Why Businesses Choose WaaS Over Building Their Own Blockchain Wallet

[TL;DR]

• WaaS effectively resolves the challenges businesses face when developing their own wallets, including high development costs, difficulty in securing specialized talent, security risks, and complex regulatory compliance.
• With its proven security systems and global infrastructure, WaaS offers rapid market entry and scalable expansion, allowing companies to focus on core business and product innovation instead of wallet development.
• When adopting WaaS, it is crucial to evaluate the service provider’s technological capabilities, security measures, development environment, and cost structure to select the best fit for the business model.

1. The Limitations and Challenges of Developing an In-House Wallet

1.1 High Development and Maintenance Costs

The first major challenge businesses face when developing their own blockchain wallet is the unexpectedly high costs. Many companies initially perceive wallet development as a simple task, but in reality, it involves significantly more complexity.

Building a development team is a major hurdle. Unlike standard software, blockchain wallets require expertise in Ethereum’s EVM mechanics, Solidity security patterns, HD wallet key generation algorithms, and elliptic curve cryptography (ECDSA). While a company may not need a large number of such experts, their high salaries significantly increase labor costs.

Companies struggling to secure internal talent often turn to outsourcing, but this is not an easy alternative. Blockchain development firms demand high fees and require separate maintenance contracts post-development. Security issues, slow response times, and additional costs for source code management or technology transfers further complicate matters.

An even bigger challenge emerges after launch. The blockchain ecosystem evolves rapidly, making continuous updates essential. New mainnets, protocol upgrades, and emerging token standards demand ongoing maintenance costs. Additional expenses for security infrastructure, regular security audits, and 24/7 monitoring systems make self-hosted wallet solutions financially unsustainable for many businesses.

1.2 Difficulty in Managing Security Risks

Security is the most critical factor for wallets handling digital assets, as even minor security lapses can result in multimillion-dollar losses. Many high-profile wallet hacks in recent years have stemmed from basic security vulnerabilities or operational mistakes.

Private key management poses a fundamental risk. Securely generating, storing, and backing up keys, as well as designing key recovery mechanisms, are all complex challenges. Implementing multi-signature wallets further increases key management complexity.

Smart contract security is another major concern. Vulnerabilities such as reentrancy attacks, overflow/underflow exploits, and inefficient gas optimizations require rigorous testing, as once deployed, smart contracts cannot be easily modified. Emerging threats, such as flash loan attacks and MEV bot exploits, further complicate security management.

Network-level threats also abound. These include man-in-the-middle transaction tampering, RPC node manipulation, DNS hijacking, and DDoS attacks. Implementing cross-chain bridges adds another layer of security challenges.

To counter these risks, businesses must invest heavily in hiring security experts, building security frameworks, and conducting regular audits. However, such investments come at a steep cost and still do not guarantee absolute security.
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2. Why Companies Choose WaaS

2.1 Cost Efficiency

WaaS offers businesses a significant cost advantage by eliminating the need for large upfront investments in development, infrastructure, and security systems. It also spares businesses from the high salaries required to recruit blockchain developers and security experts.

WaaS typically operates on a subscription model, where costs scale with API calls or user count. This allows businesses to adopt a predictable cost structure and start with minimal expenses, gradually increasing their spending as their business grows.

WaaS providers leverage economies of scale, sharing their advanced infrastructure and security measures across multiple clients, making the service more cost-effective than self-built solutions. Furthermore, maintenance expenses such as system updates, security patches, and new blockchain protocol support are absorbed by the WaaS provider, reducing the ongoing operational burden.

Additionally, WaaS helps businesses reduce compliance costs. Most providers already meet regulatory requirements across various jurisdictions, enabling companies to remain compliant without additional investments.

2.2 Leveraging Proven Security Systems

A key advantage of WaaS is instant access to a thoroughly tested and battle-hardened security infrastructure. WaaS providers have years of operational experience, serving numerous clients while refining their security architecture. This minimizes risks associated with security misconfigurations and undiscovered vulnerabilities in self-built solutions.

From private key management to transaction signing and smart contract interactions, all security-critical components are provided in a tested, ready-to-use format. This allows businesses to bypass lengthy security validation phases and launch secure wallet services faster.

WaaS providers continuously monitor and respond to emerging security threats, ensuring all clients benefit from proactive security updates. This approach is far more efficient than individual businesses tackling security challenges independently.

2.3 Faster Market Entry and Flexible Scalability

WaaS enables businesses to significantly reduce time-to-market. In contrast to 6-12 months of development for in-house wallets, WaaS can launch services in just weeks via API integration. This speed allows businesses to seize market opportunities and gain competitive advantages quickly.

WaaS also provides flexible scalability, ensuring that businesses can handle rapid user growth without major infrastructure overhauls. When new blockchains, token standards, or features emerge, WaaS providers update their systems, ensuring immediate compatibility for clients.

This scalability is particularly beneficial for global expansion. Most WaaS providers already operate global infrastructures, allowing businesses to offer stable services worldwide without setting up their own international infrastructure.

2.4 Focus on Core Business

By adopting WaaS, companies can redirect resources from wallet infrastructure management to their core business. For companies not specializing in blockchain, WaaS enables them to focus on their unique value proposition rather than the complexities of wallet development.

For example, gaming companies can prioritize game content, NFT marketplaces can enhance trading experiences, and DeFi services can innovate financial products. This improves user experience and strengthens market differentiation.

Moreover, WaaS eliminates the need to continuously track blockchain advancements, as WaaS providers handle evolving technologies, allowing businesses to focus on product innovation and market growth.
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3. Considerations When Choosing a WaaS Provider

3.1 Evaluating Service Providers

Once a company decides to adopt WaaS, choosing the right provider is the most critical step. A poor selection can lead to service instability, security vulnerabilities, and unexpected costs. Companies should carefully assess the following key criteria:

First, examine the provider’s market track record and client portfolio. How many businesses currently use the service? Has the provider successfully handled high transaction volumes and large-scale user bases? Case studies and customer feedback can provide insights into real-world performance.
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Technical stability is another vital factor. Businesses should evaluate the completeness of the provider’s APIs, SDK support, documentation quality, and the efficiency of their issue resolution process. Additionally, it is essential to verify whether their disaster recovery time objectives (RTO) and data recovery point objectives (RPO) align with business requirements.

Lastly, assessing the provider’s financial stability and long-term sustainability is crucial. Since WaaS requires a long-term partnership, companies should check the provider’s financial backing, funding rounds, and industry reputation. Startups should pay extra attention to the financial viability of their chosen WaaS provider.
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3.2 Security and Trustworthiness

Security is the most important consideration when selecting a WaaS provider. Even if a provider offers feature-rich services, inadequate security can expose businesses to severe risks. Key security aspects to verify include:

• Private key generation and management: How does the provider ensure private keys are generated securely? Is client-side key management supported to prevent key exposure?
• Transaction signing and verification: Are transactions securely signed within the user’s device? Does the provider ensure transaction integrity throughout the process?
• Data encryption and storage: Does the provider encrypt sensitive data at rest and in transit? What measures are in place to prevent unauthorized access?
• Backup and recovery mechanisms: What recovery options are available for lost credentials? Does the provider offer solutions like social recovery or multi-party computation (MPC) to enhance security?
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3.3 Development Environment and Support

The ease of development and level of technical support are critical for seamless WaaS integration. A provider should offer:

• Well-documented APIs and SDKs: The API should include essential wallet functionalities such as transaction signing, balance retrieval, and token management. It should also support various programming languages and frameworks.
• Comprehensive technical support: Does the provider offer 24/7 customer support? Are there dedicated support channels for enterprise clients?
• Active developer community and resources: Are there developer forums, code samples, and ongoing updates? Some WaaS providers offer developer education programs and webinars, which can be highly beneficial.
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3.4 Cost Structure and Scalability

Companies should conduct a long-term cost analysis before selecting a WaaS provider. While initial costs may seem low, businesses need to consider how expenses will scale with increased usage.

Most WaaS providers charge based on:

• API call frequency
• Monthly active users (MAU)
• Transaction volume

Businesses should calculate estimated costs based on expected traffic and growth to avoid unexpected financial strain. Additionally, factors like gas fee subsidies, enterprise discounts, and volume-based pricing models should be examined.

Scalability-related costs also need to be reviewed. What are the additional charges when scaling to higher transaction volumes or integrating new blockchain networks? Does the provider offer flexible pricing for startups or early-stage projects?

Lastly, hidden costs should not be overlooked. Businesses must check whether additional fees apply for premium support, custom development, service-level agreements (SLAs), or early contract termination.
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4. Future Outlook for WaaS

4.1 Advancements in WaaS Technology

As blockchain technology evolves, the WaaS market is expected to introduce new innovations beyond standard wallet infrastructure. Some key advancements include:

• Omnichain wallet solutions: Demand for seamless cross-chain asset management is growing. Future WaaS platforms will allow users to manage assets across multiple blockchains through a single interface, eliminating interoperability barriers.
• MPC (Multi-Party Computation) advancements: Initially popular for institutional custody, MPC is now being adapted for consumer-friendly applications like social recovery and multi-signature authorization. Hybrid security models combining MPC with biometric authentication or hardware security modules (HSMs) are also emerging.
• Zero-Knowledge Proofs (ZKPs) for privacy: Privacy-focused wallets are expected to integrate ZKPs to enable confidential transactions while remaining compliant with regulations. This innovation will particularly appeal to institutional investors and enterprise clients.
• Decentralized Identity (DID) integration: Web3 identity solutions are gaining traction. WaaS providers may incorporate DIDs and Verifiable Credentials (VCs) into wallet services, transforming wallets into secure digital identity hubs. This could streamline regulatory compliance for KYC/AML processes and age verification.
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4.2 Competitive Landscape and Market Evolution

As the WaaS market matures, competition is shifting from basic wallet infrastructure to more specialized service offerings. There are three key trends shaping the market:

1. Comprehensive Financial Infrastructure Providers
   • Leading WaaS companies are expanding beyond wallets to offer integrated DeFi access, fiat on/off ramps, and payment processing. These firms leverage economies of scale to provide cost-effective, all-in-one solutions.
2. Niche-Focused WaaS Providers
   • Some providers are tailoring their services for specific industries, such as:
     • Gaming-focused wallets that support in-game assets and NFTs
     • NFT marketplaces with optimized wallet experiences
     • Institutional-grade custody solutions for large asset managers
   • By focusing on industry-specific needs, these providers deliver highly specialized features.
3. Regional WaaS Expansion
   • Local providers are emerging in Asia, Europe, and Latin America, adapting to unique regulatory environments and market demands. These companies compete by offering localized compliance solutions and language support.
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4.3 Regulatory Challenges and Compliance Trends

Regulatory developments are expected to play a major role in shaping the WaaS industry. Key trends include:

• Institutional custody regulations:
  • The SEC and CFTC are introducing new digital asset custody guidelines in the U.S.
  • The EU’s MiCA (Markets in Crypto-Assets) regulation is setting clear rules for custody services.
  • These changes will increase compliance burdens for WaaS providers but also open opportunities for regulated custody solutions.
• Non-Custodial Wallet Compliance:
  • Non-custodial wallets have traditionally been exempt from financial regulations. However, regulators are now considering expanding travel rule requirements to non-custodial transactions.
  • If implemented, WaaS providers will need to develop compliance-friendly solutions for decentralized wallets.

Given these changes, the WaaS market will likely become more regulated and institutionalized. Traditional financial firms may enter the space, leveraging WaaS providers to bridge the gap between crypto and legacy finance.
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5. Conclusion

As digital assets gain mainstream adoption, wallet services are no longer optional but essential for businesses entering the Web3 space. WaaS presents a cost-efficient, secure, and scalable alternative to in-house wallet development, allowing companies to focus on their core value propositions.

Given the rapid evolution of blockchain protocols, security threats, and regulations, self-managed wallets are becoming increasingly difficult to maintain. WaaS simplifies this complexity, enabling businesses to stay agile and competitive.

However, choosing the right WaaS provider is critical. Companies must carefully evaluate technology, security, pricing, and regulatory compliance to ensure long-term success. With the Web3 landscape becoming more competitive, WaaS will be an essential infrastructure for businesses looking to scale efficiently.

Ultimately, WaaS adoption will drive innovation across the blockchain ecosystem, fostering broader industry growth and financial inclusion in the decentralized economy.