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This collective effort aims to ensure the safety of Web3's potential while simplifying its complexity.
Key industry players from the HBAR Foundation and Algorand Foundation have announced the launch of DeRec Alliance, an initiative to build a “decentralized recovery” protocol for digital assets.
According to the announcement made today at the Crypto Finance Conference in St. Moritz, the Hedera and Algorand ecosystems are partnering to simplify securing and recovering digital assets in Web3 while still being compatible with conventional user experiences from Web2.
The prospects of the DeRec Alliance were discussed by Hedera co-founder Leemon Baird and Algorand CTO John Woods during a joint panel.
Baird urged all blockchain and industry players to establish standards and share open-source code. This collective effort aims to ensure the safety of Web3’s potential while simplifying its complexity.
“All blockchains need to work together to create a compatible standard across all wallet software on all blockchains,” Baird shared.
According to Baird, the new alliance is in the process of communicating and forming partnerships involving credit unions, banks, and several other wallet software developers to help create and align the standards.
Digital assets associated with decentralized protocols are usually kept and protected with cryptographic key passwords. However, managing these can be difficult for a user new to crypto and Web3, and it can take time, especially for users who may be new to self-custody.
“Seamless user experience is core to any great product. We need to maximize ease of use and minimize risk associated with self-sovereignty,” stated Woods.
Backups for the secret keys need to be maintained to avoid losing the assets if a device malfunctions, but the backups also need to be secured.
“DeRec is a novel protocol for secrets management based on secret-sharing amongst a set of helpers (e.g., friends or multiple custody services), who can assist the user to recover their secret when needed,” a description on the protocol’s GitHub repo states.
The Decentralized Recovery (DeRec) protocol is a standardized approach to respond to this need. The system is designed based on secret sharing among a specific group of trusted individuals, such as friends or businesses.
It enables users to regain access to their secrets when (and as) needed by providing automatic confirmations that helpers retain (for shared secrets), which are then automatically reshared should the secrets be changed or when helpers join or leave a group.
Notably, the protocol maintains a “siloed” sharing model, with each helper’s shared data blocked from providing any information about the original secret. At the same time, the system ensures recovery even if a user misplaces their recovery device.
If implemented correctly, such a system results in a more privacy-preserving experience for users of the recovery system whose identities do not require disclosure to and from each other.