Solana-based DeFi, airdrops propel crypto wallet Phantom’s user base to new heights

Phantom, a crypto wallet heavily used in the Solana ecosystem, has seen its active user base more than triple over the past year, its CEO and co-founder Brandon Millman exclusively shared with TechCrunch.

In January 2024, Phantom hit 3.2 million monthly active users (MAUs), up 220% from 1 million one year ago, and recorded 941,000 installs, 463.5% more than 167,000 installs during the same time frame, Millman said. “These numbers are essentially our peak” and outperformed usage and metrics from the previous crypto bull market in 2021 and early 2022, he added.

“The Jito and Jupiter airdrops were a huge turning point for the ecosystem,” Millman said. “Solana has reached escape velocity and proved itself to be a first-class ecosystem. It’s the platform attracting some of the best builders in the world.”

Solana-focused decentralized finance (DeFi) Jito Network and decentralized aggregator Jupiter both did airdrops in late 2023 and early 2024, respectively, providing users of their projects with rewards, or tokens, essentially as a “thank you” for using their service.

When it rains, it pours

These airdrops, coupled with the recent Solana memecoin mania, could be why the ecosystem has seen a surge of both old and new users.

“It’s a lot of DeFi activity but what that’s equating to is crypto wallets are becoming the new entry point to crypto,” Millman thinks. When a user first onboards to crypto, the typical method is to go through centralized crypto exchanges like Coinbase, which he attributes to “word of mouth,” but now the world has changed, he thinks, “increasingly people are downloading a crypto wallet” to get started.

This entry point of wallets and on-chain applications are becoming the “new thing people are trying to get access to when they want to use crypto,” Millman said.

Aside from being a place for people to hold and trade their cryptocurrency, Phantom also aims to be a “safe access” for web3 experiences, Millman noted. During the Jupiter airdrop, by sharing links on Phantom’s website it helped drive 1.1 million visits to the Jupiter claim site, in an effort to prevent people from getting scammed by malicious links, he added.

Growth over revenue

Phantom started in 2021 as a Solana-only crypto wallet, but has since expanded to provide multichain support for Ethereum, Polygon and Bitcoin as well. Now, the company has its sights on growing its user base as it seeks to become the top destination for people new to crypto and wallets.

“Right now, we’re in a focused growth stage. We’re not super focused on generating revenue, but we prefer to feed it back to the user growth. The more users that sign up, the more developers are attracted to building on the ecosystem, and the more applications and users we get. It’s like a flywheel and we’re looking to grow as fast as possible,” Millman said.

Phantom makes money the same way most other wallets do: By providing in-app convenience features for swapping cryptocurrencies and charging a small fee for them. The company, which is backed by investors like Paradigm, Andreessen Horowitz, Jump Capital and Solana, also has a “strong balance sheet,” Millman said, so it doesn’t have to focus much on revenue currently.

“We believe the future of wallets is multichain, just the way crypto exchanges have evolved. Coinbase started off as a Bitcoin-only exchange, then added support for Ethereum, and one thing led to another,” he said. “No one can fathom a world where exchanges only have one coin. Wallets will follow the same path.”

While it’s still too early to expect the masses to self-custody their crypto assets, the rise in usage of crypto wallets points to further growth in the space. In the past, on-chain apps have been too expensive or complicated to use, but these airdrops and the resulting influx of users show the benefit of composability, Millman added.

Crypto exchanges like Coinbase run a completely closed system, but on-chain systems like Solana are open to developers to build on top of. So by trading or staking assets on exchanges, people could potentially miss out on rewards like airdrops, Millman noted.

And when you consider that crypto wallets let users trade cryptocurrencies, too, they become more attractive than exchanges because they also provide access to on-chain perks. “DeFi applications are now incentivizing usage with airdrops, and the only way to get that is by downloading a wallet […] The intent of users and types of on-chain apps have grown and diversified, making wallets an entry point,” he said.

Millman expects crypto wallet adoption to continue increasing as more providers and the ecosystem bring new features and explore new avenues. “There’s still a lot of sharp edges and foreign concepts, that’s for sure. Secret recovery phrases are the de-facto key management for wallets. But these are areas we’re going to innovate on this year, and we’re excited to show the next evolution of what it will look like.”

In the future, he expects crypto wallets to help people do more than just buy, hold and sell crypto. “It’s a window into a much richer world of interoperability.”