So how does Instagram make money? From it's userbase. Similar strategy is used in any *free* product. You are the money for them, the more the userbase, the more information they have and the better sponsors they can get for their product, simple as that. In case of Crypto Wallets, it's maybe that they can advertise a big Crypto coin without looking sus? IDK.
The actually free crypto wallets have teams that rely on their main job and donations. Believe it or not, people who do this for everyone else and not for personal gains still exist. They’re rarities, but they exist.
As you may expect, donations usually aren’t considerable and they’re more like tipping. That’s why they have to rely on other sources of income. I’d guess there are also a few devs who have enough money and passive income to not give a shit about being paid to do fun development stuff.