How Does Rainbow (Wallet) Work And Make Money?

  • Rainbow is a fun, simple, and secure Ethereum wallet that helps users manage their assets. The platform was founded by Christian Baroni, Mike Demarais, and Jin Chung in 2019 to make Ethereum technologies more accessible to non-savvy consumers.
  • Rainbow onboards casual users into Web3 in much the same way that Robinhood onboards casual investors into traditional equities. Users can pay for ETH using Apple Pay infrastructure and can connect to other wallets such as MetaMask. Unlike some cryptocurrency exchanges, Rainbow does not hold assets on the behalf of its users. 
  • Rainbow revenue generation is undisclosed, though it is likely the platform earns a commission from third-party cryptocurrency exchanges or other infrastructure providers. With a core focus on NFTs, the company may also take a percentage of NFT minting fees as a commission.

Origin Story

Rainbow is a fun, simple, and secure Ethereum wallet that helps users manage their assets. The platform was founded by Christian Baroni, Mike Demarais, and Jin Chung in 2019.

The trio came together with a mission to make navigating Ethereum technologies simpler for the average consumer. Baroni used to contract design for Microsoft while he was at high school and then took a job at Stripe at the age of 17. Demarais immersed himself in computer design and website creation from a young age, dropping out of college to work as an engineer at several user-focused start-ups. Chung, on the other hand, was a relative newcomer to the industry. She majored in computer science engineering and would later write trading tools for equity derivatives and algorithms for eBay’s recommendation systems.

What resulted from this experience was Rainbow, which would become the world’s most well-known Ethereum mobile interfaces. The company founders leveraged their unique backgrounds to create narrowly-tailored UI/UX to both on-ramp non-crypto users and facilitate new Web3 behaviors. 

Rainbow is also the wallet of choice for NFT collectors, with the company envisioning a future world where friends can follow each other across the Metaverse. More specifically, users will be able to showcase their on-chain history, on-chain collectibles, and on-chain access to others.

How does Rainbow work?

Rainbow onboards casual users into Web3 in much the same way that Robinhood onboards casual investors into traditional equities. 

Users can purchase ETH or other ERC-20 tokens using Apple Pay infrastructure, with the process of on-ramping casual users into the Ethereum ecosystem taking no more than thirty seconds. 

Unlike crypto exchanges such as Coinbase, Rainbow does not hold assets on behalf of its users.

Rainbow also enables users to:

  • Send, receive, and trade assets from their wallet without going through a financial institution.
  • Trade on the leading decentralized exchange Uniswap.
  • Connect to dApps and websites such as Yearn, Aave, and Compound.
  • Purchase and display crypto art from sites such as Foundation, Zora, and OpenSea. 
  • Showcase their favorite digital art on social media by sharing a Rainbow profile.

Importantly, users can also use an existing Ethereum wallet such as MetaMask with Rainbow.

How does Rainbow make money?

Like many cryptocurrency wallets, Rainbow charges transaction fees whenever a user performs actions like swapping currencies, sending assets, and minting NFTs.

Though exact revenue generation methods are undisclosed, many similar wallets earn commissions from a range of third-party services incorporated into the platform. These may include cryptocurrency exchanges such as Changelly and fiat infrastructure providers such as Simplex. The company may also charge a swap fee for users of Uniswap.

Rainbow also charges gas fees whenever a change is made to the Ethereum blockchain. However, it should be remembered that the company is simply passing these fees to the user and does not profit from them.

The company has plans to introduce additional features to reduce gas fees by making the Ethereum ecosystem more efficient. 

Connected Business Concepts

According to Joel Monegro, a former analyst at USV (a venture capital firm) the blockchain implies value creation in its protocols. Where the web has allowed the value to be captured at the applications layer (take Facebook, Twitter, Google, and many others). In a Blockchain Economy, this value might be captured by the protocols at the base of the blockchain (for instance Bitcoin and Ethereum). However, according to blockchain investor Paivinen due to ease of forking, incentives to compete and improved interoperability and interchangeability also in a blockchain-based economy, protocols might get thinner. Although the marginal value of scale might be lower compared to a web-based economy, where massive scale created an economic advantage. The success of the Blockchain will depend on its commercial viability!
A Proof of Stake (PoS) is a form of consensus algorithm used to achieve agreement across a distributed network. As such it is, together with Proof of Work, among the key consensus algorithms for Blockchain protocols (like the Ethereum’s Casper protocol). Proof of Stake has the advantage of security, reduced risk of centralization, and energy efficiency.
A Proof of Work is a form of consensus algorithm used to achieve agreement across a distributed network. In a Proof of Work, miners compete to complete transactions on the network, by commuting hard mathematical problems (i.e. hashes functions) and as a result they get rewarded in coins.
Non-fungible tokens (NFTs) are cryptographic tokens that represent something unique. Non-fungible assets are those that are not mutually interchangeable. Non-fungible tokens contain identifying information that makes them unique. Unlike Bitcoin – which has a supply of 21 million identical coins – they cannot be exchanged like for like.
A Blockchain Business Model according to the FourWeekMBA framework is made of four main components: Value Model (Core Philosophy, Core Values and Value Propositions for the key stakeholders), Blockchain Model (Protocol Rules, Network Shape and Applications Layer/Ecosystem), Distribution Model (the key channels amplifying the protocol and its communities), and the Economic Model (the dynamics/incentives through which protocol players make money). Those elements coming together can serve as the basis to build and analyze a solid Blockchain Business Model.
Ethereum was launched in 2015 with its cryptocurrency, Ether, as an open-source, blockchain-based, decentralized platform software. Smart contracts are enabled, and Distributed Applications (dApps) get built without downtime or third-party disturbance. It also helps developers build and publish applications as it is also a programming language running on a blockchain.
The Graph is an ERC20 Utility Token (built on top of Ethereum) to enable consumers to freely query the blockchain through a fully decentralized database kept by indexers, incentivized by the payment of tokens (called GRT). The network is also ministered by curators and delegators that help maintain a high-quality index.
BAT or Basic Attention Token is a utility token aiming to provide privacy-based web tools for advertisers and users to monetize attention on the web in a decentralized way via Blockchain-based technologies. Therefore, the BAT ecosystem moves around a browser (Brave), a privacy-based search engine (Brave Search), and a utility token (BAT). Users can opt-in to advertising, thus making money based on their attention to ads as they browse the web.
In 2012, co-founders Christian Larsen and Jed McCaleb created Ripple, a technology acting as both a pre-mined cryptocurrency called XRP and a digital payment platform enabling monetary transactions. Where Ripple is the tech company, XRP is the decentralized ledger.
In 2014, Jed McCaleb – which also played a key role in the development of Ripple – created a cryptocurrency to provide fast, reliable, and affordable money transactions. The same cryptocurrency has considerably grown seven years later. It is now one of the most stellar cryptocurrencies to provide a real-time platform that links banks, payment systems, and people. Meet, Stellar!
In early 2019, a joint project between TRON and BitTorrent Foundation called BitTorrent Token came to fruition. BitTorrent Token launched to tokenize in-demand file-sharing protocol and enhance content delivery and bandwidth accessibility with blockchain technology.
Chainlink is considered the most established decentralized oracle network. As an ecosystem housing several decentralized oracle networks running simultaneously. As a decentralized oracle service built on Ethereum, Chainlink has the power to support the development of blockchain solutions for both traditional businesses and enterprises.
Uniswap is a renowned decentralized crypto exchange created in 2018 and based on the Ethereum blockchain, to provide liquidity to the system. As a cryptocurrency exchange technology that operates on a decentralized basis. The Uniswap protocol inherited its namesake from the business that created it — Uniswap. Through smart contracts, the Uniswap protocol automates transactions between cryptocurrency tokens on the Ethereum blockchain.
In essence, Polkadot is a cryptocurrency project created as an effort to transform and power a decentralized internet, Web 3.0, in the future. Polkadot is a decentralized platform, which makes it interoperable with other blockchains.
Designed and created as an alternative to Ethereum, Cardano claims to be the first decentralized blockchain protocol to use a scientific approach and undergo a peer evaluation.
Solana is a blockchain network with a focus on high performance and rapid transactions. To boost speed, it employs a one-of-a-kind approach to transaction sequencing. Users can use SOL, the network’s native cryptocurrency, to cover transaction costs and engage with smart contracts.

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Read Also: BAT TokenProof-of-stakeProof-of-workBitcoinDogecoinEthereumSolanaBlockchainBATMoneroRippleLitecoinStellarDogecoinBitcoin CashFilecoin.

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