Hidden Concerns Behind Web3 Super Unicorn Phantom

Author: zhou, ChainCatcher

The cryptocurrency wallet market in 2025 is witnessing a brutal battle for market share.

As the Meme coin craze subsided, high-frequency trading users began flocking to exchange-affiliated wallets with lower fees and stronger incentives. Faced with the closed ecosystem of exchanges, the survival space for independent players is being continuously squeezed.

Against this backdrop, Phantom's performance has attracted attention. At the beginning of the year, it raised $150 million, pushing its valuation to $3 billion. Since the fourth quarter, the project has launched its own stablecoin CASH, a prediction market platform, and a crypto debit card, attempting to find new growth points beyond its trading business.

With a valuation of 3 billion, it started with Solana and has expanded into multiple chains.

Looking back at Phantom's development history, the Solana ecosystem was just emerging in 2021, and the on-chain infrastructure was still incomplete. Traditional crypto wallets such as MetaMask mainly support the Ethereum ecosystem and lack compatibility with other chains, resulting in certain shortcomings in user experience.

Typically, when creating a wallet, users must manually write down a seed phrase of 12 or 24 words. Once the key is lost, the assets will be permanently unrecoverable, which many potential users find tedious and risky.

Phantom's three founders had previously worked at 0x Labs (an Ethereum DeFi infrastructure project) for many years. They seized this opportunity, choosing to start with Solana and create a wallet with a simple interface and intuitive operation. Its core innovation lies in optimizing the backup process: providing multiple simple methods such as email login, biometrics, and encrypted cloud backup to help replace manually copying seed phrases, significantly lowering the barrier to entry for beginners.

In April 2021, the Phantom browser extension was launched, and within months, its user base surpassed one million, becoming the preferred choice for Solana users. According to RootData, in July of the same year, Phantom, still in its testing phase, secured $9 million in Series A funding led by a16z; in January 2022, Paradigm led a $109 million Series B funding round, valuing the company at $1.2 billion; and by early 2025, Paradigm and Sequoia Capital again led a $150 million investment, pushing its valuation to $3 billion.

As it expanded, Phantom subsequently developed a multi-chain footprint, supporting multiple public chains including Ethereum, Polygon, Bitcoin, Base, and Sui, attempting to shed its "Solana-only wallet" label. However, Phantom currently does not natively support BNB Chain, and some users have previously complained that Phantom supports ETH but not BNB Chain, causing delays in receiving airdrops.

The joys and sorrows of 2025

2025 will be a year of extremes for Phantom: on one hand, it will see rapid breakthroughs in user base and product development, and on the other hand, its trading volume share will be significantly eroded by exchange-affiliated wallets.

Specifically, user growth is a standout feature. Phantom's monthly active users grew from 15 million at the beginning of the year to nearly 20 million by the end, ranking among the top in growth rate among independent wallets, especially with significant user growth in emerging markets such as India and Nigeria.

Meanwhile, Phantom's assets under management have exceeded $25 billion, with peak weekly earnings reaching $44 million. Its annual revenue once surpassed that of MetaMask, and Phantom's cumulative revenue is currently close to $570 million.

However, concerns about trading volume are equally prominent. According to data from Dune Analytics, Phantom's share of the embedded swap market across the entire network fell from nearly 10% at the beginning of the year to 2.3% in May, and further shrank to only 0.5% by the end of the year. Meanwhile, exchange-affiliated wallets have attracted a large number of high-frequency trading users with their fee advantages, rapid new product launches, and generous airdrop subsidies. Currently, Binance Wallet accounts for nearly 70%, and OKX (wallet + routing API) combined accounts for over 20%.

The market's bigger concern about Phantom lies in its deep dependence on Solana. Data shows that 97% of Phantom's swap transactions occur on Solana, while Solana's total value locked (TVL) has fallen by more than 34% from its peak of $13.22 billion on September 14th, currently standing at a six-month low of $8.67 billion. This has directly dragged down Phantom's core trading metrics.

Faced with these pressures, Phantom has bet its resources on new products in an attempt to open up a second growth curve.

At the product level, Phantom has launched a series of differentiated features:

• In July, it was integrated with Hyperliquid perpetual contracts, and within just 16 days of its launch, it drove approximately $1.8 billion in trading volume and generated nearly $930,000 in revenue through builder codes.
• In August, the company further solidified its coverage of segmented transaction needs by acquiring Solsniper, a meme coin monitoring tool, and SimpleHash, an NFT data platform.
• CASH, the native stablecoin launched at the end of September, quickly surpassed $100 million in supply, with a peak of over 160,000 transactions in November. Its core competitiveness lies in fee-free P2P transfers and accompanying lending rewards.
• The Phantom Cash debit card, which was first launched in the United States in December, allows users to make purchases directly using on-chain stablecoins and is compatible with mainstream mobile payment methods such as Apple Pay and Google Pay.
• On December 12, it was announced that a prediction market platform was launched, with the Kalshi prediction market integrated into the wallet, which is currently open to eligible users;
• At the same time, a free SDK, "Phantom Connect," was launched, allowing users to seamlessly access different web3 applications with the same account, further reducing the onboarding threshold for developers and users.

Among them, the most attention has been focused on debit cards and CASH stablecoins, which Phantom is attempting to use to solve the "last mile" problem of cryptocurrency consumption.

Phantom CEO Brandon Millman has publicly stated that in the short term, there will be no new token issuance, no IPO, and no self-built blockchain. All efforts will be focused on refining the product and making the wallet a financial tool that ordinary people can use. He believes that the ultimate winner in the wallet market will not be who has the largest transaction volume, but who brings crypto into everyday payments first.

However, the “last mile” of cryptocurrency payments is not an easy road, and Phantom is not the first independent non-custodial wallet to launch a debit card.

Prior to this, MetaMask partnered with Mastercard, Baanx, and CompoSecure in Q2 of 2025 to launch the MetaMask Card, which supports real-time conversion of cryptocurrency to fiat currency for spending and rollout in the EU, UK, Latin America, and other regions. MetaMask's card has wider coverage and launched earlier, but it is limited by the Ethereum and Linea networks, resulting in higher fees and slower speeds, leading to user feedback that it is "convenient but rarely used."

In contrast, Phantom's debit card entered the market later and is currently only available on a small scale in the United States; its actual adoption remains to be seen. Theoretically, leveraging Solana's low fees, it may be more competitive in fee-sensitive emerging markets, but it still lags significantly behind MetaMask Card in terms of global coverage and merchant acceptance.

In terms of stablecoins, if CASH cannot form a sustained network effect, it may follow in the footsteps of other wallet-native stablecoins that "opened high and closed low." For example, MetaMask's native stablecoin mUSD saw its supply quickly exceed $100 million after its launch, but it dropped to about $25 million in less than two months.

Conclusion

As the meme craze fades, transaction volume is no longer a reliable competitive advantage, and independent wallets must return to the essence of financial services.

Overall, Phantom integrates Hyperliquid perpetual contracts and Kalshi prediction markets on the trading side to retain high-end users; on the consumer side, it bets on CASH stablecoins and debit cards, attempting to bring on-chain assets into everyday life.

This dual-track approach of "trading derivatives + consumer payments" is Phantom's self-redemption under the pressure of the Matthew effect in the wallet industry. It is not only looking for a second growth curve, but also defining the endgame of independent wallets.