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

Author: Web3 Farmer Frank

On June 5, YZi Labs tweeted that it has invested in the open-source hardware wallet company OneKey.

This is the first hardware wallet project supported by the Binance ecosystem in seven years since its investment in SafePal in 2018 (Note: In 2022, Binance Labs announced a strategic investment in Belgian hardware wallet manufacturer NGRAVE, the amount was not disclosed, and it received relatively low attention in the Chinese-speaking community, so this article will not cover it). It can be described as "restrained," making it particularly noteworthy and reigniting discussions in the industry about 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 by the Binance ecosystem over seven years also indicate that this is not random but a selective betting logic.

So the question arises: Are hardware wallets still a good business? Or, in today's context of experiencing bull and bear cycles, regulatory storms, and security incidents, have they already transcended mere profit-making to become a trust-level Web3 infrastructure?

Are Hardware Wallets a Good Business?

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

High barriers to entry, significant educational costs, thin hardware profits, and long user conversion cycles are inherent structural challenges in this field. Therefore, even though hardware wallets have been regarded as the "ultimate solution" for asset security throughout the more than ten years of Web3 development, there remains a psychological and usage barrier to widespread adoption.

Looking back at the development history of mainstream hardware wallet products on the market, the industry's starting point can be traced back to 2014, with a considerable span:

• 2014: Trezor launched the world's first hardware wallet, and Ledger also introduced its classic Nano series in the same year, marking the beginning of cold wallet security technology;
• 2018: SafePal became the first hardware wallet project selected for the Binance Labs incubator and received strategic investment from Binance at the end of the year, launching the classic S1 product the following year;
• 2019: OneKey was officially established, positioning itself with "open source × minimalism," and during the on-chain Summer period, it gained popularity with OneKey Classic, becoming one of the most representative hardware wallet brands in the Chinese-speaking community;

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

The real catalyst for bringing hardware wallets back into the core of user awareness was actually two unexpected industry events:

• First, the explosion of on-chain Summer in 2020, which catalyzed a group of on-chain Degen users to start using hardware wallets for secure signing and contract interactions, completing a crucial step in user education from 0 to 1;
• Second, the FTX collapse in 2022, which brought a trust crisis due to the collapse of centralized exchanges, causing many users to reevaluate private key management. "Not your keys, not your coins" transformed from an idealistic slogan into a real pain point, leading to a surge in interest in hardware wallets;

Since then, hardware wallets, which were originally sidelined, have officially entered the center of the Web3 security narrative.

However, to be fair, the hardware wallets of the Trezor and Ledger 1.0 era were indeed not suitable for ordinary users—the initial setup and backup processes were complex, the operational threshold was high, the accompanying software was difficult to use, and the prices often exceeded thousands of RMB, discouraging most people before they could experience the value.

The emergence of brands like SafePal and OneKey has, to some extent, lowered the entry barrier by reducing prices and reconstructing the user experience, allowing hardware wallets to transition from being geek-centric to mainstream. It can be said that this strategy of "removing the price wall and emphasizing user experience" has been a significant catalyst for pushing hardware wallets from the geek circle to the mass market.

In fact, as long as the price is low enough and the user experience is friendly, users will be more willing to take the first step towards self-custody, even if it is just to "give it a try." Once they have a good experience and feel secure about their assets, they may transition from "experimenters" to long-term users.

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

This is why we say that security is not an accessory to Web3 but its foundation—after all, 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 exclusive equipment for geek players, they are now gradually evolving into crypto infrastructure aimed at a broader user base.

I have used several hardware wallets, including Cobo, imKey, OneKey, and SafePal, and beyond the differences in experience, I have also clearly felt the rapid evolution of the industry—especially among Chinese-speaking users, aside from the two overseas veteran manufacturers Trezor and Ledger, the most recognized and actively iterated products are undoubtedly OneKey and SafePal.

1. OneKey: Open Source Philosophy + Rapid User Mindset Building

Among the mainstream hardware wallet manufacturers, OneKey, which spun off from CoinEx, did not start early, but it has quickly established a strong (Chinese-speaking) user recognition by leveraging the narrative dividends of on-chain Summer, forming a clear brand label—minimalism, security, and open source.

In particular, in recent years, OneKey's series of products have gained a lot of user goodwill in the Chinese-speaking market, with representative products including:

• OneKey Classic 1S / 1S Pure: A slim credit card-style hardware wallet aimed at users new to cold wallets;
• OneKey Pro: Supports air-gapped signing, fingerprint encryption verification, and wireless charging, balancing security and convenience, aimed at advanced users;

Notably, its classic product OneKey Classic, released in 2020, became a favorite among on-chain Degen users, but it is currently sold out.

In recent years, OneKey has also begun to attempt to "break the circle" with products, such as the recently launched USDC yield module, which attracted over $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 has just 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 the only wallet brand selected for the first incubator program of Binance Labs and underwent a 10-week incubation in San Francisco; at the end of the year, it received investment from Binance, and in the first half of 2019, it officially launched its first hardware wallet product, S1.

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 levels:

• Entry-level hardware S1 (2019), Bluetooth model X1 (2023), advanced version S1 Pro (2024), all of which are open source;
• Accompanying software wallet app (2020) and browser plugin wallet (2022);
• Telegram mini-program wallet (2024), on-chain bank accounts/MasterCard (2024), and other services;

However, although SafePal has mass-produced multiple hardware wallets, it still follows a user-friendly approach. For example, the highest-priced product currently on sale, S1 Pro, is only $89.99, the X1 Bluetooth model is $69.9, and the S1 is as low as $49.99.

It is worth noting that SafePal is one of the few hardware wallet projects with a token—in 2021, it launched SFP through Binance's IEO Launchpad, further familiarizing many Chinese-speaking users with it. Because of this, SafePal's features have always been reflected in its deep integration with the Binance ecosystem:

SafePal is currently the only wallet product deeply integrated with Binance—the app provides direct access to Binance's spot trading, leveraged trading, contract trading, and financial features (in the form of sub-accounts), while also lightly integrating Binance's fiat deposit and withdrawal channels, allowing users to share Binance's trading liquidity and deposit/withdrawal channels in one stop within the SafePal wallet, essentially meeting daily trading needs.

In addition, SafePal also has a first-mover advantage in supporting activities and ecological collaboration on the BNB Chain. For example, it currently supports gas-free transfers of stablecoins on the BNB Chain (I personally use the SafePal app to transfer USDT/USDC and other stablecoins to save on gas fees).

Notably, just in April, SafePal co-founder Veronica became a mentor for the new round of YZi Labs incubator, which to some extent reflects its long-term relationship with Binance's VC and industry influence.

3. Ledger and Trezor

As mentioned above, Ledger and Trezor are the oldest overseas manufacturers in the hardware wallet space, but they have long been criticized for being "difficult to use" and "too expensive."

Among them, Ledger is currently the hardware wallet manufacturer with the highest cumulative sales globally, with over 6 million units shipped for the Nano S/Nano X series, enjoying high brand credibility and compliance endorsement in the European and American markets, suitable for institutions and high-net-worth users with high requirements for private key hardware isolation and security certification.

Trezor is recognized as the "ancestor of hardware wallets" in the industry, having released the world's first hardware wallet in 2014. Its products, Trezor One and Trezor Model T, have a strong reputation in the BTC community, among geek users, and in libertarian circles, with an operational logic geared towards geek-type users.

4. Keystone: Focused on Ultimate Security with QR Offline Solutions

Keystone is a fully open-source Air-Gap security product that uses an embedded system (no Bluetooth, USB, or Wi-Fi). It completes address generation, transaction signing, and other operations by scanning QR codes with a camera, ensuring that private keys never touch the internet. It is also the official hardware wallet partner of MetaMask, supporting integration with MetaMask.

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

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

Beyond "Cold Storage": From Single Hardware to Full-Stack Services

The starting point of hardware wallets is security, but the true endpoint goes far beyond that.

This is also a common trend among almost all mainstream wallet manufacturers today: while cold storage is certainly a core competitive advantage, relying solely on one or more hardware devices has become insufficient to create a significant differentiation barrier.

From a business perspective, the user demographic of hardware wallets is generally labeled as "on-chain Degen," "diamond-handed holders," and "crypto high-net-worth users," all of whom have extreme security needs. Therefore, for "hardware wallets," their core value lies in the offline storage and isolation protection of private keys.

However, as the crypto user base shifts from geeks to everyday users, the core of asset storage 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 smooth asset usage: encompassing trading, interaction, financial management, and even off-chain payments for a broader experience.

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

This is also why hardware wallet manufacturers are beginning to shift towards "full-stack" solutions, with brands like SafePal and OneKey already extending their functionalities to DeFi and TradFi scenarios, rather than being limited to "storing coins":

• Upgraded on-chain operation experience: supporting one-click swaps, multi-chain asset synchronization display, contract authorization parsing, etc., lowering the barriers to on-chain interaction;
• Integration of on-chain payment scenarios: incorporating Lightning Network, cross-chain bridges, and stablecoin protocols to achieve rapid on-chain payments and asset flows between chains;
• Ecological tool integration: providing contract authorization parsing/removal tools, gas stations, built-in DApp browsers, plugin wallets, Telegram mini-programs, and other interactive modules to cover the "last mile" of users' on-chain activities;

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

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

This "full-stack path" is well represented by SafePal, the hardware wallet project that Binance invested in early on: starting from early hardware wallets, it has built app wallets, plugin wallets, off-chain payment accounts, and bank card services, currently forming a complete asset management closed loop covering "cold storage—on-chain interaction—off-chain usage."

This also means that hardware wallets are no longer isolated devices but the physical security foundation of an entire multi-end product matrix, balancing "hardware asset storage + app/plugin interaction + off-chain consumption and payments," which is a microcosm of this major trend.

Looking at the entire industry, this is a signal that a consensus is forming. Objectively speaking, today when we discuss the competitiveness of hardware wallets, we are shifting from "keeping assets safe" to "affordable" and then to "pleasant to use," with their role boundaries continuously expanding—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 being continuously broadened.

This may also be one of the reasons why Binance has re-entered the hardware wallet space after seven years. Regardless of which path ultimately prevails, the second half of the hardware wallet story is clearly just beginning.

In Conclusion

Wallets have always been seen as a battleground for Web3 entry, intersecting on-chain identity systems and off-chain payment channels.

Because of this, while this field may seem to diverge, all players are actually converging towards the same goal: whether it is the international veteran manufacturers Ledger and Trezor or the rising stars SafePal, OneKey, and Keystone, they are all ultimately moving in the same direction—building a comprehensive crypto wallet system that integrates private key security, on-chain interaction, and off-chain payments.

So, are hardware wallets still a good business?

From the current signs, especially with YZi Labs' renewed investment, the answer leans towards affirmation—it is no longer just a "cold wallet" business that sells devices to a niche geek audience, but is evolving into a foundational role that encompasses 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 just be such a position.