What is the Burner Wallet (and what’s xDai)?

If you’ve heard the buzz around xDai and Austin Griffith’s Burner Wallet but don’t know what those things are, this post is for you!

The first thing to know is that xDai and Burner Wallet are NOT the same thing – they’re two separate projects (but they complement each other nicely).

What’s xDai?

In typical crypto fashion, “xDai” refers both to a blockchain and a token.

• xDai Chain – A separate blockchain developed through a partnership between POA Network and MakerDAO. xDai Chain operates as an Ethereum sidechain and uses the Proof of Autonomy consensus. Proof of Autonomy resembles Proof of Authority, but instead of a centralized authority, a DAO manages validators. Other properties of xDai Chain include 5-second block times and low gas prices.
• xDai token – xDai Chain’s native token (it’s analogous to ether for the Ethereum blockchain). xDai is a 1:1 representation of MakerDAO’s Dai stablecoin. Thus, if you have Dai, you can convert it to xDai via POA Network’s TokenBridge that connects Ethereum and xDai Chain.

What’s the Burner Wallet?

Created by Austin Griffith in November 2018, the Burner Wallet provides a quick and easy way to carry and exchange small amounts of spending-crypto using a mobile browser. The Burner Wallet runs on the xDai Chain and uses xDai, taking advantage of low fees and fast transaction times. But that increased convenience comes at a security cost – the “burner” part of the wallet’s name exists to remind users that it’s not secure for long-term storage. If you use a Burner Wallet, you should regularly sweep funds into a more secure wallet and burn your Burner Wallet’s private key (you can always make a new one).

How does the Burner Wallet work?

When you visit xdai.io, the site automatically generates a pubic/private key pair. You don’t need to remember a seed phrase; the private key lives in a cookie in your web browser (remember the convenience-security tradeoff).

You first need some xDai, which you can get by exchanging ETH or Dai via the Burner Wallet interface. But you must be connected to the Ethereum mainnet (through, e.g., MetaMask). Once you have some xDai, you need to switch to the xDai Chain to use it.

Send xDai to your phone

To use the Burner Wallet as it’s intended (on the go), first visit xdai.io in your mobile browser to open a new Burner Wallet. From there, tap Request, enter the amount of xDai you want to send (and a message if you want), and tap Request again. This brings up a QR code.

When you scan the QR code from the browser you’re sending xDai from, you’ll see a “Send to Address” form. The form will be populated with your mobile Burner Wallet’s address and the amount you chose to receive. Click Send, confirm the transaction, and, then you’ll have xDai on your mobile phone! Within 5 seconds!

Burn your private key

After you’ve finished using your mobile Burner Wallet, send any remaining xDai to a more secure wallet. Then you can burn your private key by going to Advanced->Burn PK. The option to burn your private key only exists on mobile.

Where is it going?

Austin Griffith first announced the Burner Wallet in November 2018. Since then, he’s been spreading the word and gathering feedback at numerous public demonstrations. The wallet’s first major test took place in mid-February 2019 at ETHDenver. There, 11 food trucks accepted xDai via Burner Wallets and sold 4,405 meals for a total of $38,432.56. And the total fees were only $0.20 (i.e., twenty cents)!

We wouldn’t be surprised to start seeing similar experiments at festivals and markets this spring and summer. In addition to quick transactions and low fees, the Burner Wallet boasts another feature that should appeal to vendors. The wallet can be configured to restrict the transfer of preloaded funds to specified accounts. That means that vendors could distribute Burner Wallets preloaded with a little bit of xDai in order to encourage customers to shop with them using xDai.

How can I use it?

To use the Burner Wallet, just go to https://xdai.io.

If you need some Dai, you can find the best price by checking DEX.AG. If Uniswap has the best price, you can use Settle’s Swap Tool app to swap ETH for Dai on your Settle dashboard.

To see where xDai ranks among top DeFi projects, you can check DeFi Pulse. And you can always use your free Settle account to track all your cryptoassets with the most advanced portfolio tracking tool in crypto: Settle Portfolio.