Non-custodian Investment Vault

The custodian paradigm

Banks and notaries traditionally perform trust functions like managing an equity portfolio or verifying an equity transaction. As a result, these transactions are both slow and expensive. Decent and trustworthy, but limiting nonetheless.

It was about time for a change, we thought.

By using modern technology, we have eliminated the disadvantages without losing trust and security. Instead of having a bank or a notary acting as a custodian, the investor himself is now the guardian of his assets. This is the only way to ensure that the investor’s assets are 100% safe. Of course, this has it’s own disadvantages as this is new and thus can be daunting for an investor.

This presented us with a problem to fix. We had to eliminate any fear of this new paradigm. And so we did.

We created a “best of both worlds” solution called the Non-custodian Investment Vault technology.

TAKE-AWAY

At Liqwith, we are building the next generation of financial infrastructure for managing an organization’s equity via blockchain technology. By leveraging the Ethereum blockchain, we can replace traditional trust functions like managing an equity portfolio or verifying an equity transaction.

Our Non-custodian Investment Vault technology allows investors to maintain absolute and sole control over their private keys. They can interact with smart contracts, without the risk of losing access to their wallet if they misplace the device containing the only copy of their private key.

They will enjoy a “cloud-like” experience, as these investors will be able to access the same wallet (private key) from different devices, using a familiar email and password login mechanism from their existing browsers. There will be no need to install any third-party applications like MetaMask or Ledger Live.

How Liqwith facilitates mainstream adoption

Current solutions in the Ethereum ecosystem introduce friction into the onboarding process of Investors by placing the burden of creating a wallet on the investors, requiring them to install a third-party solution like MetaMask or Ledger before they can invest in an organization powered by the Liqwith Decentralized Application (DApp).

Liqwith eliminates that friction by offering a so-called Non-custodian Investment Vault or “Light Wallet” build into the DApp itself. If users are tech-savvy enough, it is still possible to use a third-party solution like Ledger or MetaMask.

With the Light Wallet integrated, Investors can manage their private key inside their existing browser, letting them sign transactions, claim dividend, and participate in the voting process of a particular organization. At the same time, an investor remains the sole owner of his private keys, as the Non-custodian Investment Vault architecture makes sure nobody can access the investor’s unencrypted private key – besides the investor itself.

MAKING THE INVESTOR JOURNEY AS FRICTIONLESS AS POSSIBLE

We strive to bring the best security architectures to investors who are not themselves security experts. Not everyone wishes to become a security expert, but an investor is entitled to security whether or not he seeks to understand how it works. He needs to be sure that his assets are safe and well protected. Concealing the necessary complexity of the design from investors when they just want to use a Liqwith DApp or manage their crypto funds is all well and good, but we should never conceal the security design from security experts, system and security administrators, or curious users. Security by transparency is something we value and live by.

How we facilitate the investor’s journey:

  • Simplifying private key management (see below)
  • Integrating fee-less smart contracts
  • Offering direct-to-wallet purchases of Ether through the services of Byecoin
  • Working together with the Liqwith DApp users to better understand and tackle use-flow pain points

Simplifying private key management without sacrificing security

The average investor doesn’t care about blockchain and shouldn’t have to care about blockchain. So in order to promote the mainstream adoption of the Liqwith Solution among large groups of investors we made sure that we abstracted away from the investor as much as we could without compromising security.

However, it also meant that this abstraction could not extend to the management of their private keys. Private key management is one of (if not) the biggest challenge for investors in an “Ethereum blockchain-powered” investment platform. While custodial solutions on Ethereum Blockchain DApps can offer users an experience which feels very familiar to, for example, Crowdfunding platforms, we believe they are a step in the wrong direction, as “Safe vaults” are not truly safe if they hinge on a centralized service having access to the private keys of an investor. Alternatively, placing the burden totally on the shoulders of investors by requiring them to manage their private keys on their own is too demanding of investors who are not necessarily tech-savvy.

By using the Non-custodian Investment Vault technology of Liqwith, investors enjoy a familiar experience (email and password login flow), without requiring them to install anything, while making sure they are the only ones able to access their vaults containing their digital assets via their private key. Also, accessing the same private key on multiple devices is as simple as typing in their credentials on a new device.

How does this Non-custodian Investment Vault technology work?

Liqwith lets investors create an encryption key in their browser as soon as they make an account on a Liqwith DApp. Effectively, an Ethereum blockchain wallet is created and encrypted with the aforementioned encryption key. The wallet is then stored in a Liqwith DApp as an encrypted Json Object.

All cryptographic keys are generated and managed by the investor in his browser, and all encryption is done locally on his device. Liqwith DApps are never in the position of learning an investor’s cryptographic key. When the already encrypted data travels between the investor’s device and a Liqwith DApp, it is encrypted and authenticated by TLS. All of the user’s sensitive data is encrypted when they create their account using 64 random bytes generated on the Client and protected using a password that they select.

Nobody on earth knows this password besides the investor as it never leaves the device of the investor. Note: We cannot recover users’ data if they forget their password. A Backup Recovery Phrase (Mnemonic Seed) is derived to offer investors a means of resetting their password in case they forget it.

Is an STO the way forward for your organization?

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Get in touch

Want to get in touch? We'd love to hear from you. Here's how you can reach us...

EINDHOVEN OFFICE, High Tech Campus 32, 5656 AE Eindhoven, Room 3.304

+31 165 33 22 44

info@liqwith.io

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