1. Introduction

1.1 Research Background

In recent years, the rapid development of blockchain technology has led to a large number of decentralized applications (DApps), which provide users with more freedom, transparency, and security, covering multiple areas such as finance, gaming, social, etc. In the blockchain ecosystem, digital wallets are important tools for users to manage encrypted assets and participate in DApps interactions. They store users’ private and public keys for signing transactions and verifying identity.

With the increasing popularity of DApps, users have higher requirements for the convenience, security, and compatibility of the connection between wallets and DApps. Traditional connection methods have many limitations, such as high risk of private key exposure, cumbersome operation, poor compatibility, etc., making it difficult to meet the diverse needs of users. In this context, WalletConnect has emerged as an innovative connection protocol designed to address the communication challenges between wallets and DApps, providing users with a more secure and convenient interactive experience.

Since its launch, WalletConnect has been widely used and received attention. It has been integrated with many well-known wallets and DApps, becoming one of the important infrastructure connecting wallets and applications in the blockchain field. With the continuous evolution of blockchain technology and the expansion of application scenarios, in-depth research on the principles, functions, applications, and development trends of WalletConnect is of great significance for promoting the development of the blockchain ecosystem.

2. The basic concept of WalletConnect

2.1 Definition and Essence

WalletConnect is an open source protocol designed to securely connect decentralized applications (DApps) with cryptocurrency wallets (such as MetaMask, Trust Wallet, etc.) through scanning QR codes or clicking links. It allows users to interact with DApps through mobile devices or desktop wallets without directly exposing their private keys. Essentially, WalletConnect establishes an encrypted communication channel, enabling DApps and wallets to securely exchange messages and transaction information. Users can confirm and sign transactions in the wallet, while the private keys are always kept in the wallet and not exposed to the DApp, ensuring security and privacy.

2.2 Development History

• Origin and Early Development: WalletConnect was initially proposed by Richard Burton in 2018, at which time it was a well-established project on Ethereum.Balance.ioAn ancillary product in the development process. Web full-stack engineer Pedro Gomes hopes toBalance.ioProviding an industry-standard user experience, after several months of research and development, a user experience that can integrate management tools with mobile wallets was designed. This set of tools was later open-sourced and named ‘WalletConnect.’ Subsequently, it received funding from the Ethereum Community Fund (ECF) and the Ethereum Foundation (EF). The team decided to operate as a non-profit organization (in the form of a foundation), and Pedro Gomes also left.Balance.ioFull-time development and operation of the WalletConnect project.
• Version iteration and feature expansion: During the development process, WalletConnect continuously undergoes version updates and feature optimizations. The initial version was mainly limited to secure remote communication between mobile wallets and desktop applications. With the development of technology and changes in user needs, subsequent versions added support for secure connections between mobile wallets and mobile DApps, further enhancing the user experience of using DApps on different devices. At the same time, the WalletConnect team also focuses on web3 messaging technology, committed to providing users with richer and more convenient services.
• Financing and Ecological Expansion: On January 15, 2025, WalletConnect completed a $13 million Series B financing, with investors including 1kx, BitGo,Crypto.comCapital, etc. Prior to this, the WalletConnect team has also received multiple rounds of financing, with a total accumulated financing amount of 38 million US dollars. Through financing, WalletConnect has more resources for technical research and development and ecosystem construction. Currently, the company has integrated with more than 100 wallets and over 200 applications, with connection times exceeding 220 million, covering 35 million users, becoming one of the important infrastructures connecting wallets and DApps in the blockchain ecosystem.

3. The working principle of WalletConnect

3.1 Connection Establishment Mechanism

When a user accesses a decentralized application (DApp) that supports WalletConnect, the connection process begins with the DApp generating a unique QR code or deep link containing essential information such as the DApp’s identifier, session request details, and a temporary public key for encrypted communication. For example, in a decentralized finance (DeFi) application, the QR code or link may include the application’s name, version, supported blockchain networks, and instructions prompting the user to connect their wallet.

Users can then use a crypto wallet that supports WalletConnect, such as MetaMask or Trust Wallet, to scan the QR code or click the deep link. Taking a mobile wallet as an example, when a user opens the wallet application and chooses to connect via WalletConnect, the wallet will call the phone’s camera function to scan the QR code or resolve the content of the clicked link. After obtaining the information from the QR code or link, the wallet will verify it to confirm the source and integrity of the information. If the verification is successful, the wallet will generate its own temporary key pair and use the public key provided by the DApp to generate a shared symmetric key through the Diffie-Hellman key exchange protocol. This shared key will be used for encrypted communication between the DApp and the wallet to ensure the confidentiality and integrity of the communication content. Finally, the wallet will send a connection confirmation message to the DApp, informing that the connection has been successfully established, and both parties can start secure communication.

3.2 Principles of Secure Communication

WalletConnect uses a variety of advanced encryption technologies to ensure the security of message exchange between DApps and wallets, mainly based on end-to-end encryption, key exchange, and channel encryption mechanisms. During the connection establishment phase, DApps and wallets generate a shared symmetric key through the Diffie-Hellman key exchange protocol. In this process, both parties first exchange their public keys, based on which, using the Diffie-Hellman algorithm, a shared symmetric key is securely generated on an insecure communication channel, known only to the DApp and the wallet, and inaccessible to third parties.

During the process of message transmission, encrypt the message using the AES (Advanced Encryption Standard) symmetric encryption algorithm. When a DApp sends a message to a wallet, it encrypts the message using a shared symmetric key, and then sends it through the WebSocket communication channel. WebSocket itself supports the use of TLS (Transport Layer Security) to encrypt the transmission channel, providing additional security for message transmission. Even if the underlying channel is monitored, the message content cannot be deciphered by the eavesdropper because it is already encrypted. After the wallet receives the encrypted message, it decrypts it using the same shared symmetric key to obtain the original message. At the same time, to ensure the authenticity and integrity of the message, the message is usually signed before sending. The sender signs the message using their private key, and the recipient can use the sender’s public key to verify the message signature to confirm that the message has not been tampered with. For example, when conducting a blockchain transaction, the transaction request message sent by the DApp is encrypted and signed. The wallet first verifies the signature upon receiving it, then decrypts the message to ensure the security and accuracy of the transaction request.

3.3 Transaction Signing and On-chain Interaction Process

When a DApp needs users to make transactions or perform other operations that require signatures, it will send a signature request to the user’s wallet through the established secure connection. Taking the purchase of digital artwork in an NFT marketplace as an example, the DApp will encapsulate the details of the transaction, such as the purchased NFT identifier, price, addresses of the transaction parties, and the blockchain network of the transaction, in the signature request sent to the wallet. The user will receive this signature request in the wallet, which will visually display the transaction details for the user to confirm. After carefully reviewing the transaction information and ensuring its accuracy, the user can click the confirm signature button in the wallet. The wallet will use the user’s private key to sign the transaction information. The signing process involves processing the transaction data based on encryption algorithms to generate a unique signature. Once the signing is completed, the wallet will return the signed information to the DApp.

After the DApp receives the signed information, it will broadcast the signed transaction information to the blockchain network according to the rules and interface of the blockchain network. Nodes in the blockchain network will verify the legitimacy of the transaction, including the validity of the signature and whether the balances of both parties are sufficient. If the verification is successful, the transaction will be included in a block on the blockchain, completing the on-chain interaction and realizing the transfer of assets or other operations. Throughout the process, the user’s private key is always stored in the wallet and not exposed to the DApp. The DApp can only access the transaction information that has been signed, thereby ensuring the security and privacy of user assets.

4. Features and Advantages of WalletConnect

4.1 Characteristics Analysis

4.1.1 Decentralization

WalletConnect adopts a decentralized architecture design, not relying on any central server to achieve the connection and communication between DApps and wallets. In traditional centralized connection methods, there is usually a central server to coordinate and manage the connection, which not only easily becomes the source of single point of failure, but may also lead to data privacy and security issues. WalletConnect uses the decentralized characteristics of blockchain to establish connections and transmit data through blockchain nodes, making the entire connection process more decentralized and reliable. This decentralized design avoids the risks that central servers may bring, enhances the stability and attack resistance of the system, and also conforms to the core concept of blockchain technology, that is, to eliminate intermediary institutions and realize direct interaction between users.

4.1.2 Security

Security is one of the core features of WalletConnect. During the connection and interaction process, the user’s private key is always stored in the local wallet application and will not be exposed to the DApp. The private key is a crucial credential for users to access and manage encrypted assets. Once leaked, the user’s assets will face significant risks. WalletConnect ensures that only the user themselves can sign and confirm transactions and operations through encrypted communication channels and strict signature verification mechanisms. All messages and transaction data are encrypted during transmission, using advanced encryption algorithms such as AES symmetric encryption and RSA asymmetric encryption, to prevent data theft or tampering. At the same time, when the wallet receives a request from a DApp, it rigorously verifies the request, ensuring that only legitimate requests are processed, further safeguarding the security and privacy of the user’s assets.

4.1.3 Compatibility

WalletConnect has excellent compatibility and can integrate with a variety of mainstream crypto wallets and decentralized applications. In terms of wallets, it supports many well-known wallets such as MetaMask, Trust Wallet, Coinbase Wallet, covering different types and platforms of wallet applications. Whether it’s a mobile or desktop wallet, users can easily use WalletConnect to connect. As for DApps, whether it’s decentralized finance (DeFi) applications, non-fungible token (NFT) markets, blockchain games, or other types of DApps, as long as they follow the WalletConnect protocol standard, they can achieve seamless connection with wallets. This wide compatibility allows users to freely switch between different DApps and wallets without worrying about compatibility issues, greatly improving user interaction experience in the blockchain ecosystem and promoting interoperability between different applications and wallets, driving the prosperity and development of the blockchain ecosystem.

4.1.4 Open-ended

WalletConnect is an open protocol that anyone can freely use, develop, and extend. This openness provides developers with a vast space for innovation, allowing them to build various applications and services based on WalletConnect without worrying about cumbersome authorization processes or high usage fees. Developers can customize WalletConnect according to their needs to meet specific business scenarios and user requirements. At the same time, the open nature also attracts developers from around the world to participate in the construction of the WalletConnect ecosystem, promoting technical exchange and innovation, and driving the continuous improvement and development of the WalletConnect protocol. This open ecosystem enables WalletConnect to continuously adapt to market changes and user needs, maintain its leading position in the blockchain connectivity field, and inject powerful momentum into the development of the entire blockchain industry.

4.2 Advantages Comparison

Compared with traditional connection methods, WalletConnect demonstrates significant advantages in many aspects. In terms of convenience, traditional connection methods may require users to manually enter wallet addresses, private keys, or mnemonic phrases in DApps, which is cumbersome and error-prone. Moreover, switching between different devices and applications complicates the process. In contrast, WalletConnect only requires users to scan a QR code or click on a link to quickly establish a connection between the wallet and DApp. Whether on desktop or mobile, the process is simplified, saving users time and effort.

In terms of security, traditional connection methods have the risk of private key exposure, especially when entering the private key in an unsafe network environment or on a compromised device. Once obtained by hackers, user assets will suffer losses. WalletConnect, on the other hand, effectively avoids the problem of private key leakage through encrypted communication and local storage of private keys, ensuring the security of user assets.

From a user experience perspective, traditional connection methods may lead to frequent switching of accounts and operations between different DApps and wallets, resulting in a poor user experience. WalletConnect provides a unified and smooth connection experience, allowing users to manage connections to multiple DApps in one wallet without the need for repetitive operations, enhancing users’ usage experience and satisfaction in blockchain applications.

5. Use cases of WalletConnect

5.1 Decentralized Finance (DeFi) Sector

In the current flourishing of decentralized finance (DeFi), WalletConnect plays a crucial connecting role, greatly facilitating users’ operations on various DeFi platforms. Taking the well-known decentralized exchange Uniswap as an example, users can easily scan the QR code or click the link with the help of WalletConnect to quickly establish a secure connection between their wallets, such as MetaMask or Trust Wallet, and the Uniswap platform. When conducting token exchange operations, users do not need to manually enter cumbersome wallet information. The wallet will automatically identify and display the tokens held by the user. After users confirm the type and quantity of tokens to be exchanged, the transaction request will be sent to the wallet through WalletConnect’s encrypted channel. Users can confirm the signature in the wallet, making the entire transaction process fast and secure. This connection method not only simplifies the operation process but also avoids the risk of private key exposure during the transaction, allowing users to participate in DeFi trading with more confidence.

In the lending field, platforms like Compound also rely on WalletConnect to facilitate interaction between users and the platform. When users engage in borrowing and lending activities on the Compound platform, they first connect their wallets through WalletConnect. The platform evaluates their borrowing limits based on the assets in their wallets. When a user initiates a borrowing request, the borrowing information is encrypted and transmitted to the wallet. After the user confirms the signature, the borrowing process is completed. For repayments, users confirm the repayment operation in their wallets, and the funds are automatically transferred from the wallet to the Compound platform to complete the repayment process. Throughout these operations, WalletConnect ensures the security of user asset information and transaction data, enabling users to conveniently participate in DeFi lending activities and fully experience the advantages of decentralized finance.

5.2 NFT Market

The NFT market has developed rapidly in recent years, with WalletConnect playing an important role by providing users with a convenient and secure way to connect during the buying, selling, and displaying of NFTs. Taking the world’s largest NFT trading platform, OpenSea, as an example, when users want to purchase their favorite NFT artwork on the platform, they only need to click on the ‘Connect Wallet’ option on the OpenSea page and choose WalletConnect. OpenSea will generate a QR code containing transaction-related information. After scanning the QR code with a wallet that supports WalletConnect, a secure connection is established between the wallet and the OpenSea platform. Users can view detailed information about the NFT in the wallet, including the creator of the artwork, rarity, and historical transaction records. Once the purchase is confirmed, the transaction amount is deducted from the wallet, and the NFT is transferred to the user’s wallet address. The entire process is fast and secure, ensuring the safety of users’ assets and privacy in NFT transactions.

On platforms like Rarible, users can not only buy and sell NFTs, but also use WalletConnect to showcase their NFT collections. After connecting the wallet to the Rarible platform, the platform will automatically read the user’s NFT assets from the wallet and display them in an intuitive way on the user’s personal page. Users can categorize, add descriptions, and tags to their NFTs for easy browsing and appreciation by other users. Meanwhile, when other users show interest in the displayed NFTs and express their intention to purchase, both parties can communicate and trade through WalletConnect, greatly improving the efficiency and experience of NFT trading and showcasing without the need for cumbersome offline negotiations and complex transfer processes.

5.3 Decentralized Games

In the decentralized gaming sector, WalletConnect provides players with a more convenient and secure way to manage assets, enhancing the fun and interactivity of the game. Taking the popular blockchain game CryptoKitties as an example, players need to manage their virtual cat assets during the game, including breeding and trading. Through WalletConnect, players can connect their wallets to the CryptoKitties game, and the cat asset information stored in the wallet will be synced to the game in real-time. When players want to breed new cats, the game will send a breeding request to the player’s wallet through WalletConnect. Players confirm the operation in the wallet to ensure the security and authenticity of the breeding process. If players want to sell their cats, they just need to select the sell option in the game. The transaction information will be transmitted to the wallet via WalletConnect. After completing the transaction confirmation, the cat assets will be transferred to the buyer’s wallet address. The entire transaction process is open, transparent, and traceable.

In the blockchain game Axie Infinity, which is themed around pet battles, WalletConnect also plays an important role. Players own their own Axie pets in the game, each with unique attributes and skills. Players can enhance the value of their pets through battles, breeding, and other means. When participating in game battles, players need to confirm their Axie pet lineup. WalletConnect transfers the Axie asset information from the player’s wallet to the game, ensuring that players can use their owned pets in battles. When players receive rewards in the game, such as NFT items or game tokens, these assets are directly stored in the player’s wallet. Players can use WalletConnect to view and manage their game assets at any time, facilitating the swift transfer and trading of assets, further enhancing the game’s playability and economic value.

5.4 Other Fields

In terms of social networks, some blockchain-based social platforms, such as Steemit and Voice, use WalletConnect for identity verification. When users register and log in to these social platforms, they no longer need the traditional username and password method, but instead use WalletConnect to connect their wallets for identity verification. The public key in the wallet serves as the user’s unique identifier, ensuring the authenticity and immutability of the user’s identity. At the same time, users can choose to use the wallet to sign when publishing content, proving the originality and ownership of the content, enhancing the trust mechanism and content value of the social network.

In the field of content publishing, some decentralized content creation platforms, such as Mirror, allow creators to connect their wallets to the platform through WalletConnect. When creators publish articles, pictures, or other forms of content, they can set up paid reading or tipping functions. Readers can use WalletConnect to make payments through their wallets, and the funds will be directly transferred to the creator’s wallet address, achieving direct monetization of content creation, eliminating intermediate links, and increasing the creator’s income.

In the payment scenario, some merchants and service providers have started to support payment via WalletConnect. When consumers purchase goods or services, the merchant will generate a WalletConnect link or QR code containing payment information. After the consumer scans it with a wallet, they confirm the payment amount and transaction details to complete the payment. This payment method simplifies the traditional payment process, improves the efficiency and security of payments, and also provides users with more diverse payment options, promoting the application of cryptocurrencies in daily consumption.

The current development status and challenges of WalletConnect

6.1 Development Status

Currently, WalletConnect has achieved significant development results in the blockchain ecosystem. In terms of integration scale, it has deeply integrated with over 100 wallets and more than 200 applications. Many well-known wallets such as MetaMask, Trust Wallet, Coinbase Wallet, etc., support the WalletConnect protocol, enabling a large number of blockchain users to conveniently use WalletConnect to connect wallets with DApps. In terms of application scenarios, it covers multiple hot areas such as decentralized finance (DeFi), NFT markets, decentralized games, etc. Almost all mainstream DeFi platforms and NFT trading markets use WalletConnect as an important way to connect user wallets.

From the user data, the number of WalletConnect connections has exceeded 220 million times, covering 35 million users worldwide, which fully reflects its wide application and popularity among user groups. In terms of financing, WalletConnect has also been highly recognized by the capital market, with a total financing amount of 38 million US dollars. The $13 million Series B financing completed on January 15, 2025, includes investors such as 1kx, BitGo,Crypto.comCapital and other well-known investment institutions, these funds will further boost WalletConnect’s development in technology research and development, ecosystem expansion, and market promotion, enhancing its competitiveness and influence in the blockchain connectivity field.

Facing Challenges 6.2

Despite achieving certain accomplishments, WalletConnect also faces many challenges in its development. In terms of security, although WalletConnect adopts various encryption technologies to ensure the security of communication and transactions, there is still a risk of being attacked due to the continuous advancement of hacker techniques. For example, there have been cases where fake WalletConnect wallet applications were listed on Google Play, leading to the theft of user assets. Additionally, some Web3 wallets have imperfect transaction popup restrictions when providing WalletConnect support, which may result in users inadvertently transferring assets through phishing.

Market competition is also an important challenge. The competition in the blockchain connectivity field is fierce, with new connection protocols and solutions constantly emerging, such as some wallets developing their own connection methods or other connection protocols focusing on specific areas. These competitors may compete with WalletConnect in terms of functionality, user experience, cost, etc., to compete for market share.

User awareness and education is also a challenge. For ordinary users, blockchain technology and related concepts are relatively complex in themselves. As a relatively professional connection protocol, WalletConnect may pose certain difficulties for users in understanding and usage. How to increase users’ awareness of WalletConnect, reduce the usage threshold, and enable more users to use it safely and conveniently is the problem that WalletConnect needs to solve. At the same time, with the continuous development of blockchain technology and the continuous expansion of application scenarios, WalletConnect also needs to continuously adapt to new technological standards and user needs, continue to innovate technically and upgrade functions to maintain its competitiveness in the market.

The future development trend of WalletConnect

7.1 Technological Innovation Direction

In terms of improving connection stability, WalletConnect may further optimize its communication protocol, adopt more advanced network technologies, such as blockchain-based distributed network technology, reduce reliance on traditional centralized network infrastructure, thus reducing the risk of network latency and interruptions. Currently, WebSocket is the main communication method for WalletConnect connections, and in the future, new generation transport protocols such as QUIC (Quick UDP Internet Connections) may be introduced. QUIC is based on the UDP protocol, and has significant advantages in reducing connection establishment time, improving transmission efficiency, and resisting network congestion, providing users with a more stable and faster connection experience.

In terms of expansion, WalletConnect is expected to support more complex operations. For example, achieving seamless interaction between multiple chains, users can transfer assets, conduct transactions, etc. between different blockchain networks through a single wallet connection without the need to switch between multiple wallets and networks. At the same time, there may be an increase in support for more types of digital assets, including new cryptocurrencies, digital securities, etc., to meet the increasingly diverse financial market demands.

Privacy protection is also an important direction for technological innovation. As users’ concerns about data privacy continue to rise, WalletConnect may adopt advanced encryption technologies such as zero-knowledge proofs to complete identity verification and transaction operations without revealing sensitive user information. Zero-knowledge proofs allow the prover to prove a fact to the verifier without disclosing any other information, which will further enhance user privacy protection when using WalletConnect and increase their trust in its security.

7.2 Market Expansion Prospects

In emerging markets, with the global popularity of blockchain technology, the demand for blockchain applications in some developing countries and regions is rapidly increasing. For example, in Southeast Asia, Africa, and other regions, where the financial infrastructure is relatively weak, there is an urgent need for convenient and low-cost financial services. Blockchain technology provides innovative solutions for these regions. As an important tool to connect blockchain applications and wallets, WalletConnect is expected to be widely used in these emerging markets, helping local users to participate more conveniently in decentralized finance, digital asset trading, and other activities, and promoting the landing and development of blockchain technology in these regions.

In addition to the existing areas of decentralized finance, NFT marketplaces, and gaming, WalletConnect may also play an important role in areas such as the Internet of Things, supply chain finance, and identity verification. In the IoT field, where secure communication and authentication between devices are key issues, WalletConnect can leverage its secure connection and encryption technology to connect IoT devices to blockchain platforms, ensuring the security and trustworthiness of device data, and providing a more reliable infrastructure for IoT applications. In supply chain finance, WalletConnect connects all links in the supply chain to realize information sharing and transaction automation, improve the transparency and efficiency of the supply chain, and reduce financial risks. In the field of identity verification, WalletConnect can provide a decentralized identity verification solution, users can use their own wallets for identity verification, without relying on traditional centralized identity verification institutions, improving the security and privacy of identity verification.

Conclusion

WalletConnect, as an open-source protocol, plays an important role in the blockchain ecosystem by connecting decentralized applications (DApps) with encrypted wallets. It provides users with a secure and convenient way to connect by scanning QR codes or clicking links, allowing users to interact with DApps without directly exposing their private keys. Users must be cautious when using WalletConnect, choosing reputable and well-known wallets and DApps to connect to, and avoiding connections from unknown sources to prevent phishing attacks or other security risks.