Ethereum onboarding solution provider UniLogin is shutting down due to high gas fees

UniLogin, which provides a user onboarding solution for Ethereum apps, is shutting down due to high gas fees.

"UniLogin is out of gas," co-founder Alex Van de Sande said in a blog post on Friday. "Not necessarily out of money, but the current Ethereum gas market, the rise of DeFi [decentralized finance], ... have changed the game significantly enough that we don't see a way forward with the project."

Van de Sande said UniLogin is particularly sensitive to gas prices because before onboarding any users, the project was deploying a new multi-sig wallet on users' behalf, registering an ENS [Ethereum Name Service] name, and sometimes using its relayer to add a Dai transaction. "After that, every new sign-in on a different device required a new on-chain transaction (to add a new key) and every transaction would be a bit more expensive due to the relayer," said Van de Sande.

He went on to say that some days the whole process of onboarding a new user was costing over $130, equivalent to a cost of a hardware wallet.

The current gas situation isn't a temporary problem, according to Van de Sande. He said even if gas prices improve and onboarding costs reduce, it "would still be a deal breaker for many mainstream applications with millions of users."

UniLogin considered pivoting to a Layer-2 DeFi focused wallet or a sign-in solution only for a smaller set of products in xDAI, but that would have been almost a restart of the project. So UniLogin decided simply to return the remaining cash to investors, said Van de Sande. 

The firm is yet to figure out how much money is to be returned to investors after accounting costs, Van de Sande told The Block. UniLogin raised less than a quarter-million in seed funding, mainly from Swiss angel investor Paolo Rebuffo, said Van de Sande.

UniLogin will continue running relayers until the end of the year to facilitate users migrating their interfaces and funds elsewhere.

Van de Sande is yet to announce his next move. His co-founder Marek Kirejczyk and the rest of the UniLogin team are joining Ethworks — a place where startups can hire a team for their Ethereum projects.

This story has been updated to include comments from UniLogin co-founder Alex Van de Sande.