand does not require a seed phrase and is quite safe.
You can use any of the above software wallets as they are relatively safe and do not cost anything to use. However, if you are holding large funds in your wallet then a Hardware Wallet is the best option.
Accordingly, hardware wallets like Ledger, or Trezor, make it impossible for unauthorized personnel to access your holdings.
These were my choice for the best DeFi wallets you can use, what’s yours?