Original author: Jason, Puzzle Ventures
Those who cannot evaluate smartphones are not good web3 researchers.
As a web3 researcher who hasn't fully grasped on-chain data, I never expected that one day I would have to evaluate smartphones. The concept of web3 phones is like the concept of handheld computers back in the day. The combination of phones and web3 seems to be a perfect match, but it is also slightly strange. To put it in a broader sense, it is a groundbreaking product that signifies the transition from the internet to mobile internet. To put it simply, it is a regular phone with some web3 software and hardware additions. In today's world, where web3 has not yet been fully embraced, web3 phones add more possibilities and, of course, uncertainties to web3.
Regardless, any new thing is born amidst criticism and grows amidst skepticism until it becomes indispensable. Therefore, it wouldn't hurt to carefully study the full picture of web3 phones. What if it becomes a historical turning point for mass adoption? Alright, as usual, let's start the study from the earliest web3 phones. Wait, the earliest web3 phone is actually the Metavertu from Vertu, a half-dead old money factory? Well, web3 is a strange world. You get used to it. However, to enhance the rigor of our research, it is necessary to first clarify the panorama of the web3 phone market, and then... we'll see.
Panorama of the web3 Phone Market
The web3 phone market is a typical emerging market characterized by lack of unified standards, price chaos, non-mainstream manufacturers, and varying user experiences. However, by comparing different phones horizontally, we can still observe some clues.
Figure 1
As shown in Figure 1, there are currently 5 major web3 phones, and only the first three actually meet the basic requirements of being web3-native. Therefore, it is difficult to summarize any regular development trends at this stage. However, we still need to analyze the underlying development logic from some subtle trends to gain some insights.
1. Most manufacturers tend to be non-first-line manufacturers. Actually, this point is not difficult to understand. It is nothing more than the fact that web3 phones are too uncertain. Large phone manufacturers have standardized R&D plans and production requirements, and it is unlikely that they will quickly enter the market because of the new concept of web3+phones. At the same time, phone manufacturers are still competing in the software ecosystem, and from the perspective of web3 phone software, it is logical for large manufacturers to adopt web3 OS, dapp Store, and DID, which will disrupt the self-owned ecosystem, from the perspective of investment return. On the other hand, web3 phones themselves are a combination of bizarre and differentiating routes, and they are also combined with small and medium-sized manufacturers that have differentiated routes. Of course, it does not rule out the possibility that web3 phones will form a bottom-up reverse growth trend in the future.
2. The basic configuration of web3 phones is in the high-middle level. This point is also not difficult to understand. The concept that web3 phones emphasize is the integration of web3, not competition in terms of configuration. Even if some functions of phones are added to cold wallets, I believe it will be a new product. Of course, METAVERTU and Solana Saga, two leading phones, adopt processor configurations that are close to top-level processors in current Android phones, combined with relatively strong camera and storage functions, which can reach the level of first-line phones. The remaining few manufacturers have uneven configurations, similar to randomly assembling a basic configuration that meets the average level. However, honestly speaking, any user who pursues configuration is unlikely to buy any web3 phone, and web3 degens should have at least one commonly used main phone. Therefore, the configuration of web3 phones is basically "uninteresting to use but a pity to give up."
3. The software layer of web3 phones is mainly composed of dapp store, wallet, and DID. There is an important question involved here: the technological development path of web3 phones, what is the fusion model of OS+dapp store at the software layer, or the major modification model of hardware layer such as cold wallet + Blockchain SIM card? We will discuss this question in the later article. Purely from a software perspective, the currently popular web3 integration method is to integrate a built-in dapp store or curated dapps to improve the friendliness of dapp acquisition, and then use wallets and DiD to construct a relatively private and secure operating environment. then add some identity confirmation functions such as using the phone's camera, fingerprint recognition, and face recognition, and finally add some benefits such as NFT airdrops. In addition, Solana Saga has developed a Solana Mobile Stack that is convenient for developing web3 dapps, providing some toolkits for developing dapps in the Android environment. The real effectiveness of this web3 combination needs to be judged in combination with the actual user experience, and consider an ultimate question: is it better for any phone to install a set of universal web3 OS or to use a pre-set single-ecosystem web3 system?
4. Web3 mobile phones have their own strengths in terms of hardware. METAVERTU adopts a dual-chip model to enhance the security of the execution environment, which means adding a Qualcomm A5-level security chip. The specific working principle is: establishing an isolated environment separated from the main chip based on TEE (Trusted Execution Environment) + SE (Secure Element), while also being able to interact with the original system through APIs, similar to a bank-level security hardware token - U Shield. The security solution of this dual-chip scheme is obviously high-quality, but the specific practical effect remains to be verified. Taking Solana Seed Vault as another example, it is essentially a set of encryption information custody software that stores information in a secure environment within the local hardware, which can be considered as a compromise between software and hardware. On the other hand, the early Finney Phone simply added a complete set of hardware wallets and used a physically encrypted safe screen (similar to slide lock) for additional protection, but it seems to have not received much attention so far. Overall, there is room for combining hardware in web3 mobile phones. Innovative hardware security solutions such as the bSIM card recently launched by China Telecom (storing private keys in the SIM card) can better demonstrate the value of mobile phones as physical hardware connecting to the digital world compared to software.
5. At present, there is no standard for the price of web3 mobile phones. Judging from the exaggerated price range from $3350 (lowest configuration of Metavertu) to $376, the market positioning of web3 mobile phones is still in a state of confusion. From the comparison of price gradients, web3 mobile phones currently have at least three positioning categories: high-end and cool phones, web3 enthusiast backup phones, and low-end non-mainstream phones. From a relatively rigorous perspective, we need to judge whether the main application scenario of web3 mobile phones in the future is as a mainstream phone or as a backup phone. As for the mainstream phone positioning, Solana Saga is the closest, but from several publicly available practical evaluations, Solana Saga does not meet the standards of a first-line mainstream phone in terms of UI smoothness and configuration richness. As for the backup phone positioning, Solana Saga and other low-priced web3 mobile phones seem to be sufficient, but is the original intention of the emergence of web3 mobile phones just to be a backup phone? At the same time, the single Solana and Polygon ecosystems as backup phones cannot fully meet the basic needs of web3 enthusiasts. Therefore, there are only two possible directions for the positioning of web3 mobile phones in the future: gradually becoming a mobile phone that can meet the basic and universal needs of web3, and approaching the level of a mainstream phone without limit; or gradually becoming a niche, grassroots, or even obsolete product.
Through the above analysis, we found that the current web3 mobile phones need to solve several problems: first, the solution of reasonable hardware and software matching and optimized adaptation; second, the handling of the competition relationship between mobile phone manufacturers; and third, a clearer positioning between the main device and the backup device.
Technical Path of web3 Mobile Phones
The technical path of web3 mobile phones mainly involves three areas: hardware, OS software, and Dapp software. The combination of web3 hardware wallets and mobile phones forms a "hard + hard" solution, while Web3 OS and Dapp can interact with the blockchain through light nodes or third-party nodes (including wallet encryption) to achieve the purpose of running web3 on mobile phones.
Hardware Path of web3 Mobile Phones
From the current attempts in web3 mobile phone hardware, they can be roughly divided into two generations: the first generation solution of hardware wallet + mobile phone that appeared around 2018, and the second generation solution of sim card + mobile phone and chip + mobile phone that appeared around 2022 (in fact, the hardware wallet itself is also a chip), as shown in Figure 2.
Figure 2
Let's start with the first-generation solution. HTC Exodus 1 and Finney Phone launched web3 mobile phones with built-in hardware wallets and some simple operation software at the end of 2018. If I remember correctly, the end of 2018 was the bottom of the previous bear market. From this release timing, we can roughly feel the lack of professionalism in the understanding of Web3 by these two manufacturers, and their mobile phone sales did not generate any ripples.
From the promotional materials of HTC Exodus 1, it can be seen that the device comes pre-installed with a set of hardware wallet (chip) management software called Zion App to achieve similar private key storage, ERC-20 and ERC-721 token payment and remittance functions like a regular hardware wallet. It also comes pre-installed with basic software such as Brave browser and market software, completing the so-called web3 phone solution. On the other hand, Finney Phone is relatively more innovative, with the additional installation of the Safe Screen component, as shown in Figure 3. In other words, when you need to use the hardware wallet, you need to physically toggle the safe screen, so that the phone will disconnect from the external network and allow the wallet operations to be in a secure environment.
Figure 3
This retro-style design reminds me of the physical keyboard of BlackBerry. Although it solves some problems well and in a straightforward manner, it still cannot resist the trend of technology. The same goes for web3 phones. Although the first-generation solution provides a basic solution, it faces serious challenges in terms of retro design, incompatibility with existing systems, and UI smoothness against the trend.
Now let's take a look at the second-generation solution. METAVERTU adopts a TEE+SE security environment based on another independent chip and OS switching, while the BSIM+phone solution, mainly represented by the blockchain SIM card (BSIM) launched in cooperation with China Telecom and Conflux, takes a different hardware technology path.
METAVERTU adopts the TEE+SE independent chip trusted execution environment technology, which is relatively reliable without exaggeration. TEE technology has been standardized and regulated since the 1990s. It is a hardware execution environment that can only be accessed through a private key. It records the hash state before and after execution to ensure that there are no problems during execution or that there is evidence to follow in case of issues. The data within the environment is additionally encrypted by SE, so even if the operating system is exploited, the data within the environment can still be protected as a final layer of security. Therefore, under the premise that the information before entering the executable environment is not erroneous, the execution process is relatively secure, similar to a hardware wallet. However, this technology still faces two problems: first, the cost is high. The computational power and storage space required for the execution environment determine the demand for chip levels. For example, chips like METAVERTU's Snapdragon chip raise the price to more than $3000 (although there may also be brand-related premium reasons), which is extremely unfavorable for mass adoption. Second, this TEE method is more suitable for security protection within relatively closed systems such as banks. If it is necessary to connect to the entire web3, especially in scenarios involving MPC, Oracles, which require extensive data interaction with the outside, more complete privacy computation and customized smart contract-related infrastructure are needed to ensure efficiency, privacy, security, and scalability during the process of data transmission from outside to inside and from inside to outside.
The basic principle of BSIM card is to increase the storage space and computing power of the SIM card by several tens of times to achieve the generation and storage of user public and private keys within the card. According to the official explanation, "BSIM card can reduce the risk of malicious software attacks by adopting hardware security protection technology, and it can also achieve the binding of digital identity and real identity through mobile phone number real-name system. In addition to basic private key management and digital signature, BSIM card can also realize operations such as encrypted storage and key recovery, and even integrate traditional U shield functions within the card." Aren't these functions basically the basic functions solved by hardware wallets? In other words, BSIM card basically provides the ability for wallets and DIDs to operate on mobile phones in web3. Samsung has collaborated with Ledger to develop the Ledger Live app to connect Ledger to mobile phones via Bluetooth, thereby achieving the capabilities of web2+web3. And when BSIM cards become a more popular paradigm in the future, it is obviously a more attractive and imaginative solution to implement the capabilities of web2+web3 on a single mobile phone.
It is worth mentioning that when I was searching for relevant materials on BSIM, at least 50% of the information discussed the development potential of BSIM in Africa, which was unexpected yet reasonable. First of all, BSIM effectively solves the chaos in the African banking system and fiat currency system. Compared with Alipay and PayPal, which have flourished in a well-developed financial system, Africa's imperfect financial system provides a fertile ground for web3 payments. According to World Bank data, as of 2021, only 53% of adults aged 15 and above in sub-Saharan Africa have a bank account or mobile payment app based on a bank account. Therefore, when the BSIM card provides a complete chain of infrastructure for web3 + cryptocurrency as a payment equivalent + personal KYC on the blockchain + mobile payment based on phones, one can imagine the enormous potential for web3 mass adoption among young people in Africa.
web3 Mobile Operating System & dapp Path
The web3 mobile operating system or dapp path is actually very understandable. A web3 OS is a decentralized (mobile) operating system with a lightweight node to achieve on-chain interactions within the entire system, while a mobile dapp is an on-chain interaction within a decentralized mobile OS through the dapp's own interactive facilities. This topic is very broad, ranging from web3 browsers to in-app stores within web3 wallets, and even to complete web3 mobile OS, all of which can be understood as solutions. Therefore, in this simplified discussion, the author only focuses on pure web3 mobile OS.
Currently, some of the more pure web3 mobile OS include ethOS, Conflux OS, dappOS, and other separate products. Near, Polkadot, and others are also developing operating systems based on their respective chain ecosystems. These OS systems are all attempting to establish a set of unified interfaces for the application layer, improve interaction efficiency through lightweight nodes, and provide better developer tools, thus laying the groundwork for potential future mobile web3. But is the reality as beautiful as we think?
First, let's discuss the necessity of web3 mobile OS. Through a comparison and analysis of different existing OS, the author believes that the current web3 OS has the greatest value in providing unified identity, wallet interface, unified scheduling of mobile hardware, and improving user experience. As shown in Figure 4, the innermost layer of METAVERTU web3 OS's demonstration diagram is the unified authentication and protection of personal identity, which leads to the evolution of different functions in the outer circle. Without using web3 OS, if you want to perform actions on more than two dapps on your mobile phone, you need to repeatedly switch between different dapps and send data between different RPCs, and of course, the experience is not as smooth as the operations inside web3 OS. However, web3 OS itself also has certain problems: the independent OS requires a strong technical team to continuously maintain it, the efficiency of technical and version updates is questionable, and even security risks may arise; web3 browsers, wallets, and other alternatives can achieve similar functions, but the balance between user experience and security cannot be fully verified.
Figure 4
On the other hand, let's talk about security. Using mobile dapps in an open-source environment like Android OS is definitely the least secure. So, is web3 OS definitely more secure? The reason why hardware wallets are secure is that they are not connected to the internet throughout the process and operate through a completely closed-loop built-in software, making them immune to hackers and network attacks. While some web3 OS also have the ability to combine software and hardware through mobile chips for secure key storage, there is still a possibility of attacks on the web3 OS system itself. However, I believe that the developers of web3 OS will take targeted security measures. From the perspective of user experience, do users really care about security with a score of 80 or 90? Is the 90% security provided by web3 OS the only factor that motivates users to abandon their habitual use of the 80% secure environment? No, what users really care about is whether it is good to use, fun, and profitable. Therefore, the real task of web3 OS is still the richness of the dapp store, the ease of multi-chain interaction, and optimization of gas fee reduction. As for security, including data privacy, it can only be considered as an added bonus.
Figure 5
JAMBO is well versed in it. JAMBO is a web3 superapp for the African market, and its recently launched JamboColor is also a web3 phone (Figure 5). From the current promotional materials, we understand several pieces of information: it is priced as low as $99, comes with a wired headset, has a stylish appearance, and the built-in JAMBO superapp allows you to watch to earn, play to earn, learn to earn, and chat to earn. However, there is no mention of security or the operating system. I believe this will be a very effective mass-adoption attempt because it truly considers what users want, rather than how to boast. While web3 technology iteration is important, it is a top-down matter for the Ethereum community core members and A16z to consider. But for ordinary users to appreciate the charm of web3, all they need is a good user experience.
User Experience & Community Feedback
A crucial part of phone reviews is user experience, and the quality of web3 products also depends partially on community feedback. Therefore, we need a section that combines user experience and community feedback to explore the "naked" truth about these web3 phones beyond the fancy brochures.
Let's start with METAVERTU. With the setting of dual chips, METAVERTU can achieve completely isolated dual system operations. Users enter the new system homepage through the Meta Space app and engage in various on-chain interactions such as cloud storage (IPFS), Wallet, and browser. They can also download new dapps from the built-in dapp store. Overall, this experience is considered smooth. However, the current dapp store ecosystem is not yet complete, so many dapps' download sources actually redirect to external links. Additionally, Vertu's Life Account, which requires certain personal information binding to use the system, means that the so-called privacy and external data cannot be protected.
In the community feedback, I mainly refer to the evaluations from Amazon, Taobao (Vertu has been acquired by a Hong Kong company and focuses on the Chinese market) and comments from Twitter and Reddit. First of all, there is a premise that users who purchase such expensive phones are less inclined to complain about real pain points online, so I can only form a general perception. From the evaluations on e-commerce websites, most of the complaints are about the Vertu system itself, such as battery life, smoothness of Vertu OS, heating issues, etc., and only a few feedbacks on the use of web3 are positive. Overall, due to the novelty of web3 phones, users have a perceived bonus for new experiences and there are not too many complaints. As for the so-called security and privacy, perhaps no one really cares until problems arise. Today's phone market is no longer simply about hardware stacking, the competitiveness brought by software capabilities is increasing, and luxury web3 oddities like METAVERTU, despite having a bunch of software problems, still receive reasonable or even enhanced explanations from the web3 perspective due to hardware stacking such as dual chips. Nevertheless, no matter what, borrowing a phrase from a Reddit nickname, the people who will truly buy METAVERTU are either ultra-rich or ultra-stupid, and future web3 phones should not take METAVERTU as a milestone of development.
Then there's Solana Saga. So far, there have been many Chinese and English reviews on Solana Saga. Here, I will only do a simple summary and discuss some trending opinions. The first observation is that Solana Saga has an overall tone of "weak hardware, mixed reviews on web3 experience". The criticism about hardware mainly focuses on camera, lack of face recognition, rear fingerprint entry, screen display effects, battery life, chip quality, etc. Some users even commented that the actual value of the phone is probably around 3000 yuan. As for the web3 experience, the overall evaluation of UI and software is mixed, but it still manages to impress people due to the bonus of new experiences. The most praised product is Seed Vault, which essentially stores important information on a chip processor outside the Android system. Therefore, it can be understood as a trusted UI that combines software and hardware. After the storage is complete, transactions can be verified through a convenient fingerprint verification method.
And the most criticized aspect is the adaptability of the web3 software and the lack of ecosystem in the dapp store, just like METAVERU. In terms of adaptability, the current Solana Saga only supports Phantom, Solflare, and Ultimate, limiting the use of some other ecosystem dapps, including Bitcoin (of course, users can still use other dapps on the web or in the Android system). At the same time, different evaluation articles have mentioned problems such as wallet connection failures or crashes in different scenarios, as well as adaptability issues such as missing functionality in dapps and confusion in connecting Google accounts and web3 accounts. In this regard, the author believes that it is not the fault of Solana Saga, but Solana Saga's SMS is also promoting more developers to improve the web3 mobile ecosystem. In terms of the dapp store ecosystem, as of June 2023, the dapp store only provides 30 dapps, and most of them are non-mainstream dapps (as shown in Figure 6), including Ledger Live in the wallet download directory. Imagine the future web3 mobile scene: users holding a ledger wallet and Solana Saga, switching currencies and passwords between different devices, and ultimately completing an NFT purchase. Is this what Web3 is all about?
Figure 6
Finally, let's take a look at the relatively niche products, the Nothing Phone and HTC. The Nothing Phone is focused on design and UX, and it is already a unique presence in the mobile phone market with its cool appearance. In terms of web3, the unconventional Nothing Phone has chosen to collaborate with Polygon and develop some PolygonID, NFT widgets, and wallet components, and has airdropped a Black Dots NFT to the community users. These actions seem more like marketing activities rather than a complete web3 phone experience. However, this approach is actually a good attempt for phone manufacturers to enhance the attractiveness of the phone through some web3 components and promote marketing through NFT airdrops, without affecting the web2 experience of the phone itself. It can be said to be an embellishment.
On the other hand, the HTC Desire 22 pro is a relatively unsuccessful attempt. First of all, the web3 integration solution adopted by HTC Desire 22 pro is a self-built set of Metaverse components in the Android system, including VIVE wallet and VIVERSE. In fact, HTC not only built a wallet but also built a Metaverse platform, which has violated the original intention of decentralization in web3. From the experience of VIVE wallet, it is only equivalent to a low-end version of a general crypto wallet, supporting only 20+ ERC-20 tokens and without providing any way for further development. It is a regressive experience of web3. Furthermore, the positioning of the HTC Desire 22 pro as a budget phone is even more neglecting the necessary web3 phone features such as chip storage and security environment. It seems to be a product mainly targeted at the "Ultra-stupid only" group.
Table 1
Conclusion
web3 mobile phones are a huge and new topic. Although we cannot cover all the information in detail, we still want to make a small contribution to the future of web3 through constructive summaries. The core question we focus on is: What kind of web3 mobile phones are in line with future development trends? The following points can be summarized:
1. Web3 mobile phones need to move towards the integration of hardware and software. The hardware-based security environment is the inherent advantage of mobile phones, while the integration of hardware and software is the key to improving user experience. The existing web3 mobile phones have some strong hardware and some good UI, but the development direction of the next generation of web3 mobile phones will definitely be products with strong hardware and good UI. I believe that with careful polishing and improved understanding of web3, it is only a matter of time to create web3 mobile phones that are well-rounded in all aspects.
2. Web3 mobile phones need to move towards universality. The current web3 mobile phones have more or less closed ecosystem problems, and only with the universality of multi-chain interactions can the web3 mobile phone's dapp store and developer truly become rich. At the same time, the relationship between the mobile web3 ecosystem and the native mobile ecosystem needs to be considered. They can be parallel, additional, or overlapping relationships. Regardless of the direction, the universality of the mobile web3 ecosystem needs to be ensured in order to create user demand for web3 mobile phones.
3. Web3 mobile phones need to move towards popularization. High prices and niche brands are not choices for popularization. The popularity of mobile phones should not be limited by objective factors such as price and brand. And web3 mobile phones should not become bizarre and niche products (at least not in the future). JamboPhone is actually a good example. It starts from the most essential needs of low prices and good dapps, and iterates gradually from the bottom up.
