Progressive Wallets | Jonny Howle - Par

Awesome. Thanks for waiting folks. Uh we're going to get started with the next round of talks. So hands up everyone who has a wallet sitting over here on their phone. Is it good?

Is it shitty? We've all experienced pretty shitty wallets. So the next talk is about progressive wallets. We've got Johnny How over here who's the design lead at PAR and is going to be talking about when do you use the right cryptography at the right time for wallets to provide better UX for users.

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Um, let's jump right in. It is um 2026, as you all know. Um, and I still think there's too few people using crypto. Um, I think we probably peaked a couple years ago and we've seen a little bit of a decline in usership. Obviously, we're all hoping that this uh, you know, uh, reverses and we still have we still have a lot of onboarding to do if we want to quote unquote onboard the masses as a lot of uh, people say.

The reason why we have too few people using crypto, a lot of people debate this. Is it the scams? Is it regulation? Is it that there's a lack of uh interesting use cases? Um I think unfortunately the the the answer to this question of why crypto is still too hard to use for people is the same as it's always been which is that it's too hard to use the wallets.

And I think we can change this. We've um as an industry, we've been sitting on some of the most interesting advancements in computer science and cryptography, and we haven't fully leveraged uh all of those things at our disposal. And that advancement ultimately is what I would like to call progressive wallets, the ability to use this cryptography in a more userfriendly way. Uh to introduce myself, I'm Johnny Howell, uh the the design lead at Parah. And at Parah, I focus on what I like to think of as like wallet ergonomics.

So, what does the wallet feel like? How does it fit into a user's life? And I want to thank everybody who came to the talk and thank you as well to um ETH Denver um for having me. A little about Para, a primer. Um this won't be you know hey you know just shilling parah but it is our perspective on what the future of wallets look like.

So to give you some context par believes uh that this bifurcation of tradi and defi of um fintech and crypto of web 3 and web 2 a lot of this is artificial kind of constructs. I think that the reason we think of these things as two separate experiences is because they imply two separate user experiences at the wallet level. So that's really what drives this divergence between these two um two forms of products and we it doesn't have to be this way. So we coming back to this onboarding of the masses. Um the question is what do we truly consider a user that has been onboarded?

Do we consider a user that holds assets in a centralized exchange on something like Coinbase who's never touched a real crypto wallet? Do we consider them onboarded? Do we consider them a user? I think we can only say that they're partially a user. I think the truth is is that there are these different degrees of usership.

And I think what we can all agree on is that we want people even if they enter through centralized means to progress to using wallets, interacting with blockchains directly, taking ownership of their assets, their identity, um their reputation. And we need to help shepherd them along that journey. And I think it begs the question of what even is a wallet? What's the wallet's role in this? Um there's been a lot of discussion I think over the years of what a wallet is and uh I know back you know a few years ago there was a decent linguistic debate around is the wallet the right metaphor.

Some people believe that what wallets are are keychains um rather than you know containers of assets. I wouldn't be advocate or I would not going to advocate that we should call wallets something different but I think we would be helped by expanding the definition of what a wallet is to not just a container of assets and identity credentials but also to an interface uh as an interface for performing cryptography. So here's this journey. The goal is to get users from this left side to the right side. And maybe that furthest point on the right side isn't the best place for all users to be, but I think we can all agree that it's somewhere further than the leftmost point, which is where everybody currently is.

And the question is what needs to happen to get people to move along this spectrum. They're going to need a wallet or a way to interact with things every step of the way. And the and right now what we have is this sort of a journey. It's not really a journey. It is a set of discrete steps that have different software at each point for different levels of decentralization and ownership and come with different UX trade-offs.

And so this doesn't really result in a smooth journey. Um what this results in is a user in you know onboarding into one of these steps and then getting stuck there. they to move to the next step and progress. U a lot of lot of wallets are going to require you to either transfer all of your assets out to the next more sophisticated piece of wallet software or export your private key and reimpport that private key and some other wallet that you want to use. That is a non-starter for really onboarding the masses.

It's not going to happen at PAR. We have seen this firsthand. Um, and so we need a different we need a different way of thinking about this. We need to think about how to build wallets in a way that can evolve with the user as they progress along this journey. That's where this idea of progressive wallets comes from.

That's the progressive in progressive wallets. So, here's a bit of a definition that, you know, the way I think about it, um, it's just that it's a a flexible and composable wallet interface that seamlessly transitions between each stage of a user's decentralization journey. Essentially, a progressive wallet is the combination of two other progressive concepts. Both you might have heard of. Progressive decentralization, we hear this a lot in like a network um, context.

So progressive decentralization, this is my own pet definition, um is a network design strategy that allows a platform to transition to a protocol over time by shifting incentives from platform creators to protocol users. Essentially, it is what we know is users are going to take on more control. It's going to become less decentralized every step of the way. You need a strategy to do that. I think we can apply this to the wallet space and not just the protocol and network space.

The other kind of progressive idea here is progressive disclosure. And this comes from the UX world. Progressive disclosure, this is a very academic description of it, but what it boils down to is just giving users the right information at the right time. Do not overwhelm them during onboarding is essentially what it boils down to. Too many of our pieces of, you know, wallet software overwhelm the user by asking them to understand what a seed phrase is, understand the security around it.

Maybe there's other 2FA, installing a wallet extension, um, doing all sorts of setup. Um, and things can be a lot lighter at the beginning without sacrificing the long-term growth of that user into a fully kind of self-s sovereign um, user of blockchains. And this is made possible by composable cryptography. So, as I said at the beginning, um, composable cryptography is this idea or I think about it as we have all these primitives. We have uh here's a bunch of them.

Uh HSM, MPC, ZK, pass keys, etc. This is an alphabet soup of just acronyms. Some of which you may have heard, maybe some um are, you know, anacronistic at this point, but these things can be composed together. You likely not every user needs access to all of these things at the same time and they certainly do not need access to all of them the first time they use your product if if they're a new crypto user. The question is like how do we orchestrate all of these different uh primitives together into a single experience and give users the right things at the right time.

So to take us through a bit of how we think about this at Para um this is one way you can set things up and imagine it. Um there's different trade-offs other teams might make. These are the what this is the way we think about it at Parah. And you know you the the user shouldn't be choosing these things you know you know on their own. It's not as though they get to build their own wallet.

But I think the insight here is that as a user naturally moves through their decentralization and blockchain and crypto journey they're going to encounter and want to do things that imply the use of some of these at certain times. and those are the times that they should be introduced to them. So starting with NPC, this is uh the basis of of PAR and many other teams are in the NPC space and the beauty of NPC is that it is very secure but it also can support a very lightweight experience to start. So here you see you know using something like parah again other teams do the same thing. Um, you can create a wallet as a as an app developer.

Put your shoes in the uh put yourself in the shoes of an app developer. You can create a wallet for a user in the background. They don't even need to have an account yet. This is might be something you would kind of feels like a burner wallet if you've ever heard of that. It's fragile, but it allows a user to keep you immediately use your app, have access to keys that they can sign with.

Of course, this is great for getting started really fast, but like I said, it's fragile and it's relatively centralized, but it doesn't have to stay that way. You don't have to move to new wallet software if this isn't working for your user. What you can do is you can add OOTH to it. So once you do that, you solve a couple of these problems. So OOTH for anybody that doesn't know, this is just all of the social login that you're probably familiar with.

Login with Google, GitHub, X, whatever. So now the user, you know, you add that on. If the user likes your app, they come, they try with a kind of a fragile wallet. Maybe you mint them an NFT for having signed up. They've created a profile, they've signed a social message, they've you maybe you've sponsored a transaction of theirs.

Now, the user doesn't want to lose this. They haven't thought much beyond that, but you allow them to add OOTH at this point and claim that wallet back from your centralized control to a more normal MPC setup. So we do some fancy cryptography at Parah in the background that kind of re um constructs the MPC setup and encrypts it um in a you know re-encrypts the shards that live on in the MPC setup. And now that wallet can truly only be controlled by the user that has access to that login method. And now this user can come back to your site and they have a pretty traditional u UX uh user experience um using your app.

They log in, they have access to a wallet and the app can no longer control it uh unilaterally. Then we have a new problem and this is the problem that has been endemic to embedded wallets of the past. That wallet is siloed. You can't really safely use it outside of that app's context. But that's not going to get users where they want to go.

This this is one of the main problems where a user goes, "Okay, I've amassed, you know, I'm familiar with crypto. There's other things I want to do. I have money in this wallet. I've heard about Uniswap. I've heard about, you know, whatever other app is out there.

How can I go use that? I already have a wallet apparently. Well, this is where permissions come in. Permissions is a bit of a um cheating. It's not exactly cryptography, but it uses cryptography, so I'm going to count it.

Um, and what you don't want as an app developer is for your user to reach this point and then decide they're going to transfer their assets out of the wallet that they use with you to some other wallet that is more generalizable and can go do all the other things they want to do. Thus, when they come back, they have no liquidity. You know, they fractured their liquidity now and it's much harder in the future for them to come back and use your app. So, don't make them do that. simply allow them to set permissions and reuse this wallet that they created on your app in other contexts.

And we have to use permissions to do this safely. This will say things like allow this app to uh interact with my wallet, sign transactions under these conditions. Maybe it's a certain amount of transactions per day, maybe it's under some value threshold, maybe it's only with certain smart contracts, etc., etc. There's a whole design space there.

But now the user can had had a invisible wallet in the background and has now moved it all the way to the point where they can use it with other apps. Finally, maybe you get to the point where you want to make sure users uh maybe you have users that are more security conscious. Maybe they just become more sophisticated over times. They get worried about scams. Um they're using this app now or using this wallet across apps.

They want an extra layer of security and censorship resistance. they can add something like a pass key or a password or a PIN. Um, and this will allow a user to now take custody of one part of that MPC setup locally on their device by encrypting it with this other secret. This means that now they don't have to rely on um other services to get access to the key shares that they need to conduct transactions. So now you have another further level of decentralization and they've moved now further along that path towards a full kind of self- sovereignty that looks like this in the the parah context.

We allow users to you know not just go cross app but then also go to even more sophisticated self- custody by adding one of these uh security methods. And finally from there you might want to add other things to it. So maybe this user has now been using this wallet for 18 months. They've used five, 10 apps. They have a few thousand dollars maybe in this wallet.

They might want to do even more sophisticated things. This is where you get into more maybe not experimental things. I mean I mean FHE like which is fully homorphic encryption ZK zero knowledge proofs. Maybe they want privacy. They want to do all of these things.

These can be built on top of the base that the user has already constructed which is ultimately built on a very solid base of MPC. And so to come back to one of the things we talked about at the very beginning, abstracting it all away I don't think is the right goal. Um this is was a refrain for a long time that web 3 will never be as successful as web two until it feels like web two. And this is uh I think a bit of a miscalculation. My god.

Um what we need to do is accept that uh the UX trade-offs and the responsibility that comes with really being a web 3 user or a crypto user. We shouldn't be abstracting things away. We should be giving users the right things at the right time so they can progress kind of slowly into this journey and not let the pendulum swing all the way back to web two and kind of throw the baby out with the bathwater. So to sum it up, I mean this is why I think of progressive wallets as being um the idea that we can use the right crypto crypto as cryptography at the right time. Thank you.