Pantera Partners Interpret Dynamic: A Wallet-Based Authentication and Authorization Tool

Written by: Paul Veradittakit, Partner at Pantera Capital

Compiled by: Amber, Foresight News

With the rapid rise of DeFi and NFTs, the decentralized application (dApp) ecosystem has seen explosive growth in recent years. Since dApps interact directly with smart contracts on the blockchain, crypto wallets are often used to verify operations within these dApps. Wallets are also becoming a symbol of identity on the chain, allowing users not only to log into dApps through their wallets but also to interact with Web2 applications like Instagram and Twitter via Web3 social networks, or to verify asset ownership and gain access to certain content, among other uses. Wallets are becoming the "ID cards" of the Web3 world.

The importance of wallets in the Web3 ecosystem has made this sector one of the most crowded, with notable competitors including Metamask, Trust Wallet, Phantom, and Coinbase Wallet. Since each blockchain may use different elliptic curves, different blockchains often require different wallets to establish identity and interact, further increasing the market demand for wallet applications. Currently, mainstream wallet applications can be categorized into several types: browser extensions, browsers (like Brave and Opera, which have built-in wallet functions), smart contracts, mobile applications, and desktop wallets.

However, this has led to challenges, as the abundance of wallets means that dApp developers need to spend considerable effort supporting different types of wallet logins. Developers must integrate as many mainstream wallets as possible to attract more traffic and provide convenience for users. For early-stage startup teams, this consumption of time and energy can significantly impact the development of core products.

Dynamic addresses this issue by providing a simple identity verification SDK and toolkit, allowing application and dApp developers to more easily integrate multiple wallets across chains and quickly enable wallet-based identity features like NFT gating.

What is Dynamic

Dynamic is a wallet login-based authentication and authorization toolkit. It allows developers to create a "future-proof" unified multi-chain wallet authentication process.

The Dynamic toolkit consists of three main components: SDK, developer dashboard, and a series of APIs (allowing customization). Once developers embed the Dynamic wallet SDK into their websites or applications, they can access the Dynamic dashboard for configuration.

The dashboard provided by Dynamic allows developers to configure enabled blockchains, capture user information during registration, create whitelists for beta testing and NFT distribution, and many other identity-related features. Orchestrating identity verification on Dynamic requires no coding.

For example, Popartcats.xyz uses authentication and NFT gating features to create restricted access information delivery for its clients, while Llama uses Dynamic to create a member-only login identity system for its website.

Dynamic Developer Dashboard

The combination of the SDK and no-code dashboard allows developers not only to have a unified multi-chain wallet integration framework but also to simplify user management and registration processes. The SDK can interact directly with the code of the dApp's frontend.

Thanks to the SDK dashboard structure, developers can also get up to speed more quickly after new features are launched. Dynamic's latest multi-wallet feature allows end users to combine multiple wallets within the dApp into a single user identity. Using the dashboard, developers can "turn on" this feature in their Dynamic implementation without redeploying the integration.

Team

Dynamic was founded by Itai Turbahn and Yoni Goldberg, two Israelis who met 15 years ago at MIT. Itai previously worked in product management for 7 years and was a consultant at the Boston Consulting Group. He holds an MBA from Harvard Business School and a bachelor's degree in Electrical Engineering and Computer Science and Economics from MIT. Yoni is the Vice President of Engineering at companies like AQR and Even Financial and was the CTO at Gilt Groupe. He previously conducted research at Google and holds a bachelor's degree in Computer Science and a master's degree in Engineering from MIT.

Conclusion

Dynamic has completed a $7.5 million funding round led by a16z and has begun collaborating with alpha clients such as Llama, Popartcats, Handstamp, Newton, and ProofOfMerge to build its first version. This version is currently in closed testing and is expected to launch a public beta soon.

The problem that Dynamic addresses is often overlooked by the market, but with the rapid development of crypto wallet infrastructure and the increasing complexity of how websites and applications interact with and manage users through wallets, this market pain point will be rapidly amplified. As more teams become aware of this issue, everything that Dynamic is doing is becoming crucial.