Over the past decade, decentralized finance (DeFi) has emerged as a blockchain-based alternative to traditional financial systems—promising open access, automation, and the removal of institutional middlemen. But with this shift comes a profound rethinking of what trust, security, and financial autonomy actually mean. DeFi challenges the idea that banks or regulators are the default stewards of money. In their place, users are increasingly asked to trust the code that runs decentralized protocols.
At the center of this shift are smart wallets—a new generation of digital wallets that automate how users store and control cryptocurrencies. Unlike traditional wallets that require manually safeguarding private keys, smart wallets embed features like programmable spending rules, recovery options, and account abstraction. On the surface, these tools seem to reduce friction and broaden access. But beneath that promise lies a more complex story—one that echoes long-standing questions from anthropology and science and technology studies (STS): Who builds these systems? Whose assumptions get coded in? And who gets excluded in the name of “user-friendliness” (Bowker and Star 2000)?
This article explores how smart wallets not only reflect changing technological norms but also reveal deeper social and political dynamics. Drawing on themes of delegated trust, infrastructure politics, and usability, it asks what kinds of financial agency are being enabled—or foreclosed—as DeFi tools move from niche platforms to mainstream adoption.
Image of two people exchanging money and bitcoin (Photo by Kanchanara on Unsplash)
Understanding Smart Wallets: Beyond Private Keys
For example, one can program a smart wallet to automatically demand multiple device confirmations for big transactions or to cap spending at particular times of day. A crypto wallet typically stores private keys and facilitates sending and receiving assets—but smart wallets go a step further by using programmable smart contracts to automate actions and enforce custom rules. Such flexibility—once unthinkable in traditional crypto custody, where individuals either stored their own assets or depended on a company to do so—adds a new level of personalization and security.
This shift turns smart wallets into new gatekeepers of trust. In traditional finance, people rely on banks, notaries, or regulators to safeguard money and enforce rules. But in decentralized finance, smart wallets begin to take on those roles. Instead of trusting a person or institution, users are now trusting the code that runs the wallet. This means decisions—like whether a transaction goes through or how an account can be recovered—are determined not by a human, but by automated rules written in software. In this way, smart wallets quietly replace many of the functions that used to be handled by human-run institutions, making code itself the new source of trust.
The Role of Account Abstraction in Wallet Evolution
The rise of account abstraction has transformed crypto wallets, enabling advanced features like automation, custom rules, and smart wallet functionality. In earlier blockchain systems like Ethereum, there were two types of accounts: one controlled by a person using a private key, and another run by code—called a smart contract. These two types were kept separate. Account abstraction removes that divide, allowing wallets to behave like smart contracts themselves (Vitalik 2021). In simple terms, wallets are no longer just digital containers—they can now act like mini-programs that users or developers can customize.
This technology gives people more flexibility in how they manage their digital assets. For example, someone could program their wallet to ask for a second approval from another device for big transactions, or limit how much can be spent in a day. Others might set it up so trusted friends can help recover access if they get locked out—a feature known as social recovery. Wallets can also include tools like session keys (which allow temporary access for certain apps), or time locks that delay a transaction until a specific time has passed.
These new features give users much more control than earlier versions of the crypto wallets ever allowed. Instead of relying on rigid rules set by the system, individuals can now adjust how their wallets behave to suit their own habits, preferences, or risk tolerance.
But this added control comes with a trade-off: greater complexity. In the early days of crypto, around 2009–2015, the rules were simple—if you had the private key, you controlled the funds. If you lost it, the money was gone. With smart wallets built on account abstraction, control is handed over to software. Behind the scenes, the wallet follows instructions written in code. If that code has a bug, hasn’t been updated, or is poorly written, it can expose your assets to risks—even if you don’t realize it. This creates new layers of trust: most users now depend on developers, auditors, and the transparency of the codebase—raising concerns about who is accountable if something goes wrong.
So, while account abstraction makes crypto more user-friendly and powerful, it also raises new questions about trust, responsibility, and transparency. You’re not just trusting yourself anymore—you’re trusting the system, the code, and the people who designed it.
Delegated Trust and the Design of Security
With decentralized finance (DeFi), trust no longer resides within traditional institutions such as banks or their regulators. Instead, it shifts to the design of socio-technical systems—particularly the decisions that go into constructing wallets, interfaces, and protocols. This shift has been referred to as “delegated trust”: rather than trusting a person or organization, users now place trust in technological systems and software to manage complexity on their behalf (Pasquale 2015). But this also means relying on processes they may not fully understand—such as source code, interface logic, or automated decision-making rules.
Smart wallets make this shift especially visible. They automate previously technical tasks like securing private keys or verifying transactions, making crypto more accessible. Yet this convenience shifts the responsibility for security from the user to the people building the systems—developers, designers, and auditors. A user might rely on auto-recovery features without knowing how they work or who maintains them. If the system fails, users bear the consequences, often without clarity on where the fault lies—whether it’s a software bug, unclear documentation, or design flaws.
This blurs accountability. If a contract update causes a critical bug, or if fees are miscalculated, who is responsible? The user, for clicking “I agree” without full comprehension? The developer, for writing flawed code? Or is it a result of the system’s complexity itself? In many cases, users perform consent—signing off on terms they can’t meaningfully evaluate, while risk remains hidden under layers of abstraction.
Trust in DeFi is not eliminated—it is diffused across an opaque stack of codebases, user flows, policies, and third-party integrations. And within these systems, the choices made by designers and developers often reflect unspoken assumptions: about who the user is, what knowledge they have, and how they should interact with the interface. This opens questions around exclusion and accessibility—how aesthetics, language, or workflow design may unintentionally favor some users while excluding others. The result is a form of delegated trust that, while decentralized, still carries inherited risks—just redistributed across different layers of design, authority, and code.
The Politics of Wallet Usability
For instance, smart wallets that enable social recovery assume the user has a stable, trustworthy social network to assist with key management. Yet many populations—migrants, political dissidents, users in conflict zones, or individuals experiencing isolation—may not have access to such reliable social connections. Likewise, wallets that encourage backup via cloud storage often presume unfailing internet access, technical literacy, and comfort with centralized service platforms—assumptions that don’t hold true globally. A real-world example: users in rural areas with intermittent connectivity may be unable to complete identity verifications or recovery flows, locking them out of their assets.
Thus, while smart wallets aim to lower barriers to DeFi participation, they can also introduce new exclusions. Their designs often implicitly cater to the digitally literate, the socially networked, and the infrastructurally privileged—leaving others outside the imagined user base.
Smart wallets built on account abstraction illuminate a broader tension: every gain in user-friendliness risks embedding hidden exclusions and trade-offs. By rendering technical complexity invisible, these systems can also render invisible the structural barriers certain users face. For example, a wallet that allows gasless transactions via a sponsored relayer may assume the availability of such services—yet such infrastructure often privileges popular blockchains or regions, leaving users on emerging chains unsupported.
Redefining Financial Agency in a Post-Exchange Era
As centralized exchanges lose their dominance and users shift toward self-custody tools, smart wallets represent more than a technical upgrade—they actively reshape how financial autonomy is imagined and enacted. Their security models, interfaces, and underlying assumptions all reflect cultural values and political decisions. These design choices shape not just access to finance, but how inclusion is defined in the first place.
While smart wallets promise greater individual control, they also shift responsibility and risk from institutions to users—and from people to code. This redistribution is not neutral. It reflects the priorities of developers, designers, and dominant user imaginaries. For instance, flows designed around seamless biometric login or one-click recovery may work well for some, but fail users who opt out of surveillance-based tools or lack access to modern hardware.
As smart wallets become the default gateway to DeFi, their role in reinforcing—or resisting—existing forms of exclusion demands closer scrutiny. How are interface decisions made? Whose expectations are embedded in “intuitive” design? And what populations are made invisible by assumptions about literacy, bandwidth, or device ownership?
If decentralization is not the end of trust but its reengineering, then the central question becomes: whose code are we being asked to trust—and whose futures does that code serve, support, or leave behind?
This post was curated by Contributing Editor Nishanth Kunnukattil Shaji
References
Bowker, Geoffrey C., and Susan Leigh Star. 2000. Sorting Things out: Classification and Its Consequences. MIT press.
Pasquale, Frank. 2015. The Black Box Society: The Secret Algorithms That Control Money and Information. Harvard University Press.
Vitalik, Buterin. 2021. “Abstraction, and the Future of Ethereum Accounts.” Ethereum Foundation Blog (blog). 2021. https://ethereum.org/en/developers/docs/accounts/#account-abstraction.
