Fueled by the rise of DeFi and NFTs, the Ethereum network experienced a surge in activity in 2021. To navigate Ethereum-based DeFi, crypto games, or NFTs, users first need to connect their wallets. Here’s a guide to setting up MetaMask, the most popular Ethereum wallet, and how you can use it. Over the past two years, the Ethereum network has experienced a surge in activities fueled by the rise of decentralized finance, nonfungible tokens, and crypto gaming,
For newcomers to crypto, those words alone can seem intimidating. New users often struggle to pin down where they can get started amid a kaleidoscopic web of products.
Many retail investors have rushed to trade cryptocurrencies on centralized exchanges. But any functions beyond that, from minting an NFT on OpenSea to interacting with DeFi protocols, would require a crypto wallet in order to move forward.
Some crypto wallets are custodial, meaning that a third party secures users’ funds by controlling their private keys, which are passwords that give people access to their tokens. Other wallets are non-custodial, which means that users hold their own private keys.
Among them, MetaMask is the most popular non-custodial wallet for interacting with the Ethereum blockchain. Since 2020, it has increased its monthly active users 38x to about 21 million as of November 2021, according to its parent company ConsenSys. The firm said the wallet allows users to interact with 3,700 Web3 applications spanning NFT marketplaces, play-to-earn games, decentralized autonomous organizations, decentralized finance applications, and metaverse worlds.
Jacob Cantele, lead of operations at MetaMask, explained why people need a crypto wallet in a recent RealVision interview. His core argument was that a Web3 wallet represents not only users’ funds but also their identities in a way that allows them to control their personal data rather than giving it away to the tech companies.
“You can say to a site, you can see this, you can see that, you can interact with me,” he said. “And this way I can send and receive funds, or join a community, or participate in decentralized finance, or play a video game or dozens of other use cases in ways where I have a self-sovereign ownership over my identity.”
How to set up a MetaMask wallet With all that being said, below is a step-by-step guide to setting up your MetaMask wallet.
1. Download MetaMask as a Google Chrome extension.
MetaMask While MetaMask is also available as a mobile app, many find it more secure and convenient to set it up as a browser extension. Here we highlight Google Chrome but MetaMask is also compatible with Firefox and Brave browsers.
2. Set up a new account.
MetaMask 3. Keep your assigned secret recovery phrase safe by writing it down or storing it in a secure location.
MetaMask 4. Once you confirm your secret recovery phrase, you can send crypto to your MetaMask wallet.
MetaMask 5. Send crypto to MetaMask from trading platforms such as Coinbase or buy ether through Wyre or Transak depending on your location.
MetaMask 6. After funding your account with ether, you can start connecting your crypto wallet to Web3 applications. Here is an example of where users can connect their wallets to the metaverse world Decentraland.
Decentraland Author’s note: I bought and expensed $100 worth of ether through Wyre on MetaMask for this story. Before publication, I sold the ETH (by then worth $80) and received $57.94 after gas fees. The proceeds were donated to charity.
How to get started in Web 3.0Having a crypto wallet is only the first step to exploring the Web 3.0 space. To learn how to navigate the complex world, some analysts suggest that users start with simple things they can do on decentralized exchanges such as sending and receiving tokens.
“For example, you can send some USDT to a decentralized exchange, see how it works, and try to understand the process of how long it takes, what’s the block, the transaction hash, and the whole mechanics behind it,” Armando Aguilar, an independent crypto analyst and ex-Fundstrat digital strategist, said in an interview.
Interacting with decentralized exchanges will also teach users to track their transaction costs and plan their trading activities strategically.
“When you are sending at peak times and the network is really busy, your gas fees might be higher,” he said. “So it gets you thinking about when you should be trading or doing other things.”
To be sure, gas fees, which are costs to compensate for the computing energy required to process and validate transactions on the Ethereum blockchain, could be a barrier to new users looking to get down the crypto rabbit hole. Due to the explosion in Ethereum-based DeFi, NFT, and gaming activities, gas fees on the network have surged to a much higher level than those on other blockchains.
“If you were to send money to your MetaMask wallet and then you had to perform a swap on it, you are probably paying more than $50 in just transaction fees for doing a simple swap,” Tristan Frizza, core contributor to decentralized derivatives exchange Zeta Markets, said in an interview. “I think for a lot of retail investors who might just fund it with a couple hundred or thousand dollars, you suddenly spent quite a large amount of your money just in transaction fees, which is usually not super appealing to people.”
Frizza chose to build Zeta Markets on the Solana blockchain, which is known for supporting cheap, fast, and scalable transactions. He considers Solana more newcomer-friendly and has directed friends towards the Phantom wallet, which is a Solana-specific wallet.
“They were pretty amazed because you can just open it up, fund it and pay less than a cent or something in terms of transaction costs,” he said. “And then you can put that in a bunch of DeFi protocols or NFTs that are on Solana.”
Admittedly, the Solana blockchain is not perfect either, having experienced network issues three times within six months, but Frizza agrees that the optimal way to learn about crypto is to get hands-on.
“The best way for anyone to learn about DeFi is, rather than reading about it in an article somewhere, to actually go open up a wallet and start playing around with it,” he said.