Passkey adoption and smart wallet expansion on Base

The Coinbase Smart Wallet reached 1 million accounts. On August 16, 2025, 270,000 accounts were created in a single day. This growth follows the implementation of passkey authentication on the Base network. Base leads ERC-4337 adoption on Layer 2 networks. The transition to passkeys removes the need for complex seed phrases. Users manage assets through biometric verification. This reduces the friction of traditional onboarding. The integration of passkey authentication into the Coinbase Smart Wallet enables users to manage their assets through biometric verification, which reduces the reliance on traditional seed phrases that often cause friction during the onboarding process for new users. Critics note that Base acts as a centralized sequencer, which creates concerns regarding the autonomy and security of user accounts.

The ERC-4337 standard uses six components. UserOperations represent the intent of the transaction. Bundlers gather these operations. The EntryPoint contract functions as the central verification hub. Paymasters allow for gas sponsorship. Senders execute the calls. Aggregators optimize signatures. The ERC-4337 standard relies on specific infrastructure components. Bundlers monitor the alternative mempool to collect UserOperations. These Bundlers then submit the aggregated operations to the EntryPoint contract. The EntryPoint contract verifies the signatures and ensures the account holds enough funds. Paymasters complete the process by handling the specific gas payment policies requested by the user. The standard enables gasless transactions and social recovery. This removes the requirement for users to hold native tokens for every transaction. UserOperations include new fields in the transaction structure for EntryPoint, Bundler, and Aggregator addresses. Bundlers receive compensation from gas fees. Paymasters allow users to pay gas fees using ERC-20 tokens like USDC or USDT instead of native assets. This capability removes the barrier of needing ETH before interacting with the blockchain.

Developers choose between various wallet types. Embedded wallets allow users to sign in with email or social accounts. Para builds infrastructure that supports EVM, Solana, Stellar, and Sui. Para uses distributed MPC so private keys never exist in full. Para is SOC 2 Type II compliant and supports a free tier for up to 1,200 monthly active users. Para powers over 15 million wallets for hundreds of customers. Coinbase CDP provides gas sponsorship and spend permissions for teams on Base. Alchemy offers an Account Kit that combines embedded wallets with ERC-4337 and EIP-7702. Magic now lives inside Payward Services after Payward acquired the business in July 2026. Fireblocks provides MPC key management and expanded its lineup through an acquisition in late 2025. Circle provides embedded wallet infrastructure and native USDC support. Phantom provides SDKs for React, React Native, and browser environments.

Developers must evaluate the technical depth of a vendor before starting a project. A good partner explains key management models like multi-party computation or passkey-based recovery in plain language. You should look at the security credentials of any vendor before you commit to a specific wallet infrastructure.

Regulatory requirements influence wallet design. FinCEN distinguishes between businesses that transmit value and software providers that supply tools. OFAC requires sanctions screening for products touching US persons. New York maintains the BitLicense as a strict state-level framework. Coinbase recognized $355 million in incident costs in 2025. These costs came from a security breach involving outsourced support agents in India. Attackers offered bribes to TaskUS agents to copy customer data. The attackers demanded a $20 million ransom. Coinbase CEO Brian Armstrong stated the company has zero tolerance for bad behavior. Will the concentration of bundler power among three main operators eventually impact the decentralization of the ERC-4337 ecosystem?