In Brave, if the user has MetaMask installed, we currently show an infobar on a Dapp page that asks the user to disable one of either Crypto Wallets or MetaMask.

This is over disabling functionality that we don’t need to, when really we should just be asking which web3 provider they want to use for that page. The current implementation also allows for various edge cases where users can be in a stuck broken state when trying to use Dapps.
This is intended to allow Crypto Wallets to remain enabled, and to improve the frustrations that users encounter by having two web3 providers installed. It also enables us to keep other future functionality enabled as we enhance Crypto Wallets for things like exchange integrations.
Explicitly not part of this spec:
The work can be cleanly divided into 4 areas:
The old settings switch to turn off Crypto Wallets will be removed. See the next section on Migration work to see how the existing user choice will be handled.

The options for the drop down menu will be: Ask, None, Crypto Wallets, and MetaMask if it is installed. The default will be Ask until an explicit option is set. The new preference will be stored with the pref name of brave.wallet.web3_provider in per-profile prefs which are visible in chrome://prefs-internals/. If the user explicitly uses Brave wallet first and opts in and the setting is set to Brave, then even installing MetaMask later won’t change the setting from Brave.
If Ask is selected, UI will be shown as per the section on Infobar work
If None is selected, the entire extension will always be lazy loaded, even if it is installed.
If Crypto Wallets is selected, only Crypto Wallets will be used as a web3 provider.
If MetaMask is selected, only MetaMask will be used as a web3 provider.
Some users in the past had seen the old infobar and selected either to use MetaMask or Crypto Wallets. We have only in the past actively disabled Crypto Wallets, so no one will have MetaMask disabled by us.
A one time migration will be done to determine which value should be used for the new setting brave.wallet.web3_provider.
An automated test will be added for each of these migration cases to ensure they work correctly.
Migration code will be added in chrome/browser/prefs/browser_prefs.cc via MigrateObsoleteBrowserPrefs.
If MetaMask is not installed, the existing UX will continue to be valid:

If MetaMask is installed, the existing infobar UX highlighted in the Objective section will be repurposed to the following.

Closing the infobar will use neither provider, it will keep the setting mentioned in the last section to “Ask”.
If the user’s setting is “None”, no infobar will be shown.
Depending on which option is selected, the setting mentioned above will be set to either “Crypto Wallets” or “MetaMask”. “None” can only be set from the settings page.
Adding an API to obtain the web3 provider
A new API will be exposed to both Crypto Wallets and MetaMask:
chrome.cryptoWallets.getWeb3Provider((extensionId) => {})
The other APIs available within chrome.cryptoWallets will NOT be accessible to MetaMask.
It will return the extensionId for the provider to use or a blank string.
A web3 provider should only inject existing MetaMask code that provides web3 to the page if its extensionId matches the return value from chrome.cryptoWallets.getWeb3Provider.
Possible values for the extensionId in the above callback will be:
nkbihfbeogaeaoehlefnkodbefgpgknn (metamask)odbfpeeihdkbihmopkbjmoonfanlbfcl (Brave)Test plan being added in wiki here
https://github.com/brave/qa-resources/wiki/%5BWIP%5D-Multiple-Web3-provider-support-test
None at this time.
This is such a well-written issue, holy cow.
Verification passed on
Brave | 1.5.109 Chromium: 80.0.3987.132 (Official Build) beta (64-bit)
-- | --
Revision | fcea73228632975e052eb90fcf6cd1752d3b42b4-refs/branch-heads/3987@{#974}
OS | Windows 10 OS Version 1803 (Build 17134.1006)
Clean profile:
Ask, None and Crypto Wallets options when MM isn't installed. By default, the Ask option is selected
Ask, None, Crypto Wallets and Metamask options when MM is installed. By default, the Ask option is selected
Ask
Ask to Crypto Wallet when MM is installed and Use Crypto Wallet option is selected from the infobar on Dapp page
Metamask option is not shown in the dropdown when MM is removed from braveNone is selected in settings
Ask to MetaMask when MM is installed and Use MetaMask option is selected from the infobar on Dapp page
Crypto Wallet from web3 provider dropdown, verified that the infobar is not shown on the Dapp page and only Crypto Wallets will be used as a web3 provider.MetaMask from web3 provider dropdown, verified that the infobar is not shown on the Dapp page and only MetaMask will be used as a web3 provider.Crypto Wallet on Dapp page when MM is not installed. Also verified that click on Setup navigates to brave://wallets which allows creating CW and option Crypto Wallet will be selected in web3 provider dropdown
Use Crypto Wallet and Use MetaMask options in Dapp page and default option Ask in settings remained unchangedUse Crypto Wallet and Use MetaMask options in Dapp page and default option Ask in settings remained unchangedSetup CW to interact with this app and others like it and default option Ask in settings remained unchangedAsk option in the dropdown as expected.Ask option in the dropdown as expected.Setup and create a crypto wallet (download component + create wallet), verified that the Web3 provider is showing Crypto Wallet option in the dropdown as expected.Upgrade Profile
Crypto Wallet is selected in the web3 provider dropdown instead of Ask - Logged https://github.com/brave/brave-browser/issues/8656Crypto Wallets is disabled in 1.4.x and MetaMask is installed, after upgrade to 1.5.x, the default option is set to MetaMask in the web3 provider dropdown.Crypto Wallets is disabled in 1.4.x and MetaMask is not installed, after upgrade to 1.5.x, the default option is set to None in the web3 provider dropdown in settings.Crypto Wallet is selected in the web3 provider dropdownCrypto Wallet is selected in the web3 provider dropdownCrypto Wallet selected in the dropdown instead of Ask - added scenario in https://github.com/brave/brave-browser/issues/8656Crypto Wallet selected in the dropdown instead of Ask - added scenario in https://github.com/brave/brave-browser/issues/8656Use MetaMask option from infobar and then upgrade to 1.5.x. after upgrade verified that MetaMask is selected in the web3 provider dropdown.Use CryptoWallet option from infobar in 1.4.x and then upgrade to 1.5.x. after upgrade verified that Crypto wallet is selected in the web3 provider dropdown.Setup in the infobar which enables Cryptowallet (just component download) and then upgrade to 1.5.x, after upgrade verified that Crypto wallet is selected in the web3 provider dropdown.Verification passed on
Brave | 1.5.111 Chromium: 80.0.3987.132 (Official Build) (64-bit)
-- | --
Revision | fcea73228632975e052eb90fcf6cd1752d3b42b4-refs/branch-heads/3987@{#974}
OS | Linux
Clean profile:
Ask, None and Crypto Wallets options when MM isn't installed. By default, the Ask option is selected
Verified that the drop-down menu shows Ask, None, Crypto Wallets and Metamask options when MM is installed. By default, the Ask option is selected

Verified that the infobar is shown on a Dapp page to use Web3 providers when MM is installed in brave and the default option is Ask

Verified that the infobar is not removed until one of the Web3 provider is selected on Dapp page
Ask to Crypto Wallet when MM is installed and Use Crypto Wallet option is selected from the infobar on Dapp pageMetamask option is not shown in the dropdown when MM is removed from braveNone is selected in settingsMetaMask when MM is installed and Use MetaMask option is selected from the infobar on Dapp pageCrypto Wallet from web3 provider dropdown, verified that the infobar is not shown on the Dapp page and only Crypto Wallets will be used as a web3 provider.MetaMask from web3 provider dropdown, verified that the infobar is not shown on the Dapp page and only MetaMask will be used as a web3 provider.Crypto Wallet on Dapp page when MM is not installed. Also verified that click on Setup navigates to brave://wallets which allows creating CW and option Crypto Wallet will be selected in web3 provider dropdownUse Crypto Wallet and Use MetaMask options in Dapp page and default option Ask in settings remained unchangedUse Crypto Wallet and Use MetaMask options in Dapp page and default option Ask in settings remained unchangedSetup CW to interact with this app and others like it and default option Ask in settings remained unchangedAsk option in the dropdown as expected.Ask option in the dropdown as expected.Setup and create a crypto wallet (download component + create wallet), verified that the Web3 provider is showing Crypto Wallet option in the dropdown as expected.Upgrade Profile
Crypto Wallet is selected in the web3 provider dropdown instead of Ask - Encountered #8656Crypto Wallets is disabled in 1.4.x and MetaMask is installed, after upgrade to 1.5.x, the default option is set to MetaMask in the web3 provider dropdown.Crypto Wallets is disabled in 1.4.x and MetaMask is not installed, after upgrade to 1.5.x, the default option is set to None in the web3 provider dropdown in settings.CryptoWallets is enabled and wallet created in 1.4.x and MetaMask is not installed, after upgrade t 1.5.x, the default option Crypto Wallet is selected in the web3 provider dropdownCryptoWallets is enabled (just component download don't create wallet) and MetaMask is not installed in 1.4.x, after upgrade to 1.5.x, the option Crypto Wallet is selected in the web3 provider dropdownCrypto Wallet selected in the dropdown instead of Ask - Encountered https://github.com/brave/brave-browser/issues/8656Use MetaMask option from infobar and then upgrade to 1.5.x. after upgrade verified that MetaMask is selected in the web3 provider dropdown.Use CryptoWallet option from infobar in 1.4.x and then upgrade to 1.5.x. after upgrade verified that Crypto wallet is selected in the web3 provider dropdown.Setup in the infobar which enables Cryptowallet (just component download) and then upgrade to 1.5.x, after upgrade verified that Crypto wallet is selected in the web3 provider dropdown.Verification PASSED on macOS 10.15.3 x64 Catalina using the following build:
Brave | 1.5.112 Chromium: 80.0.3987.132Â (Official Build)Â (64-bit)
-- | --
Revision | fcea73228632975e052eb90fcf6cd1752d3b42b4-refs/branch-heads/3987@{#974}
OS | macOS Version 10.15.3 (Build 19D76)
Basically went through all the cases that @GeetaSarvadnya outlined above and @bbondy outlined via https://github.com/brave/brave-browser/issues/7503#issue-541101168. I had more detailed notes but lost them when attempting to update this post and hit a merge conflict. After I refreshed, everything was gone. Notes were basically similar to @GeetaSarvadnya.
@bbondy: I don't see new pref name brave.wallet.web3_provider in chrome://prefs-internals/ - I have verified in both clean and upgraded profiles. let me know if I am missing anything.
Most helpful comment
This is such a well-written issue, holy cow.