Your crypto wallets are safeguarded with a seed phrase or public key that keeps unauthorized persons from accessing your funds. However, if you misplace your seed phrase, you automatically lose access to your crypto wallet and might never recover your crypto funds.

How do you solve the issue of losing access to your wallet if you can't find its public key? This is where the crypto social recovery wallet comes in.

What Is a Social Recovery Wallet, and How Does It Work?

Vitalik Buterin, the Ethereum blockchain's founder, first introduced the idea of social recovery wallets. He aimed to help crypto investors overcome the risk of potential loss and safeguard their investments from theft. Social account recovery is now made possible via an Ethereum standard called ERC-4337.

A crypto social recovery wallet is a wallet recovery process that eliminates the need for a seed phrase while guaranteeing the process is fully noncustodial. The wallet allows you to add trusted addresses to your cryptocurrency wallet. It could be wallet addresses belonging to family members or close friends—people you can trust to retrieve your funds. If you lose your public key, the trusted addresses (guardians) will vote to change the public key or help you regain access to your wallet.

So, you give each guardian a part of your wallet private key, creating a shared secret. When needed, each guardian submits the portion of the public key you gave them until the key is complete, after which you can recover the wallet. You can also remove or add guardians using your public key if you suspect foul play.

How to Set Up a Crypto Social Recovery Wallet

Setting up a crypto social recovery wallet is easy, as two well-known wallet providers currently have integrated social recovery—Loopring wallet and Argent wallet.

How to Set Up and Use the Loopring Social Recovery Wallet

The Loopring wallet is a smart contract wallet that leverages the power of zkRollup technology to enable fast, cheap, and scalable transactions on Ethereum. This wallet stands out from other options with its social recovery feature, which allows you to regain access to your funds even if you lose your phone or forget your recovery phrase.

Download: Loopring Wallet for iOS | Android (free)

So, here's how to set up and use the Loopring smart wallet:

  1. Download the Loopring smart wallet app from Google Play Store or App Store, and launch the app.
  2. Create a new wallet by tapping the Create Wallet button on the app's home page.
  3. Enter your email or tap on Create via Mobile Phone in the upper right corner.
  4. Then, tap on Send Code to send a verification code. You can enter an invitation code if you have one and proceed from there.
  5. Otherwise, enter the verification code sent to your email or phone, and set and confirm your account passcode.
  6. At this point, you have successfully created an Ethereum Loopring wallet. However, you can choose from two wallet accounts: an Ethereum L1 account (Ethereum L1 + Loopring L2) or an L2 Loopring account. Read the details of the available options to determine what's best for you.
  7. You'll also need to add assets (either in ETH, LTC, USDT, USDC, or DAI) to either account to activate them before you can use and add guardians to the wallets.
  8. To add guardians to your activated wallet, tap the Settings icon (cog wheel) in the top right corner and then Manage Current Wallet.
  9. Next, tap on Manage Guardians, and follow the prompts to add a guardian(s). Remember, you must activate an L1 account to add a Guardian.

How to Set Up and Use the Argent Social Recovery Wallet

Argent is a noncustodial wallet that uses smart contracts to enable features such as daily limits, allowed contacts, and social recovery. Like the Loopring wallet, it will enable you to restore access to your wallet if you lose your device or forget your password by using a trusted network of people.

Download: Argent Wallet for iOS | Android | Chrome | Mozilla Firefox (free)

Here's how to set up and use the Argent wallet:

  1. Download the Argent app from App Store, Google Play Store, or extension store for Chrome or Mozilla Firefox. After downloading, tap on Create a New Wallet.
  2. Enter a username, which others can use to identify and send you money, after which you must accept Argent's terms and conditions. Your username will also be your ENS domain, which means you can receive crypto payments by simply sharing your username instead of a long and complex address.
  3. Enter and verify your email address to be notified of any important or suspicious activity on your wallet.
  4. Enter and verify your phone number before creating a passcode. Better still, you can Enable the use of fingerprint to log in.
  5. You have now successfully created an Argent wallet. You can choose to secure your Argent wallet by granting it access to store your encrypted key in Google Drive to recover your wallet easily if you lose your phone.
  6. To activate your newly-created wallet, tap Top up your account now.
  7. You must deposit some crypto in ETH, which comes with a network fee. You can also pay with DAI, USDC, or USDT. Alternatively, you can fund your Argent vault account by buying via card or bank transfer, transferring funds from Coinbase, or receiving crypto from a wallet or exchange.
  8. On the assets page, tap the Security icon in the bottom right of your screen to set up your guardians.
  9. Tap on Guardians.
  10. Swipe through the briefings you see, and then tap on Get Started.
  11. There are two options to navigate here: Who protects me and Who I protect (where you can see the people you are a guardian to).
  12. To add guardians to protect you, tap Add Guardians and follow the prompts. Note: you need to activate your vault before you can add a guardian

Pros and Cons of a Crypto Social Recovery Wallet

In general, crypto social recovery wallets provide several benefits over regular wallets but also have downsides. So, here are some pros and cons.

The Advantages of a Crypto Social Recovery Wallet

With a crypto social recovery wallet, your wallet isn't protected by a single weak link.

  1. Enhanced security: The risk of losing funds due to hacking, phishing, malware, or device theft reduces with a crypto social recovery wallet since you don't store your private keys or backup phrases on vulnerable platforms or devices.
  2. Easy to use: Before using a crypto social recovery wallet, you don't need to be tech-savvy or familiar with cryptography. You also don't have to memorize or write down complex passwords or phrases. Simply ask your trusted guardians for help when accessing your wallet.
  3. Greater control: You have more control over your assets since you don't have to entrust them with a third-party service or middleman; you can pick who you trust and how many contacts you need to authorize a recovery request. You can also revoke or change your guardians at any time.

Crypto Social Recovery Wallet Disadvantages

Despite its many pros, some things might make you hesitate to get a crypto social recovery wallet.

  1. Dependency on others: You tend to rely on the availability and cooperation of your guardians when using a social recovery wallet. You must trust that your guardians will not lose their keys, devices, or access to the recovery platform. Furthermore, you need the conviction that they won't work with each other or fraudulent people to steal your money.
  2. Privacy trade-off: Yomustto disclose your wallet address and balance to your guardians, who might compromise your anonymity and financial privacy.

Protect Your Assets With Crypto Social Recovery Wallets

With public keys being an essential and risky part of preserving investments, moving to a social recovery wallet offers better security.

Although social recovery wallets have shortcomings, with broader adoption in the crypto industry around the corner, the concept is expected to be further developed and improved.