diff --git a/README.md b/README.md
index 67202c8..2a28bb0 100644
--- a/README.md
+++ b/README.md
@@ -201,12 +201,22 @@ want maximum privacy can point it at their own Ethereum node.
 
 - **No framework**: The popup UI is vanilla JS and HTML. The extension is small
   enough that a framework adds unnecessary complexity and attack surface.
-- **Encrypted storage**: Seed phrases are encrypted with a user-provided
-  password using AES-256-GCM before being stored in the extension's local
-  storage. The encryption key is derived from the password using PBKDF2 with a
-  high iteration count.
+- **Encrypted storage**: Recovery phrases and private keys are encrypted at rest
+  in the extension's local storage. The encryption scheme:
+    - The user's password is run through PBKDF2-SHA256 (600,000 iterations) with
+      a random salt to derive a 256-bit encryption key.
+    - The encryption key + a random IV encrypt the secret material using
+      AES-256-GCM.
+    - Stored blob: `{ salt, iv, ciphertext, authTag }`.
+    - **The password is NOT used in address derivation.** It exists solely to
+      protect the recovery phrase / private key on disk. Anyone with the
+      recovery phrase can restore the wallet on any device without this
+      password. This matches MetaMask's behavior.
 - **BIP-39 / BIP-44**: Standard mnemonic generation and HD key derivation
-  (`m/44'/60'/0'/0/n`) for Ethereum address compatibility.
+  (`m/44'/60'/0'/0/n`) for Ethereum address compatibility. The BIP-39 passphrase
+  is always empty (matching MetaMask and most wallet software). The user's
+  password is completely separate and has no effect on which addresses are
+  generated.
 - **EIP-1193 provider**: The content script injects a `window.ethereum` object
   that implements the EIP-1193 provider interface, enabling web3 site
   connectivity.
diff --git a/src/popup/index.html b/src/popup/index.html
index ecd7184..81cff3d 100644
--- a/src/popup/index.html
+++ b/src/popup/index.html
@@ -56,8 +56,8 @@
                     Add Wallet
                 </h1>
                 <p class="mb-2">
-                    Enter your 12 or 24 word recovery phrase below, or press the
-                    die to generate a new one.
+                    Enter your 12 or 24 word recovery phrase below, or click the
+                    button to roll the die for a new one.
                 </p>
                 <div class="mb-1 flex justify-end">
                     <button
@@ -88,8 +88,10 @@
                 <div class="mb-2" id="add-wallet-password-section">
                     <label class="block mb-1">Choose a password</label>
                     <p class="text-xs text-muted mb-1">
-                        This password locks the wallet on this device. It is not
-                        the same as your recovery phrase.
+                        This password encrypts your recovery phrase on this
+                        device. It does not affect your wallet addresses or
+                        funds — anyone with your recovery phrase can restore
+                        your wallet without this password.
                     </p>
                     <input
                         type="password"
@@ -154,7 +156,9 @@
                 <div class="mb-2" id="import-key-password-section">
                     <label class="block mb-1">Choose a password</label>
                     <p class="text-xs text-muted mb-1">
-                        This password locks the wallet on this device.
+                        This password encrypts your private key on this device.
+                        Anyone with your private key can access your funds
+                        without this password.
                     </p>
                     <input
                         type="password"
diff --git a/src/popup/index.js b/src/popup/index.js
index 6c1ee7e..c2229a8 100644
--- a/src/popup/index.js
+++ b/src/popup/index.js
@@ -70,23 +70,153 @@ function makeStubAddress() {
     };
 }
 
+// Stub wordlist for random phrase generation.
+// TODO: replace with real BIP-39 generation via background.
+const STUB_WORDLIST = [
+    "abandon",
+    "ability",
+    "able",
+    "about",
+    "above",
+    "absent",
+    "absorb",
+    "abstract",
+    "absurd",
+    "abuse",
+    "access",
+    "accident",
+    "account",
+    "accuse",
+    "achieve",
+    "acid",
+    "acoustic",
+    "acquire",
+    "across",
+    "act",
+    "action",
+    "actor",
+    "actual",
+    "adapt",
+    "add",
+    "addict",
+    "address",
+    "adjust",
+    "admit",
+    "adult",
+    "advance",
+    "advice",
+    "aerobic",
+    "affair",
+    "afford",
+    "afraid",
+    "again",
+    "age",
+    "agent",
+    "agree",
+    "ahead",
+    "aim",
+    "air",
+    "airport",
+    "aisle",
+    "alarm",
+    "album",
+    "alcohol",
+    "alert",
+    "alien",
+    "all",
+    "alley",
+    "allow",
+    "almost",
+    "alone",
+    "alpha",
+    "already",
+    "also",
+    "alter",
+    "always",
+    "amateur",
+    "amazing",
+    "among",
+    "amount",
+    "amused",
+    "analyst",
+    "anchor",
+    "ancient",
+    "anger",
+    "angle",
+    "angry",
+    "animal",
+    "ankle",
+    "announce",
+    "annual",
+    "another",
+    "answer",
+    "antenna",
+    "antique",
+    "anxiety",
+    "any",
+    "apart",
+    "apology",
+    "appear",
+    "apple",
+    "approve",
+    "april",
+    "arch",
+    "arctic",
+    "area",
+    "arena",
+    "argue",
+    "arm",
+    "armed",
+    "armor",
+    "army",
+    "around",
+    "arrange",
+    "arrest",
+    "arrive",
+    "arrow",
+    "art",
+    "artefact",
+    "artist",
+    "artwork",
+    "ask",
+    "aspect",
+    "assault",
+    "asset",
+    "assist",
+    "assume",
+    "asthma",
+    "athlete",
+    "atom",
+    "attack",
+    "attend",
+    "attitude",
+    "attract",
+    "auction",
+    "audit",
+    "august",
+    "aunt",
+    "author",
+    "auto",
+    "autumn",
+    "average",
+    "avocado",
+    "avoid",
+    "awake",
+    "aware",
+    "awesome",
+    "awful",
+    "awkward",
+    "axis",
+];
+
 function generateStubMnemonic() {
-    // TODO: replace with real BIP-39 generation via background
-    const words = [
-        "abandon",
-        "ability",
-        "able",
-        "about",
-        "above",
-        "absent",
-        "absorb",
-        "abstract",
-        "absurd",
-        "abuse",
-        "access",
-        "accident",
-    ];
-    return words.join(" ");
+    const phrase = [];
+    for (let i = 0; i < 12; i++) {
+        const bytes = new Uint32Array(1);
+        crypto.getRandomValues(bytes);
+        phrase.push(STUB_WORDLIST[bytes[0] % STUB_WORDLIST.length]);
+    }
+    return phrase.join(" ");
 }
 
 // -- render wallet list on main view --