A hot wallet is a cryptocurrency wallet that is connected to the internet and used for regular on-chain transactions. Browser extension wallets like Phantom and Solflare are hot wallets — they are online, accessible, and ready to sign transactions.

Hot wallets prioritise convenience over security. Because they are online, they are potentially vulnerable to malware and phishing attacks. Best practice is to keep only the funds needed for regular use in a hot wallet, with larger holdings in cold storage.

For most DeFi users, a hot wallet is the primary interface for interacting with applications. The risk is manageable for smaller amounts, but large balances should be protected with hardware wallets.