What Wallets are available on Solana? For most crypto community users, the first wallets that come to mind are Phantom and Backpack. These two wallets were born in different bullish markets, entering the community eye in 2021 and 2023 respectively. Although competing in the narrow market of wallets, the competition between Backpack and Phantom has not resulted in a “winner takes all” scenario, but rather both have capitalized on the current bullish market, achieving significant growth.
Since the beginning of this year, the attention towards Solana has continued to grow, with meme hype pushing the trading volume of the Solana ecosystem to new highs. As the “gateway” to traffic, besides Phantom and Backpack, there are still other wallets in the Solana ecosystem that are thriving, with new players entering the scene. Although the emergence of Backpack has shown that even under the shadow of Phantom, a wallet can stand out phenomenally, the unique resource advantage that Backpack relies on sets it apart. So, in this period of narrative fatigue, how much space is left in the wallet market of the Solana ecosystem for new players? Solana has shone brightly in this round, with a significant increase in trading volume and a large influx of new users. In this aspect of “new user traffic conversion,” how can newcomers get a piece of the pie?
Looking back at the successful paths of the two leading wallet projects before looking ahead to the future. The advantages of Phantom and Backpack are irreplicable and have already accumulated challenging economies of scale.
Catching the wind, securing the first-mover advantage
Phantom was launched in 2021, at a time when MetaMask had already established itself in the wallet market. However, with the arrival of the bullish market, a large number of new users flooded into the crypto community, leading to the emergence of many new wallets attempting to challenge MetaMask by offering differentiated experiences such as “new user-friendly.” However, differentiated experiences can only attract temporary attention to wallets, and very few of these wallets survive. A16z founder Arianna Simpson described the fiercely competitive wallet market as a “graveyard.” In this context, Phantom first gained attention for its elegant and smooth user experience, and most importantly, Phantom chose Solana as its launch pad. Jesse Walden, co-founder of Variant and an investor in Phantom, said, “It can be said that Phantom’s growth is closely related to Solana. The Solana ecosystem is very user-friendly. There is a symbiotic relationship between Solana and Phantom, where they provide each other with motivation.”
Thanks to Solana’s rise in 2021, Phantom was able to quickly accumulate scale and become one of the standout wallet projects. In 2022, Phantom capitalized on the NFT craze by strategically partnering with the NFT marketplace Magic Eden. Phantom users could directly list NFTs on Magic Eden within the wallet. Since then, Phantom’s leading position has remained unshakable. Even in the bear market of 2023, Phantom still holds a significant position in the Solana trading market, with over 170 million transactions on the platform. During this period, Phantom also made a significant strategic move by expanding to Polygon and Ethereum. In the midst of the Bitcoin ecosystem’s booming period, Phantom also followed closely by integrating with the Bitcoin network. Towards the end of last year, the Bitcoin script market and wallet provider Unisat also supported the integration of the Phantom wallet.
Fast forward to this year, Solana has once again returned to the center of the crypto community, and Phantom continues to shine. Just a month ago, Phantom became the third most downloaded free application in the App Store’s utility category, only behind Google Chrome and Google Search.
Relying on CEX, building a closed-loop ecosystem
In September 2022, Coral, the developer of the Solana development framework Anchor, announced the completion of a $20 million financing round. FTX Ventures and Jump Crypto led the round, with Multicoin Capital, Anagram, K 5 Global, and other strategic investors participating. The company introduced an interactive wallet product that provides a native encrypted experience through “executable NFT (xNFT),” namely Backpack.
However, Backpack’s development came to a halt following FTX’s collapse, until in October last year, Backpack announced the launch of its own exchange platform, Backpack Exchange, which obtained a VASP license from the Dubai Virtual Asset Regulatory Authority.
Backpack clearly released expectations of airdrops at the outset. In February this year, Backpack announced that the 24-hour trading volume on Backpack Exchange exceeded $1 billion. Meanwhile, the SOL/USDC 24-hour trading volume on Backpack Exchange surpassed that of Binance, reaching $800 million. This also brought a large number of users to the Backpack wallet.
Apart from relying on CEX resources, Backpack’s unique feature is that it is designed specifically for xNFTs, a token standard on the Solana blockchain that represents ownership of executable tokenized code. Based on this, Backpack combines the functionalities of a traditional wallet with the ability to support and run decentralized applications (dApps) within the wallet itself. These applications complement the exchange platform, allowing the Backpack wallet to…
In addition to the CEX resources, Backpack’s focus on xNFTs and the strategic airdrop expectation attracted many initial users, while the success of pump.fun and various trading bots stems from a precise understanding of user demands in the meme hype era. The revenue streams of these projects rely on transactions, but transactions are only one part of the picture. The transaction scene and narrative cycle are questions that all new players in the market need to consider.
