Are wallet companies sustainable? \ stacker news ~bitcoin

3655 sats \ 16 comments \ @netstatic 12 Aug 2023 bitcoin

I'm seeing a lot of new Bitcoin wallets popping up left and right (Nayuta, Mash, etc.). Some developers build companies around their dev team and seemingly work with an expectation to get paid, but how do these companies make money? Just thinking about the lightning wallets I use like Muun, Mutiny, Phoenix, and Wallet Of Satoshi, I don't know what their end game is with regard to monetization. Does anyone know how these companies are planning to stay sustainable in the long run? Are any of them backed by VCs with an expected ROI?

*I focused on lightning wallets in my examples because a good amount on-chain ones seem to have some sense of their desired monetization strategy (Wasabi has coinjoin fees, Nunchuck has subscriptions, Green has Jade, Liana has subscriptions, etc). Please feel free to add input to on-chain companies as well though. Also, some Lightning companies have LSPs so there is a sense of monetization strategy in that department.

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206 sats \ 1 reply \ @TonyGiorgio 12 Aug 2023

Mutiny has a few different strategies we are exploring. For one, we launched with lightning based subscriptions on day one. It doesn't give anyone much right now but we're working on a few features that will just ship to paid users or users that self host. These are a sort of loose paywall lock, since all of our wallet code is MIT FOSS.

But later will come more backend related services that will either be paid subscriptions or pay per use. Things like LSP related (right now Voltage is the LSP so we don't even make anything on routing or channel opens), or coinjoin / DLC related services.

And we're also building it like an SDK, so if it starts to become a node implementation people like to run for their own websites then we can do the heavy lifting and monetize through third parties too.

We are able to explore through different avenues because we aren't App Store locked like other wallets. We circumvent the store restrictions, not only on the 30% tax but also through accepting bitcoin as a payment method.

0 sats \ 0 replies \ @anipy 13 Aug 2023

The idea of building it like an SDK is super amazing!

101 sats \ 2 replies \ @sime 12 Aug 2023

Phoenix takes a slice when start using the app

2 sats \ 0 replies \ @nullama 13 Aug 2023

Do you mean when they open a channel for you?, there's a fixed 3k sats fee for that, so it would make sense that they make some money from that. It's not only when you start using it, it's every time you receive more sats than what you currently can receive.

0 sats \ 0 replies \ @netstatic OP 13 Aug 2023

Phoenix is also their own LSP. I'm curious how their numbers look with respect to routing fees and if they make an amount close to what it costs to run their infrastructure. I think Mutiny's forward looking approaches regarding coinjoin / DLC services could be lucrative

10 sats \ 1 reply \ @Chep 13 Aug 2023

Wallet Of Satoshi takes a .5 fee for base layer transactions and, in my humble opinion, provide an excellent service. Yes custodial is not the way for your savings but no one has made using lightning so seamless from my experience. Especially for no coiners who haven't used Bitcoin yet

100 sats \ 0 replies \ @netstatic OP 13 Aug 2023

Sill a pretty small amount considering a majority of users are probably not going on-chain. I could be wrong, many exchanges don't support lightning and on-chain could just be the mechanism users use to "cash-out" (if they to purchase something using fiat)

34 sats \ 0 replies \ @jamesviggy 13 Aug 2023

I think there are opportunities in the lightning/liquidity service provider (LSP) space, e.g. Breez partnering with Blockstream greenlight

6 sats \ 0 replies \ @nikicat 13 Aug 2023

It's a very good question. I think one of viable strategy is to affiliate with fiat on-/off-ramps, exchanges, dexes (like Bisq or Peach) and provide to services a communication channel with a user without revealing his privacy and shielding from a spam.

4 sats \ 0 replies \ @iguano 13 Aug 2023

Lightning allow wallet devs to be sustainable. Charging fees for each transaction. Also, when you see Jack Mallers and Jack Dorsey and other big personalities using Muun or phoenix, It makes sense that they can support a bit the wallet of choice.

14 sats \ 1 reply \ @JesseJames 13 Aug 2023

Exodus does pretty well, good for newbies and nice looking but they charge an arm and a leg when trading or exchanging. They do provide convenience but you pay for it, so it's your call. But to answer your question whether they are sustainable, I would say yes, if they are smart, yes they are.

9 sats \ 0 replies \ @brianh 13 Aug 2023

They always seem to push shit that gets them revenue, like referrals to certain DeFi apps or swaps or bs like their own stock. Main reason why I stopped using Exodus

4 sats \ 0 replies \ @TheBTCManual 13 Aug 2023

The total addressable market is huge so I think there is still a lot of room for interesting business models in wallets, will all make it? Absolutely not, so far wallets can offer

LSP services at a fee
CoinJoin services at a fee
Atomic swaps between BTC and L2s at a fee
Subscriptions for multi-sig
Fees on synthetic products like backed USD

I think its all about your churn and how long you can retain a user to keep netting fees from their use of services

4 sats \ 0 replies \ @nullama 13 Aug 2023

For some, it's just being an open source project. Not a lot of money in many of those projects.

Each business is run differently, they can get part of the fees charged by the wallet, others might offer other services and earn their money from that, etc.

4 sats \ 0 replies \ @notgeld 14 Aug 2023

There is apparent overproduction of wallets due you such infrastructure projects like BDK or LDK. I doubt it is a sustainable business due to such hyper competitive environment.

0 sats \ 0 replies \ @wsc1encex 13 Aug 2023 freebie

I have Satoshi Wallet and ZBD Wallet. Good Choice. I havent problem, works good. Its Super.