diff --git a/bench/mnemonic.js b/bench/mnemonic.js
index 21662cb0..d4f1b1da 100644
--- a/bench/mnemonic.js
+++ b/bench/mnemonic.js
@@ -5,8 +5,9 @@ var bench = require('./bench');
 var HD = require('../lib/hd');
 var Mnemonic = require('../lib/hd/mnemonic');
 
-var key = HD.fromMnemonic();
-var phrase = key.mnemonic.getPhrase();
+var mnemonic = new Mnemonic();
+var key = HD.fromMnemonic(mnemonic);
+var phrase = mnemonic.getPhrase();
 var i, end;
 
 assert.equal(Mnemonic.fromPhrase(phrase).getPhrase(), phrase);
diff --git a/lib/hd/private.js b/lib/hd/private.js
index 16a70cb6..df4bc3d2 100644
--- a/lib/hd/private.js
+++ b/lib/hd/private.js
@@ -27,14 +27,12 @@ var HDPublicKey = require('./public');
  * @constructor
  * @param {Object|Base58String} options
  * @param {Base58String?} options.xkey - Serialized base58 key.
- * @param {Mnemonic?} options.mnemonic
  * @param {Number?} options.depth
  * @param {Buffer?} options.parentFingerPrint
  * @param {Number?} options.childIndex
  * @param {Buffer?} options.chainCode
  * @param {Buffer?} options.privateKey
  * @property {Network} network
- * @property {Mnemonic?} mnemonic
  * @property {Number} depth
  * @property {Buffer} parentFingerPrint
  * @property {Number} childIndex
@@ -56,8 +54,6 @@ function HDPrivateKey(options) {
   this.publicKey = encoding.ZERO_KEY;
   this.fingerPrint = null;
 
-  this.mnemonic = null;
-
   this._xprivkey = null;
 
   this._hdPublicKey = null;
@@ -91,16 +87,6 @@ HDPrivateKey.prototype.fromOptions = function fromOptions(options) {
   this.privateKey = options.privateKey;
   this.publicKey = ec.publicKeyCreate(options.privateKey, true);
 
-  if (options.mnemonic) {
-    assert(options.mnemonic instanceof Mnemonic);
-    this.mnemonic = options.mnemonic;
-  }
-
-  if (options.xprivkey) {
-    assert(typeof options.xprivkey === 'string');
-    this._xprivkey = options.xprivkey;
-  }
-
   return this;
 };
 
@@ -194,11 +180,6 @@ HDPrivateKey.prototype.destroy = function destroy(pub) {
   }
 
   this._xprivkey = null;
-
-  if (this.mnemonic) {
-    this.mnemonic.destroy();
-    this.mnemonic = null;
-  }
 };
 
 /**
@@ -543,21 +524,19 @@ HDPrivateKey.fromSeed = function fromSeed(seed, network) {
 /**
  * Inject properties from a mnemonic.
  * @private
- * @param {Mnemonic|Object} mnemonic
+ * @param {Mnemonic} mnemonic
  * @param {(Network|NetworkType)?} network
  */
 
 HDPrivateKey.prototype.fromMnemonic = function fromMnemonic(mnemonic, network) {
-  if (!(mnemonic instanceof Mnemonic))
-    mnemonic = new Mnemonic(mnemonic);
+  assert(mnemonic instanceof Mnemonic);
   this.fromSeed(mnemonic.toSeed(), network);
-  this.mnemonic = mnemonic;
   return this;
 };
 
 /**
  * Instantiate an hd private key from a mnemonic.
- * @param {Mnemonic|Object} mnemonic
+ * @param {Mnemonic} mnemonic
  * @param {(Network|NetworkType)?} network
  * @returns {HDPrivateKey}
  */
@@ -566,6 +545,30 @@ HDPrivateKey.fromMnemonic = function fromMnemonic(mnemonic, network) {
   return new HDPrivateKey().fromMnemonic(mnemonic, network);
 };
 
+/**
+ * Inject properties from a mnemonic.
+ * @private
+ * @param {String} mnemonic
+ * @param {(Network|NetworkType)?} network
+ */
+
+HDPrivateKey.prototype.fromPhrase = function fromPhrase(phrase, network) {
+  var mnemonic = Mnemonic.fromPhrase(phrase);
+  this.fromMnemonic(mnemonic, network);
+  return this;
+};
+
+/**
+ * Instantiate an hd private key from a phrase.
+ * @param {String} phrase
+ * @param {(Network|NetworkType)?} network
+ * @returns {HDPrivateKey}
+ */
+
+HDPrivateKey.fromPhrase = function fromPhrase(phrase, network) {
+  return new HDPrivateKey().fromPhrase(phrase, network);
+};
+
 /**
  * Inject properties from privateKey and entropy.
  * @private
@@ -722,97 +725,6 @@ HDPrivateKey.prototype.toRaw = function toRaw(network) {
   return this.toWriter(new StaticWriter(82), network).render();
 };
 
-/**
- * Calculate extended serialization size.
- * @returns {Number}
- */
-
-HDPrivateKey.prototype.getExtendedSize = function getSize() {
-  var size = this.getSize();
-
-  size += 1;
-
-  if (this.mnemonic)
-    size += this.mnemonic.getSize();
-
-  return size;
-};
-
-/**
- * Write the key in "extended"
- * format to a buffer writer.
- * @param {BufferWriter} bw
- * @param {(Network|NetworkType)?} network
- */
-
-HDPrivateKey.prototype.toExtendedWriter = function toExtendedWriter(bw, network) {
-  this.toWriter(bw, network);
-
-  if (this.mnemonic) {
-    bw.writeU8(1);
-    this.mnemonic.toWriter(bw);
-  } else {
-    bw.writeU8(0);
-  }
-
-  return bw;
-};
-
-/**
- * Serialize the key in "extended"
- * format (includes the mnemonic).
- * @param {(Network|NetworkType)?} network
- * @returns {Buffer}
- */
-
-HDPrivateKey.prototype.toExtended = function toExtended(network) {
-  var size = this.getExtendedSize();
-  return this.toExtendedWriter(new StaticWriter(size), network).render();
-};
-
-/**
- * Inject properties from buffer reader.
- * @private
- * @param {BufferReader} br
- */
-
-HDPrivateKey.prototype.fromExtendedReader = function fromExtendedReader(br) {
-  this.fromReader(br);
-  if (br.readU8() === 1)
-    this.mnemonic = Mnemonic.fromReader(br);
-  return this;
-};
-
-/**
- * Inject properties from extended serialized data.
- * @private
- * @param {Buffer} data
- */
-
-HDPrivateKey.prototype.fromExtended = function fromExtended(data) {
-  return this.fromExtendedReader(new BufferReader(data));
-};
-
-/**
- * Instantiate key from "extended" buffer reader.
- * @param {BufferReader} br
- * @returns {HDPrivateKey}
- */
-
-HDPrivateKey.fromExtendedReader = function fromExtendedReader(br) {
-  return new HDPrivateKey().fromExtendedReader(br);
-};
-
-/**
- * Instantiate key from "extended" serialized data.
- * @param {Buffer} data
- * @returns {HDPrivateKey}
- */
-
-HDPrivateKey.fromExtended = function fromExtended(data) {
-  return new HDPrivateKey().fromExtended(data);
-};
-
 /**
  * Instantiate an HD private key from a base58 string.
  * @param {Base58String} xkey
@@ -851,8 +763,7 @@ HDPrivateKey.fromRaw = function fromRaw(raw) {
 
 HDPrivateKey.prototype.toJSON = function toJSON() {
   return {
-    xprivkey: this.xprivkey(),
-    mnemonic: this.mnemonic ? this.mnemonic.toJSON() : null
+    xprivkey: this.xprivkey()
   };
 };
 
@@ -868,9 +779,6 @@ HDPrivateKey.prototype.fromJSON = function fromJSON(json, network) {
 
   this.fromBase58(json.xprivkey, network);
 
-  if (json.mnemonic)
-    this.mnemonic = Mnemonic.fromJSON(json.mnemonic);
-
   return this;
 };
 
@@ -894,7 +802,7 @@ HDPrivateKey.fromJSON = function fromJSON(json, network) {
 HDPrivateKey.isHDPrivateKey = function isHDPrivateKey(obj) {
   return obj
     && typeof obj.derive === 'function'
-    && typeof obj.toExtended === 'function'
+    && typeof obj.fromMnemonic === 'function'
     && obj.chainCode !== undefined;
 };
 
diff --git a/lib/hd/public.js b/lib/hd/public.js
index f6141c1d..a14c1889 100644
--- a/lib/hd/public.js
+++ b/lib/hd/public.js
@@ -79,11 +79,6 @@ HDPublicKey.prototype.fromOptions = function fromOptions(options) {
   this.chainCode = options.chainCode;
   this.publicKey = options.publicKey;
 
-  if (options.xpubkey) {
-    assert(typeof options.xpubkey === 'string');
-    this._xpubkey = options.xpubkey;
-  }
-
   return this;
 };
 
diff --git a/lib/wallet/masterkey.js b/lib/wallet/masterkey.js
index 30807497..ca96a4b4 100644
--- a/lib/wallet/masterkey.js
+++ b/lib/wallet/masterkey.js
@@ -15,6 +15,7 @@ var BufferReader = require('../utils/reader');
 var StaticWriter = require('../utils/staticwriter');
 var encoding = require('../utils/encoding');
 var HD = require('../hd/hd');
+var Mnemonic = HD.Mnemonic;
 
 /**
  * Master BIP32 key which can exist
@@ -32,6 +33,7 @@ function MasterKey(options) {
   this.iv = null;
   this.ciphertext = null;
   this.key = null;
+  this.mnemonic = null;
 
   this.alg = MasterKey.alg.PBKDF2;
   this.N = 50000;
@@ -103,10 +105,15 @@ MasterKey.prototype.fromOptions = function fromOptions(options) {
   }
 
   if (options.key) {
-    assert(HD.isHD(options.key));
+    assert(HD.isPrivate(options.key));
     this.key = options.key;
   }
 
+  if (options.mnemonic) {
+    assert(options.mnemonic instanceof Mnemonic);
+    this.mnemonic = options.mnemonic;
+  }
+
   if (options.alg != null) {
     if (typeof options.alg === 'string') {
       this.alg = MasterKey.alg[options.alg.toUpperCase()];
@@ -195,7 +202,7 @@ MasterKey.prototype._unlock = co(function* _unlock(passphrase, timeout) {
   key = yield this.derive(passphrase);
   data = crypto.decipher(this.ciphertext, key, this.iv);
 
-  this.key = HD.fromExtended(data);
+  this.fromKeyRaw(data);
 
   this.start(timeout);
 
@@ -382,7 +389,7 @@ MasterKey.prototype._decrypt = co(function* decrypt(passphrase, clean) {
   key = yield this.derive(passphrase);
   data = crypto.decipher(this.ciphertext, key, this.iv);
 
-  this.key = HD.fromExtended(data);
+  this.fromKeyRaw(data);
   this.encrypted = false;
   this.iv = null;
   this.ciphertext = null;
@@ -426,7 +433,7 @@ MasterKey.prototype._encrypt = co(function* encrypt(passphrase, clean) {
   if (!passphrase)
     throw new Error('No passphrase provided.');
 
-  data = this.key.toExtended();
+  data = this.toKeyRaw();
   iv = crypto.randomBytes(16);
 
   this.stop();
@@ -435,6 +442,7 @@ MasterKey.prototype._encrypt = co(function* encrypt(passphrase, clean) {
   data = crypto.encipher(data, key, iv);
 
   this.key = null;
+  this.mnemonic = null;
   this.encrypted = true;
   this.iv = iv;
   this.ciphertext = data;
@@ -447,6 +455,59 @@ MasterKey.prototype._encrypt = co(function* encrypt(passphrase, clean) {
   return key;
 });
 
+/**
+ * Calculate key serialization size.
+ * @returns {Number}
+ */
+
+MasterKey.prototype.getKeySize = function getKeySize() {
+  var size = 0;
+
+  size += this.key.getSize();
+  size += 1;
+
+  if (this.mnemonic)
+    size += this.mnemonic.getSize();
+
+  return size;
+};
+
+/**
+ * Serialize key and menmonic to a single buffer.
+ * @returns {Buffer}
+ */
+
+MasterKey.prototype.toKeyRaw = function toKeyRaw() {
+  var bw = new StaticWriter(this.getKeySize());
+
+  this.key.toWriter(bw);
+
+  if (this.mnemonic) {
+    bw.writeU8(1);
+    this.mnemonic.toWriter(bw);
+  } else {
+    bw.writeU8(0);
+  }
+
+  return bw.render();
+};
+
+/**
+ * Inject properties from serialized key.
+ * @param {Buffer} data
+ */
+
+MasterKey.prototype.fromKeyRaw = function fromKeyRaw(data) {
+  var br = new BufferReader(data);
+
+  this.key = HD.fromReader(br);
+
+  if (br.readU8() === 1)
+    this.mnemonic = Mnemonic.fromReader(br);
+
+  return this;
+};
+
 /**
  * Calculate serialization size.
  * @returns {Number}
@@ -464,7 +525,7 @@ MasterKey.prototype.getSize = function getSize() {
   }
 
   size += 1;
-  size += encoding.sizeVarlen(this.key.getExtendedSize());
+  size += encoding.sizeVarlen(this.getKeySize());
 
   return size;
 };
@@ -493,7 +554,19 @@ MasterKey.prototype.toRaw = function toRaw() {
   }
 
   bw.writeU8(0);
-  bw.writeVarBytes(this.key.toExtended());
+
+  // NOTE: useless varint
+  size = this.getKeySize();
+  bw.writeVarint(size);
+
+  bw.writeBytes(this.key.toRaw());
+
+  if (this.mnemonic) {
+    bw.writeU8(1);
+    this.mnemonic.toWriter(bw);
+  } else {
+    bw.writeU8(0);
+  }
 
   return bw.render();
 };
@@ -524,7 +597,13 @@ MasterKey.prototype.fromRaw = function fromRaw(raw) {
     return this;
   }
 
-  this.key = HD.fromExtended(br.readVarBytes());
+  // NOTE: useless varint
+  br.skipVarint();
+
+  this.key = HD.fromRaw(br.readBytes(82));
+
+  if (br.readU8() === 1)
+    this.mnemonic = Mnemonic.fromReader(br);
 
   return this;
 };
@@ -542,24 +621,27 @@ MasterKey.fromRaw = function fromRaw(raw) {
  * Inject properties from an HDPrivateKey.
  * @private
  * @param {HDPrivateKey} key
+ * @param {Mnemonic?} mnemonic
  */
 
-MasterKey.prototype.fromKey = function fromKey(key) {
+MasterKey.prototype.fromKey = function fromKey(key, mnemonic) {
   this.encrypted = false;
   this.iv = null;
   this.ciphertext = null;
   this.key = key;
+  this.mnemonic = mnemonic || null;
   return this;
 };
 
 /**
  * Instantiate master key from an HDPrivateKey.
  * @param {HDPrivateKey} key
+ * @param {Mnemonic?} mnemonic
  * @returns {MasterKey}
  */
 
-MasterKey.fromKey = function fromKey(key) {
-  return new MasterKey().fromKey(key);
+MasterKey.fromKey = function fromKey(key, mnemonic) {
+  return new MasterKey().fromKey(key, mnemonic);
 };
 
 /**
@@ -585,7 +667,8 @@ MasterKey.prototype.toJSON = function toJSON(unsafe) {
 
   return {
     encrypted: false,
-    key: unsafe ? this.key.toJSON() : undefined
+    key: unsafe ? this.key.toJSON() : undefined,
+    mnemonic: unsafe && this.mnemonic ? this.mnemonic.toJSON() : undefined
   };
 };
 
@@ -596,8 +679,13 @@ MasterKey.prototype.toJSON = function toJSON(unsafe) {
 
 MasterKey.prototype.inspect = function inspect() {
   var json = this.toJSON(true);
+
   if (this.key)
     json.key = this.key.toJSON();
+
+  if (this.mnemonic)
+    json.mnemonic = this.mnemonic.toJSON();
+
   return json;
 };
 
diff --git a/lib/wallet/wallet.js b/lib/wallet/wallet.js
index 21bba7a8..04ab4e8c 100644
--- a/lib/wallet/wallet.js
+++ b/lib/wallet/wallet.js
@@ -31,6 +31,7 @@ var MasterKey = require('./masterkey');
 var LRU = require('../utils/lru');
 var policy = require('../protocol/policy');
 var consensus = require('../protocol/consensus');
+var Mnemonic = HD.Mnemonic;
 
 /**
  * BIP44 Wallet
@@ -102,26 +103,24 @@ util.inherits(Wallet, EventEmitter);
 
 Wallet.prototype.fromOptions = function fromOptions(options) {
   var key = options.master;
-  var id, token;
+  var id, token, mnemonic;
 
-  if (MasterKey.isMasterKey(key)) {
-    this.master.fromOptions(key);
-  } else {
-    if (!key)
-      key = HD.fromMnemonic(null, this.network);
-
-    if (HD.isBase58(key))
+  if (key) {
+    if (typeof key === 'string')
       key = HD.fromBase58(key, this.network);
 
     assert(HD.isPrivate(key),
       'Must create wallet with hd private key.');
-
-    assert(key.verifyNetwork(this.network),
-      'Network mismatch for master key.');
-
-    this.master.fromKey(key);
+  } else {
+    mnemonic = new Mnemonic(options.mnemonic);
+    key = HD.fromMnemonic(mnemonic, this.network);
   }
 
+  assert(key.verifyNetwork(this.network),
+    'Network mismatch for master key.');
+
+  this.master.fromKey(key, mnemonic);
+
   if (options.wid != null) {
     assert(util.isNumber(options.wid));
     this.wid = options.wid;
diff --git a/test/hd-test.js b/test/hd-test.js
index 8048b0b2..6a4594e7 100644
--- a/test/hd-test.js
+++ b/test/hd-test.js
@@ -87,7 +87,7 @@ describe('HD', function() {
   });
 
   it('should deserialize and reserialize', function() {
-    var key = HD.fromMnemonic();
+    var key = HD.generate();
     assert.equal(HD.fromJSON(key.toJSON()).toBase58(), key.toBase58());
   });
 
diff --git a/test/util/memwallet.js b/test/util/memwallet.js
index d91542df..d91a429a 100644
--- a/test/util/memwallet.js
+++ b/test/util/memwallet.js
@@ -87,7 +87,7 @@ MemWallet.prototype.init = function init() {
   var i;
 
   if (!this.master)
-    this.master = HD.PrivateKey.fromMnemonic(null, this.network);
+    this.master = HD.PrivateKey.generate();
 
   if (!this.key)
     this.key = this.master.deriveAccount44(this.account);
diff --git a/test/wallet-test.js b/test/wallet-test.js
index e7f064a2..d58cc625 100644
--- a/test/wallet-test.js
+++ b/test/wallet-test.js
@@ -154,7 +154,7 @@ describe('Wallet', function() {
       n: 2
     });
 
-    k = HD.fromMnemonic().deriveAccount44(0).toPublic();
+    k = HD.generate().deriveAccount44(0).toPublic();
 
     yield w.addSharedKey(k);