By Leo Park, Jay Jo, and Yoon Lee
Translation: Blockchain in Vernacular
Summary of key points:
Recently, a large number of Web3-enabled smartphones have been released and have attracted much attention. These smartphones can be divided into: 1) Web3-enabled, 2) Web3-focused, and 3) native Web3 smartphones based on their degree of Web3 integration.
Web3 smartphones are expected to improve user access to Web3 services while addressing the high fees in the mobile market. However, over-reliance on airdrop marketing rather than innovation and weak hardware performance remain concerns.
Traditional phone manufacturers like Samsung have leveraged Web3 technology for one-off promotions, but the potential for broader Web3 integration on their devices continues to grow.
In recent years, Web3-enabled smartphones have attracted widespread attention in the industry. As the terminal for the public to access new technologies, these devices have become a powerful tool to promote Web3 into the mainstream market. This article will explore the current status of Web3 smartphones and look forward to their future development.
1. Classification of Web3 smartphone projects
Web3 smartphone projects are differentiated based on the extent to which they apply Web3 technology. Tiger Research divides Web3 smartphones released by October 2024 into three categories: 1) Web3-enabled smartphones, 2) Web3-focused smartphones, and 3) native Web3 smartphones.
These classifications are based on the level of integration of Web3 technologies.
1) Smartphones that support Web3
Web3-enabled smartphones are similar in functionality to traditional smartphones, but only support Web3 technology at a basic level. Such devices are mainly equipped with Web3 wallet applications such as Metamask and Petra, as well as cryptocurrency trading platform applications. These devices introduce Web3 elements through experimental cooperation with blockchain mainnets to expand their ecosystems.
In most cases, no special Web3 technology was applied. Users could get a similar experience by installing Web3 applications on ordinary smartphones. Therefore, these devices did not provide unique value, and user interest quickly declined. A typical example is the startup smartphone manufacturer Nothing, which had worked with Polygon to launch an NFT community and Polygon-based identity system, but recently terminated most of these services.
Source: Jambo Phone
Some recent cases show more active applications of Web3 elements. For example, Jambo Phone comes pre-installed with applications such as Web3 wallet Petra and cryptocurrency trading platform OKX. It also guides users into the Web3 ecosystem through its own application Jambo Play. Users can participate in Web3 project tasks through the application and receive cryptocurrency rewards. This approach provides a lightweight testing platform and cooperation model for projects. We expect to see more similar examples in the future.
2) Smartphones focused on Web3
Web3-focused smartphones partially integrate Web3 technology into the device system. These phones run traditional mobile operating systems with Web3 features added, providing a moderate level of integration rather than full Web3 capabilities. Typical examples include Solana's first-generation Saga and the recently announced second-generation Seeker.
These Web3-focused smartphones connect the traditional mobile environment with the Web3 ecosystem through a dedicated programming interface. Solana provides the Solana Mobile Stack (SMS) to help developers build Web3 services. The phone is also equipped with Web3 optimization tools such as the Solana Pay system, which utilizes Android's NFC function and QR code, and a seed storage (Seed Vault) for enhanced security.
Solana Seeker. Source: Solana Mobile
However, these Web3-focused smartphones are still far from providing a fully Web3-native experience. Users need to install a separate Web3 wallet or use a dedicated browser like Brave to access Web3 services. Seeker, developed in partnership with Solflare, has a built-in Seed Vault Wallet as a feature. There are still many undisclosed features that could make it a truly Web3-native smartphone.
3) Web3 native smartphones
This is achieved by using its own Web3 operating system, or by providing native support for core Web3 technologies, such as the peer-to-peer distributed file system (IPFS), the Web3 messaging protocol (XMTP), and the blockchain-based naming system (CNS). These smartphones also include an on-device light node client, enabling users to verify transactions themselves.
ethOS Nouns version (left), dGEN1 (right) Source: ethOS
A notable example is Freedom Factory’s ethOS. In 2023, ethOS released its first prototype smartphone with the support of NounsDAO. The device introduced an Ethereum-based Web3 operating system with full system-level integration. Recently, the company launched the dGEN1 smartphone, which enhances its Web3 native capabilities. The built-in ethOS browser supports IPFS and ENS. Its light node client functionality allows users to run on-chain decentralized applications (dApps) without relying on external RPC nodes. The Web3 wallet integrated into the operating system enables users to sign transactions without switching apps or using an in-app browser. The device also offers advanced features such as SMS-based cryptocurrency transfers and the option to mint gallery images into NFTs.
Source: Up Network
Similarly, Up Mobile, developed by Movement Labs and Up Network, demonstrates a high level of Web3 integration. Its proprietary Web3 operating system, Up OS, provides system-level integration. The device's built-in Web3 wallet supports light node functionality and headless signing technology.
2. What advantages do Web3 smartphones bring?
Interest in Web3 smartphone projects has been growing steadily, and various experiments are underway. This upward trend stems from the expectation that Web3 smartphones will play a key role in driving the mass adoption of Web3 technologies while solving challenges in the existing industry. The advantages of Web3 smartphones can be analyzed from the following three aspects:
First, Web3 smartphones can significantly increase the accessibility of Web3 services through the advantages of portable devices. With built-in Web3 wallets, private key management, and decentralized application (dApp) services, users can easily access Web3 services anytime and anywhere. This synergy between Web3 technology and financial services is particularly noteworthy. Through these devices, users can access crypto-based financial services without time and location restrictions, which may also make financial services more accessible in developing countries with limited infrastructure.
Secondly, Web3 smartphones are expected to solve long-standing problems in the mobile market. Currently, centralized app stores charge fees as high as 30%. This reduces developer profits and limits market growth. Web3 smartphone projects aim to solve these problems through decentralized alternatives. For example, Solana Mobile and Up Network are developing decentralized dApp stores based on blockchain infrastructure. Their goal is to create a fee-free decentralized application ecosystem.
Finally, the combination of these two advantages is expected to generate strong synergies in the Web3 industry. There is a growing demand for consumer applications in the Web3 space, but there is a lack of a device environment that supports daily use. Web3 smartphones are expected to overcome this limitation and promote the development of new consumer applications. Just as the shift from PCs to mobile devices led to a surge in innovative services, the rise of Web3 smartphones may also trigger similar innovations. With the portability of mobile devices and the multiple sensor functions to enhance IT service applications, Web3 smartphones may bring significant disruption to the space. In particular, the fee-free dApp store environment is expected to create a more dynamic development ecosystem than the current Web 2 industry.
3. What challenges do Web3 smartphones face?
Despite their potential, Web3 smartphones face several challenges. First, the hardware specifications are inferior to those of mainstream smartphones. Most Web3 smartphones lag behind in camera performance and screen refresh rates, making them unsuitable for mainstream use. Additionally, the price tag of over $500 is too expensive for the specifications offered, making it difficult for the average consumer to choose. The phased pre-sale system also creates uncertainty in delivery times, reducing accessibility. As a result, Web3 smartphones face problems in hardware competitiveness, sales, and operational improvements.
Source: Jambo Phone (left), Goosefx (right)
The second problem is that interest in Web3 smartphones is more focused on rewards such as airdrops than on technological innovation. This was clearly demonstrated by Solana’s first Web3 smartphone project, Saga. Initially, Saga’s price was adjusted down due to low sales. When the value of $BONK, the payment currency users received, increased, demand surged, which caused Saga’s resale value to soar to $5,000. Pre-sale orders for its successor, Seeker, have now exceeded 140,000 units. Similarly, Jambo Phone attracted attention by offering free Aptos-based meme coin Gui Inu ($GUI). These examples show that the Web3 smartphone market is driven by speculative factors such as free tokens and resale value. This raises concerns that Web3 smartphones may become a short-term trend rather than a sustainable ecosystem.
Finally, Web3 smartphones face operational challenges. One concern is that the decentralized operation of Web3 smartphones may be too radical to fully replace the real value provided by traditional centralized platforms. Although Google Play and Apple's App Store charge up to 30%, they provide necessary services, including preventing abuse and illegal activities, maintaining application service infrastructure such as payments, and providing customer support. The dApp experience unique to Web3 smartphones may also bring new user experience challenges. Just as pre-installed applications by manufacturers or telecom providers have frustrated users, the pre-installed blockchain infrastructure and dApp configurations on Web3 smartphones may impose a specific Web3 environment on users based on the interests of manufacturers and partners. Web3 smartphones must not only focus on technical integration, but also develop a comprehensive operational plan to address these challenges.
4. How do traditional smartphone manufacturers respond?
Galaxy S20 Wemix Edition (left), Galaxy Note10 Klaytn Edition, source: Samsung
Traditional smartphone manufacturers have also shown interest in incorporating Web3 technology into their devices. Initially, most efforts were limited to one-off promotions that lacked clear differentiation. For example, Samsung partnered with WeMade Tree (now merged with WeMade) and GroundX (formerly the developer of Klaytn) to launch a series of Web3 smartphones with pre-installed dApps from each mainnet. But apart from installing a basic wallet app and providing cryptocurrency to buyers, there were no significant features.
Source: Envato
However, recently, practical applications of Web3 technology have shown good potential. For example, Circle announced that it will launch a "tap to pay" feature. This will allow users to pay with USDC stablecoins on iPhones, using Apple's NFC technology. Although Apple is not directly developing this feature, it shows that Web3 payments can be implemented on devices like iPhones.
Samsung blockchain wallet. Source: Samsung
On the other hand, Samsung has supported external Web3 wallet integrations such as MetaMask and Coinbase Wallet through its Blockchain Keystore since 2019. It also continues to support blockchain wallet applications in its latest models. Recently, Samsung partnered with the South Korean Ministry of the Interior and Security to launch a blockchain-based mobile ID card for use with Samsung Pay. The potential adoption of Web3 technology by major smartphone manufacturers could mark a new turning point for Web3 mainstream adoption.
5. Conclusion
Web3 smartphones are a revolutionary concept, but the market is still in its early stages. Some projects offer token rewards and have attracted attention, but their scale is still small compared to the shipments of traditional smartphones. Global smartphone penetration is 6.4 billion units, accounting for 76% of the total population. In contrast, there are only 10 million Web3 users, accounting for only 0.156% of all smartphone users. Given that the Web3 industry itself has not yet achieved mainstream adoption, the limitations of the Web3 smartphone market are even more obvious.
In addition, Web3 smartphones also have obvious technical limitations. Compared with traditional smartphone manufacturers, they have a large gap in hardware performance and production capabilities. In this case, Web3 smartphone projects will inevitably seek long-term partnerships with mature mobile phone manufacturers. By leveraging these manufacturers' advantages in operating systems and software interfaces, Web3 smartphone projects may complement the hardware expertise of traditional manufacturers, similar to the relationship between Android and Samsung. Although challenges such as building a user-friendly decentralized application (dApp) ecosystem remain, the combination of traditional manufacturers' hardware capabilities and Web3 projects' software expertise may accelerate the development of Web3 smartphones.
