Last time we took a look at the idea behind Decentralized Digital Asset Custody and how users can count on all the benefits they expect from a centralized custody solution without the risks that are associated with it. All of this is thanks to Odsy’s implementation of Distributed Key Generation and Threshold Signature Schemes (TSS).
Let’s take a look at another application that is related to custody. dWallets introduce a new approach to access control that can turn applications and financial products that were previously custodial into self-custodial.
This is something we call the Bring Your Own Wallet (BYOW) model.
We can think of BYOW as an open-source and decentralized framework for financial services and applications. Under this model, users simply plug their dWallets into products and services while keeping full ownership and control over their assets.
This is important because development teams, ranging from Web3 startups to traditional finance firms, face a steep climb when it comes to setting up custody. Right now, if a team is looking to offer new crypto and Web3 products and services they have to take very complex things into consideration:
- Imagine a new financial solution utilizing blockchain (e.g. carbon markets, tokenized real estate etc.). Customers will always demand a simplified user interface, forcing any such solution to custody the digital assets for them, imposing a regulatory burden and creating a technological barrier.
- Imagine adding a new digital asset to an existing financial product. There are potential liabilities that firms have to take into consideration when offering crypto due to risk management policies and consumer protection laws that have historically prevented them taking this step.
- Imagine an existing Web3 service that’s looking to expand into a new chain or work with a new asset. It cannot count on a consolidated view of the crypto space and instead is left with the task of running dedicated systems for each blockchain network.
BYOW offloads this work and lets them build without thinking about custodial responsibilities and infrastructure. Users, in turn, have the advantage of remaining in control of their assets at all times.
What it looks like now
Odsy’s groundbreaking technology is the first ever infrastructure to allow for a completely decentralized BYOW model. Web3 developers and builders today face a difficult choice which we call “The Access Control Problem.” They can either:
- Build a centralized solution that utilizes blockchain, jumping through regulatory hoops and sacrificing decentralization;
- Or, they can build a completely decentralized solution, for which they need to be experts in security, cryptography and blockchain technology, and leave their users with a clunky experience.
The centralized approach goes against an overall transition towards open-source software infrastructure that pre-dates Web3 and offers known benefits in security, customizability, community-driven innovation and no vendor lock-in.
The decentralized approach leaves little room for developing financial products that meet customer needs such as user experience, access rights, self-custody, risk controls, or rule-based frameworks and guardrails for local regulations.
In both approaches, there’s very little available in terms of taking care of the problems teams face when addressing regulatory responsibilities and the overall fragmentation of the crypto and Web3 world.
What BYOW could look like
A decentralized and open-source access control layer for crypto and Web3 takes care of these issues. The custody infrastructure that is used in most services could be replaced with a Bring Your Own Wallet (BYOW) model for development where products and solutions utilize an underlying infrastructure.
Previously custodial products could be designed simply as templates that are readily available to users. Some examples:
- Imagine launching new financial solutions utilizing blockchain (e.g. carbon markets, tokenized real estate etc.) that can focus on developing a good user experience. Their development teams can build without having to worry about the complexity of custody or any of the regulatory considerations that are connected to it.
- Imagine financial products that operate just like their traditional custodial counterparts but are programmed via wallet contracts to be non-custodial. This decouples teams from potential associated liabilities of a custodial client relationship and places them as a facilitator who offers the same benefits.
- Imagine products and services that are built on top of an access control layer that acts as a universal solution for transactions on practically all networks. This would allow for teams to expand their products more easily into other areas of Web3 thanks to native multi-chain compatibility.
Bring Your Own Wallet with Odsy
This is where Odsy comes in. By introducing a decentralized network of dWallets that are programmable and multi-chain, Odsy solves the biggest problems challenging Web3 developers today: the Access Control Problem.
Besides taking care of a great deal of legal and technical complexities — both of which represent significant time and resources for development teams — BYOW creates an option that wasn’t available before, allowing for fully decentralized ownership, with a centralized user experience.
Programmability allows teams to define the access control rules that are pre-approved by the user via wallet contracts. Everything stays in the hands of the user but the management of digital assets doesn’t necessarily rely on a single private key.
Multi-chain compatibility, on the other hand, lets these rules have an effect on the digital assets that users may hold across different blockchain networks. This eliminates the need for developing dedicated solutions for each.
And most importantly, BYOW finally connects the real world to the vision and purpose of the ownership economy embodied in Web3. It allows developers to easily create intuitive and innovative applications where users always retain ownership and control of their assets and enables users to use those applications without needing to trust anyone.
As we explained in the Odsy litepaper, “This new model (BYOW) increases both the utility and security of the projects utilizing it. It also reduces the barrier to entry for new and smaller participants and allows users to retain full control of their wallet and simply and instantly join, leave, and move between providers of similar services, or even join multiple providers with the same wallet.”
In a nutshell, BYOW is a way to use dWallets to build products that come with all the advantages of a centralized experience but in a fundamentally non-custodial way.
For developers and builders this means that all the heavy lifting can be left to the access control layer that is the Odsy Network. For users, this would mean that using completely decentralized applications where they have full ownership of their digital assets, would feel more like using Web2 products they already know.
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