When you “watch” a wallet, you are telling de.fi to search the blockchain for information regarding that wallet address. This means that you will be able to see all the relevant data about the watched wallet, but cannot perform transactions on-chain through that wallet.
When connecting to a wallet, de.fi automatically fetches its address from your wallet provider, and queries the blockchain for all the information we need to accurately display on your dashboard. As our application is connected to your wallet provider, we can prompt it to sign transactions safely, without exposing your private keys or seed phrases to anyone, not even our app.