YZi Labs takes action, betting twice in seven years, is the hardware wallet still a good business?

Author: Web3 Farmer Frank

On June 5th, YZi Labs tweeted that they have invested in the open-source hardware wallet company OneKey.

This is the hardware wallet project supported by Binance's resources for the first time in 7 years since investing in SafePal in 2018, which can be described as "restrained," making it particularly noteworthy and reigniting industry discussions on whether "hardware wallets are a good business."

From a timeline perspective, the importance of self-custody has been repeatedly validated since the FTX incident in 2022. The two (publicly disclosed) investments made by the Binance group over the past seven years also demonstrate that these are not random, but rather selective betting logic.

So the question arises: Is a hardware wallet still a good business? Or, after experiencing bull and bear cycles, regulatory storms, and security incidents, has it already transcended a simple profit-making business to become a trust-level Web3 infrastructure?

Is a hardware wallet a good business?

Hardware wallets have always been a business that is "difficult for newcomers to enter and hard for established brands to grow."

High thresholds, high education costs, thin hardware margins, and long user conversion cycles are the inherent structural challenges of this track. Therefore, even in the more than ten years of development of Web3, hardware wallets have always been regarded as the "ultimate solution" for asset security, but there has always been a psychological and use threshold from large-scale popularization.

If we look back at the development history of mainstream hardware wallet products on the market, we can find that the industry's starting point can be traced back to 2014, spanning a considerable length of time:

2014: Trezor launched the world's first hardware wallet, and Ledger also launched the classic Nano series in the same year, marking the beginning of cold wallet security technology.

2018: SafePal became the first hardware wallet project selected by the Binance Labs incubator, and at the end of the same year, it received strategic investment from Binance, launching the S1 classic model the following year.

2019: OneKey was officially established, positioning itself with "open source × minimalist" approach, and during the Summer period on-chain, it gained popularity with OneKey Classic, becoming one of the most representative hardware wallet brands in the minds of Chinese-speaking users.

However, it is worth noting that although they were mostly established or launched mature hardware wallet products before 2020, the key milestones in the dimension of these products did not directly contribute to the transition of hardware wallets from "geek tools" to "mainstream user entry points."

What truly brought hardware wallets back into the core focus of users were two unexpected industry events with unique attributes:

First, the explosion of on-chain Summer in 2020 catalyzed a group of on-chain Degen users to start using hardware wallets for secure signing and contract interaction, completing a crucial step in educating many users from 0 to 1.

Second, the FTX collapse in 2022 led to a trust crisis caused by the collapse of CEX, prompting a large number of users to reevaluate private key management. "Not your keys, not your coins" has transformed from an idealistic slogan into a real pain point, resulting in a surge of interest in hardware wallets.

Since then, the hardware wallet, which was originally sidelined, has officially entered the center stage of the Web3 security narrative.

However, to speak honestly, the hardware wallets from Trezor and Ledger during the 1.0 era were indeed not suitable for average users— the initial setup and backup process was complex, the operational threshold was high, the accompanying software was difficult to use, and the price, often exceeding thousands of RMB, discouraged most people before they could experience the value.

The emergence of brands such as SafePal and OneKey has, to a certain extent, greatly lowered the entry threshold by lowering pricing and reconstructing the experience, making hardware wallets move from geeks to mass.

In fact, as long as it is affordable and provides a user-friendly experience, users will be more willing to take the first step towards self-custody, even if it's just to "give it a try". Once the experience is good and the sense of asset security increases, they may shift from being "trial users" to becoming long-term users.

The market's demand for security has always been rigid, especially with the continuous expansion of Web3 user numbers. Security should not be an advanced configuration but rather a basic public service.

This is also why we say that security is not an accessory to Web3, but the foundation of Web3 — as the saying goes, behind every successful scam, there may be a user who stops using Web3, and the Web3 ecosystem will have nowhere to go without any new users.

From this perspective, regardless of whether hardware wallets are a "good business," they are at least becoming an indispensable business.

Overview of Mainstream Hardware Wallets on the Market

If a few years ago hardware wallets were still the exclusive equipment of geek players, now they are gradually evolving into a cryptocurrency infrastructure aimed at a broader user base.

The author has successively used several hardware wallets including Cobo, imKey, OneKey, and SafePal. In addition to experiencing differences, I have also clearly felt the rapid evolution of the industry—especially among the Chinese-speaking user base. Apart from the two established overseas brands, Trezor and Ledger, the most recognized and actively iterated products are undoubtedly OneKey and SafePal.

1.OneKey: Open source philosophy + rapid construction of user mentality

Among the mainstream hardware wallet manufacturers, OneKey, which is independent from Bixin, did not start early, but with the help of the narrative dividend of Summer on the chain, it has quickly established a strong (Chinese-speaking) user perception and formed a clear brand label - minimalist, secure, and open source.

Especially in recent years, OneKey's series of products have gained a lot of user goodwill in the Chinese market, with its representative products including:

OneKey Classic 1S / 1S Pure: A lightweight credit card-sized hardware wallet aimed at users who are new to cold wallets.

OneKey Pro: supports Air-gapped signatures, fingerprint encryption authentication, and wireless charging, providing security and convenience for advanced users.

Especially its classic product OneKey Classic released in 2020, which rode the wave of on-chain Summer and once became a favorite among on-chain Degen users, but this product is currently sold out.

In recent years, OneKey has also begun to try to "break the circle" of products, such as the recently launched USDC income module, which attracted more than $62 million in subscriptions, reflecting its active user base and community stickiness.

2. SafePal: From hardware to full stack, Binance's nurturing "Wallet OG"

Compared to OneKey, which recently received investment from YZi Labs, SafePal is actually the earliest hardware wallet project supported by Binance, and its growth path is more aligned with Binance's nurturing projects.

In September 2018, SafePal was selected as the only wallet brand for the first incubation program by Binance Labs, and underwent a 10-week incubation in San Francisco; by the end of the year, it received investment from Binance and officially launched its first hardware wallet product, S1, in the first half of 2019.

Subsequently, SafePal adopted a "small steps, quick runs" product strategy, gradually expanding its models to cover different market segments and building a product matrix aimed at different user tiers.

Entry-level hardware S1 (2019), Bluetooth version X1 (2023), Advanced version S1 Pro (2024), all of which have been open-sourced;

Supporting software wallet App (2020) and browser extension wallet (2022);

Telegram Mini Program Wallet (2024), On-chain Bank Account/MasterCard (2024) and other services;

However, although SafePal has mass-produced a number of hardware wallets, it is still close to the people, such as the S1 Pro is the highest price of its current products on sale, which is only $89.99, the X1 Bluetooth model is $69.9, and the S1 is even lower than $49.99.

It is worth noting that SafePal is one of the few hardware wallet projects with tokens - SFP was released through the Binance IEO Launchpad in 2021, which is further well-known to many Chinese-speaking users, and because of this, SafePal's features have been reflected in the deep integration of the Binance system:

SafePal is currently the only wallet product that is deeply integrated with Binance—providing direct access to spot trading, margin trading, futures trading, and investment functions (in the form of sub-accounts) within the app. It also lightly integrates Binance's fiat deposit and withdrawal channels, which means that SafePal wallet can provide a one-stop solution to share Binance's trading liquidity and deposit/withdrawal channels, basically meeting daily trading needs.

In addition, SafePal also has a first-mover advantage in supporting activities and ecological cooperation on the BNB Chain, for example, it currently supports stablecoin transfers on the BNB Chain without Gas fees (currently, I use the SafePal App to transfer USDT/USDC and other stablecoins daily to save on Gas fees).

It is worth noting that just in April, SafePal co-founder Veronica also became the mentor of the new incubator of YZi Labs, which to some extent also reflects its long-term relationship with Binance VCs and industry influence.

3. Ledger and Trezor

As mentioned above, Ledger and Trezor are the longest-established overseas brands in the hardware wallet space, but they have always been criticized for being "difficult to use" and "too expensive."

Among them, Ledger is currently the highest-selling hardware wallet manufacturer globally, with over 6 million units of the Nano S/Nano X series shipped. It has a high brand reputation and compliance endorsement in the European and American markets, making it suitable for institutions and high-net-worth users with high requirements for private key hardware isolation and security certification.

Trezor is recognized as the "originator of hardware wallets" in the industry, releasing the world's first hardware wallet in 2014, and its two products, Trezor One and Trezor Model T, have a strong reputation in the BTC community, geek users and liberal circles, and its operation logic is biased towards geek users.

4. Keystone: A QR offline solution focused on ultimate security.

Keystone is a fully open-source Air-Gap security product that uses an embedded system (without Bluetooth, USB, or Wi-Fi). It generates addresses and signs transactions by scanning QR codes with a camera, ensuring that private keys never touch the internet. It is also an officially partnered hardware wallet with MetaMask, supporting connection and use with MetaMask.

The current flagship model, Keystone Pro, is equipped with a 4-inch touchscreen, fingerprint recognition, and multiple security chips (3 independent CC EAL5+ certified chips), supporting up to 3 sets of mnemonic phrase management, and can interact with mainstream wallets like MetaMask and Solflare via QR code.

Overall, different hardware wallet players currently have their own focuses in product positioning, but they are all committed to building the next stage of "security × usability × interactivity" for cryptocurrency entry products.

Not just "cold storage", from single hardware to full-stack services

The starting point of a hardware wallet is security, but the ultimate goal goes far beyond that.

This is also a common trend among almost all mainstream wallet manufacturers: while cold storage is certainly a core competitive advantage, relying solely on one or more hardware devices has made it difficult to create sufficient differentiation barriers.

From a business perspective, the user demographics of hardware wallets are generally tagged as "on-chain Degen," "diamond-handed Holder," and "high-net-worth Crypto users," which are all segments with extreme security needs. Therefore, for hardware wallets, their core value lies in the offline storage and isolated protection of private keys.

However, as the cryptocurrency user base shifts from geeks to everyday users, secure storage as the core of asset management is just the first step—more and more users are beginning to expect that wallets are not just repositories for cold storage but operational platforms that allow for seamless use of assets: encompassing trading, interaction, wealth management, and even a broader experience of off-chain payments.

In other words, the competitive dimension of hardware wallets is extending from "security capabilities" to "service capabilities."

This is also the reason why hardware wallet manufacturers are starting to shift towards "full stack" solutions. Companies like SafePal and OneKey have long extended their functionalities to DeFi and TradFi scenarios, rather than being limited to just "storing coins":.

On-chain operation experience upgrade: supports one-click Swap, multi-chain asset synchronized display, contract authorization parsing and other functions, reducing the threshold for on-chain interaction;

On-chain payment scenario integration: integrating Lightning Network, cross-chain bridges, and stablecoin protocols to achieve fast on-chain payments and asset flow between chains;

Ecological tool integration: providing contract authorization parsing/removal tools, Gas station, built-in DApp browser, plugin wallet, Telegram mini-programs and other interactive modules, covering the "last mile" of user on-chain activities;

There are even attempts like SafePal to "move" exchanges (Binance, Bitget) into wallets, as well as integrations like imToken, SafePal, and TokenPocket that incorporate banks like Fiat24 to achieve consumer-level innovations in bank account/MasterCard payments, further bridging fiat channels with off-chain consumption.

From left to right, they are: SafePal "Bank" page, OneKey financial management page, imToken Card page.

This kind of "full-stack path", Binance's earliest hardware wallet project, SafePal, is quite representative: from the early hardware wallet to the construction of app wallets, plug-in wallets, off-chain payment accounts and bank card services, a complete closed-loop asset management covering "cold storage, on-chain interaction, and off-chain use" has now been formed.

This also means that the hardware wallet is no longer an isolated device here, but the physical security base of the entire multi-terminal product matrix, taking into account the "hardware tun coin + APP/plug-in interaction + off-chain consumption payment", which is the epitome of this general trend.

Objectively speaking, when we discuss the competitiveness of hardware wallets today, they are changing from "keeping", to "affordable", and then to "cool", and their role boundaries are constantly being broadened - from cold storage to multi-chain interaction, from on-chain asset management to off-chain deposits and withdrawals, the role boundaries of hardware wallets are constantly being broadened.

This may also be one of the reasons why Binance is re-entering the hardware wallet arena after 7 years. Regardless of which path ultimately prevails, it is clear that the second half of the hardware wallet market has only just begun.

Written at the end

Wallets have always been regarded as the battleground for the Web3 gateway, serving as the intersection of on-chain identity systems and off-chain payment channels.

For this reason, while this track seems to diverge, all players are actually moving towards the same goal: whether it's established international manufacturers like Ledger and Trezor, or rising stars like SafePal, OneKey, and Keystone, they are ultimately heading in the same direction, which is to build a comprehensive cryptocurrency wallet system that combines private key security, on-chain interactions, and off-chain payments.

So, is a hardware wallet still a good business?

From the current signs, especially with YZi Labs' renewed involvement, the answer tends to be affirmative—however, it is no longer just a simple business of selling devices aimed at niche geeks, but is evolving into a foundational role that undertakes self-custody of crypto assets, secure interactions, and off-chain implementations.

A truly "good business" often goes beyond just making money; it delves into the underlying logic of the industry, becoming an indispensable part.

The next stop for hardware wallets may be this position.