<h1>The $3 Billion Valuation: Phantom’s Growth Anxiety and Cross-Chain Breakthrough</h1>

By: blockbeats|2025/12/20 18:30:04

Original Article Title: "The Hidden Risks Behind Web3 Super Unicorn Phantom"

Original Author: zhou, ChainCatcher

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

As the meme coin craze fades, high-frequency trading users are flocking in droves to wallet platforms with lower fees and stronger incentives. Faced with the closed-loop ecosystem of these trading platforms, the survival space for independent players is constantly shrinking.

Against this backdrop, Phantom's performance has attracted attention. Earlier this year, with a $1.5 billion funding round, it propelled its valuation to $30 billion. Since the fourth quarter, the project has successively launched its own stablecoin CASH, a prediction market platform, and a crypto debit card, attempting to find new growth points beyond the trading business.

$30 Billion Valuation, From Solana Roots to Multi-Chain Expansion

Looking back at Phantom's history, in 2021, the Solana ecosystem was just taking off, and on-chain infrastructure was still immature. Traditional crypto wallets like MetaMask mainly supported the Ethereum ecosystem, lacking compatibility with other chains, and having certain shortcomings in user experience.

Usually, when creating a wallet, users need to manually copy down a 12 or 24-word seed phrase. Once the key is lost, the assets will be permanently unrecoverable, making many potential users feel cumbersome and at high risk.

Phantom's three founders had previously worked at 0x Labs (an Ethereum DeFi infrastructure project) for many years. They seized this opportunity, chose to start from Solana, and built a wallet with a simple interface and intuitive operation. Their core innovation lies in optimizing the backup process: providing various simple methods such as email login, biometrics, and encrypted cloud backup to assist in replacing manual seed phrase copying, greatly reducing the entry barrier for newcomers.

In April 2021, the Phantom browser extension version was launched, and within a few months, the user base exceeded one million, becoming the preferred choice for Solana users. According to RootData, in July of the same year, while still in the testing stage, Phantom secured a $9 million Series A funding round led by a16z. In January 2022, Paradigm led a $109 million Series B round, reaching a valuation of $1.2 billion. Until early 2025, Paradigm and Andreessen Horowitz once again led a $1.5 billion funding round, pushing its valuation to $30 billion.

As its scale expanded, Phantom subsequently embarked on a multi-chain strategy, supporting multiple public chains including Ethereum, Polygon, Bitcoin, Base, and Sui, aiming to shed the label of being a "Solana-only wallet." However, currently Phantom still does not natively support the BNB Chain. Previously, some users criticized Phantom for supporting ETH but not BNB Chain, leading to missed airdrop opportunities.

The Joys and Concerns of 2025

2025 was a year of both joy and concern for Phantom: on one hand, there was rapid growth at the user and product level, and on the other hand, the transaction volume share was significantly eroded by exchange platform-associated wallets.

Specifically, user growth was a bright spot. Phantom's monthly active users increased from 15 million at the beginning of the year to nearly 20 million by the end of the year, with growth rates among independent wallets leading the way, especially with significant user growth in emerging markets like India and Nigeria.

At the same time, Phantom's custody asset size surpassed $25 billion, with a weekly income of $44 million at its peak. Its annual revenue once surpassed that of MetaMask, and currently, Phantom's cumulative revenue is approaching $570 million.

However, concerns on the transaction volume side were also highlighted. According to Dune Analytics data, Phantom's share in the overall on-chain swap market dropped from nearly 10% at the beginning of the year to 2.3% in May, further shrinking to only 0.5% by the end of the year. Exchange platform-associated wallets have attracted a large number of high-frequency traders with advantages in fees, speed of listing new tokens, and substantial airdrop subsidies. Currently, Binance Wallet accounts for nearly 70%, while OKX (wallet + routing API) combined make up over 20%.

The market's greater concern about Phantom lies in its deep integration with Solana. Data shows that 97% of Phantom's swap transactions occur on Solana, while Solana's Total Value Locked (TVL) has dropped over 34% from its peak of $13.22 billion on September 14th to the current six-month low of $8.67 billion. This has directly impacted Phantom's core trading metrics.

Facing these pressures, Phantom is investing resources in new products, attempting to open up a second growth curve.

On the product front, Phantom has introduced a series of differentiated features:

· In July, it integrated Hyperliquid perpetual contracts, driving approximately $1.8 billion in trading volume in just around 16 days, generating nearly $930,000 in revenue through a rebate mechanism (builder codes);

· In August, it further solidified coverage of niche trading needs by acquiring the meme coin monitoring tool Solsniper and the NFT data platform SimpleHash;

· By the end of September, the native stablecoin CASH was launched, with a supply quickly exceeding $100 million. In November, the transaction peak exceeded 160,000 transactions. Its core competitive advantage lies in fee-free P2P transfers and complementary lending rewards;

· In December, the Phantom Cash debit card was launched in the United States, enabling users to directly swipe for purchases using on-chain stablecoins and compatible with mainstream mobile payments such as Apple Pay and Google Pay;

· On December 12, the announcement of a prediction market platform was made, integrating the Kalshi prediction market into the wallet. It is currently open to eligible users;

· Simultaneously, a free SDK, "Phantom Connect," was launched, allowing users to seamlessly access different web3 applications with a single account, further reducing the onboarding threshold for developers and users.

Among these, the most noteworthy are the debit card and the CASH stablecoin. Phantom seeks to solve the "last mile" problem of cryptocurrency consumption through them.

Phantom CEO Brandon Millman has publicly stated that in the short term, there will be no coin issuance, IPO, or self-built chain. All efforts are focused on refining the product to make the wallet a financial tool that even ordinary people can use. He believes that the endgame of the wallet race is not about which one has the largest trading volume but about who first brings cryptocurrency into everyday payments.

However, the road to cryptocurrency payment's "last mile" is not easy. Phantom is not the first independent non-custodial wallet to launch a debit card.

Prior to this, in Q2 of 2025, MetaMask had already partnered with Mastercard, Baanx, and CompoSecure to launch the MetaMask Card, supporting real-time conversion of cryptocurrency for fiat currency consumption. It was rolled out in various regions such as the EU, the UK, and Latin America. MetaMask's card has broader coverage, an earlier launch, but is limited by the Ethereum and Linea networks, with higher fees and slower speeds. Users have provided feedback that it is "convenient but used infrequently."

On the other hand, Phantom's debit card started relatively late, currently only being rolled out in a small area of the United States, and its actual usage still needs to be observed. In theory, leveraging Solana's low-fee advantage, it may be more competitive in fee-sensitive emerging markets. However, there is still a significant gap compared to the MetaMask Card in terms of global coverage and merchant acceptance.

As for stablecoins, if CASH cannot establish a sustainable network effect, it may also follow the footsteps of other wallet-native stablecoins, such as MetaMask's native stablecoin mUSD. After its launch, the supply quickly exceeded $100 million, but in less than two months, it dropped to around $25 million.

Conclusion

With the fading of the meme trend, trading volume is no longer a reliable moat, and independent wallets must return to the essence of financial services.

Overall, Phantom integrates Hyperliquid perpetual contracts and Kalshi prediction markets on the transaction side to retain advanced users. On the consumption side, it bets on the CASH stablecoin and debit card, attempting to make on-chain assets truly part of daily life.

This dual-track driving force of "transaction derivatives + consumer payments" is Phantom's self-redemption in the wallet race under the squeeze of the Matthew Effect. It is not only seeking a second growth curve but also defining the endgame of an independent wallet.

Original Article Link

-- Price

The X Chat will be available for download on the App Store this Friday. The media has already covered the feature list, including self-destructing messages, screenshot prevention, 481-person group chats, Grok integration, and registration without a phone number, positioning it as the "Western WeChat." However, there are three questions that have hardly been addressed in any reports.

There is a sentence on X's official help page that is still hanging there: "If malicious insiders or X itself cause encrypted conversations to be exposed through legal processes, both the sender and receiver will be completely unaware."

Question One: Is this encryption the same as Signal's encryption?

No. The difference lies in where the keys are stored.

In Signal's end-to-end encryption, the keys never leave your device. X, the court, or any external party does not hold your keys. Signal's servers have nothing to decrypt your messages; even if they were subpoenaed, they could only provide registration timestamps and last connection times, as evidenced by past subpoena records.

X Chat uses the Juicebox protocol. This solution divides the key into three parts, each stored on three servers operated by X. When recovering the key with a PIN code, the system retrieves these three shards from X's servers and recombines them. No matter how complex the PIN code is, X is the actual custodian of the key, not the user.

This is the technical background of the "help page sentence": because the key is on X's servers, X has the ability to respond to legal processes without the user's knowledge. Signal does not have this capability, not because of policy, but because it simply does not have the key.

The following illustration compares the security mechanisms of Signal, WhatsApp, Telegram, and X Chat along six dimensions. X Chat is the only one of the four where the platform holds the key and the only one without Forward Secrecy.

The significance of Forward Secrecy is that even if a key is compromised at a certain point in time, historical messages cannot be decrypted because each message has a unique key. Signal's Double Ratchet protocol automatically updates the key after each message, a mechanism lacking in X Chat.

After analyzing the X Chat architecture in June 2025, Johns Hopkins University cryptology professor Matthew Green commented, "If we judge XChat as an end-to-end encryption scheme, this seems like a pretty game-over type of vulnerability." He later added, "I would not trust this any more than I trust current unencrypted DMs."

From a September 2025 TechCrunch report to being live in April 2026, this architecture saw no changes.

In a February 9, 2026 tweet, Musk pledged to undergo rigorous security tests of X Chat before its launch on X Chat and to open source all the code.

As of the April 17 launch date, no independent third-party audit has been completed, there is no official code repository on GitHub, the App Store's privacy label reveals X Chat collects five or more categories of data including location, contact info, and search history, directly contradicting the marketing claim of "No Ads, No Trackers."

Issue 2: Does Grok know what you're messaging in private?

Not continuous monitoring, but a clear access point.

For every message on X Chat, users can long-press and select "Ask Grok." When this button is clicked, the message is delivered to Grok in plaintext, transitioning from encrypted to unencrypted at this stage.

This design is not a vulnerability but a feature. However, X Chat's privacy policy does not state whether this plaintext data will be used for Grok's model training or if Grok will store this conversation content. By actively clicking "Ask Grok," users are voluntarily removing the encryption protection of that message.

There is also a structural issue: How quickly will this button shift from an "optional feature" to a "default habit"? The higher the quality of Grok's replies, the more frequently users will rely on it, leading to an increase in the proportion of messages flowing out of encryption protection. The actual encryption strength of X Chat, in the long run, depends not only on the design of the Juicebox protocol but also on the frequency of user clicks on "Ask Grok."

Issue 3: Why is there no Android version?

X Chat's initial release only supports iOS, with the Android version simply stating "coming soon" without a timeline.

In the global smartphone market, Android holds about 73%, while iOS holds about 27% (IDC/Statista, 2025). Of WhatsApp's 3.14 billion monthly active users, 73% are on Android (according to Demand Sage). In India, WhatsApp covers 854 million users, with over 95% Android penetration. In Brazil, there are 148 million users, with 81% on Android, and in Indonesia, there are 112 million users, with 87% on Android.

WhatsApp's dominance in the global communication market is built on Android. Signal, with a monthly active user base of around 85 million, also relies mainly on privacy-conscious users in Android-dominant countries.

X Chat circumvented this battlefield, with two possible interpretations. One is technical debt; X Chat is built with Rust, and achieving cross-platform support is not easy, so prioritizing iOS may be an engineering constraint. The other is a strategic choice; with iOS holding a market share of nearly 55% in the U.S., X's core user base being in the U.S., prioritizing iOS means focusing on their core user base rather than engaging in direct competition with Android-dominated emerging markets and WhatsApp.

These two interpretations are not mutually exclusive, leading to the same result: X Chat's debut saw it willingly forfeit 73% of the global smartphone user base.

Elon Musk's "Super App"

This matter has been described by some: X Chat, along with X Money and Grok, forms a trifecta creating a closed-loop data system parallel to the existing infrastructure, similar in concept to the WeChat ecosystem. This assessment is not new, but with X Chat's launch, it's worth revisiting the schematic.

X Chat generates communication metadata, including information on who is talking to whom, for how long, and how frequently. This data flows into X's identity system. Part of the message content goes through the Ask Grok feature and enters Grok's processing chain. Financial transactions are handled by X Money: external public testing was completed in March, opening to the public in April, enabling fiat peer-to-peer transfers via Visa Direct. A senior Fireblocks executive confirmed plans for cryptocurrency payments to go live by the end of the year, holding money transmitter licenses in over 40 U.S. states currently.

Every WeChat feature operates within China's regulatory framework. Musk's system operates within Western regulatory frameworks, but he also serves as the head of the Department of Government Efficiency (DOGE). This is not a WeChat replica; it is a reenactment of the same logic under different political conditions.

The difference is that WeChat has never explicitly claimed to be "end-to-end encrypted" on its main interface, whereas X Chat does. "End-to-end encryption" in user perception means that no one, not even the platform, can see your messages. X Chat's architectural design does not meet this user expectation, but it uses this term.

X Chat consolidates the three data lines of "who this person is, who they are talking to, and where their money comes from and goes to" in one company's hands.

The help page sentence has never been just technical instructions.

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