Coinbase for a time offered a Web3 Wallet, an onchain wallet, which you could access via the side menu within your Coinbase account. The Web3 wallet has been discontinued, prompting users to empty out any cryptos and NFTs in it. I never really understood the purpose of it. It was onchain, but you didn't have keys to it. Coinbase managed the address for users. Through that address you could trade in tokens that aren't supported by Coinbase, access DeFi, and interact with Web3 dapps. I poked around a bit but never really used it. It didn't show up the Coinbase Wallet app, yet was tied to it somehow. 🤷
As the Web3 Wallet was a shared custody wallet, I never really gave it much love. Therefore, I'm not impacted by losing it. One benefit of migrating out of it is that they offered 2 free months of Coinbase One, which extends my current subscription.
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When I received the notification, I thought it meant that I would have to migrate my Coinbase Wallet addresses over to the main Coinbase account. It turns out this was unfounded. The Coinbase Wallet addresses are completely separate and apart from the Web3 Wallet. This is a great relief as I have a cb.id associated with one of the addresses. I'm posting this as I figure that my confusion might be shared by other Coinbase users.
In addition, Coinbase Wallet addresses offer the ability to connect Direct Deposit bank account numbers that convert directly into USDC on the Base Layer 2 chain. In this way, it is possible to send cash deposits into your self-custody wallet. This is useful when I have small balances that would be relatively expensive to transfer instantly. I was worried that the migration would kill that feature. I don't use it a great deal as it takes up to 5 days for deposits to post. But for small balance transfers it's ideal as it's not in significant amounts. Losing this feature would be inconvenient.
And it didn't make sense that they would kill Coinbase Wallet given that they had recently announced they would be working on a debit card for self-custody wallets. You can understand the confusion and concern.
The migration asks you to enter a self-custody wallet address you control to transfer out tokens and NFTs that the Coinbase custodial account does not support. In this way you would not lose those assets. I suggest transferring out any POL or ETH last as you'll need to cover gas fees for the transfers. Other than that, it is very straightforward and simple. At the end, the app asks you to close out the wallet, making it unrecoverable. Then you get the promo code for 2 free months of Coinbase One.