How Hybrid Custody Works:
Hybrid Custody™ is VaultCoin’s innovative solution designed to offer the “best of Self-Custody and the best of Managed-Custody” within a secure ecosystem. It ensures your crypto is Unstealable, Unlosable, and Recoverable.
The Core Problem Hybrid Custody Solves
Traditional self-custody forces users to rely solely on their private keys (seed phrases). If these keys are lost or stolen, the assets are permanently lost, a vulnerability that VaultCoin is designed to solve. Existing solutions like Multisig/MPC are often cumbersome, dilute control or do not eliminate single points of failure in real world situations. They also cannot override malicious transactions.
Hybrid Custody Vaults are built on a dual-party, dual-key architecture using Layer 2 Smart Vaults protocol. This architecture ensures control remains with the user while establishing a crucial recovery mechanism.
1: User Key (Private Key): The user maintains full control over their assets and can initiate transactions using only their private key, just like traditional self-custody. This key always retains the highest priority.
2. Service Provider Key (Sentinel Key): This second key, held by the Sentinel (Hybrid Custody Service Provider), acts as the fallback option. It enables recovery mechanisms only when needed, usually when the user’s key is lost or stolen.
The system uses advanced technologies like Interactive Zero-Disclosure Proofs and Smart Contracts to manage the Vaults and enforce the protocol rules on-chain, eliminating single points of failure.
Key Features and Safety Mechanisms
- Ultimate User Control (Eliminating Counter-Party Risk): Users can always override any unauthorized Unlock and Spend attempts by Sentinels by signing a Recovery Transaction with just their private key. This critical feature ensures that counter-party risk is eliminated.
- Effortless Recovery (Unlosable): If the user loses their private key, the Sentinel’s key can be used to securely recover the crypto and transfer it back to the user’s backup address.
- Theft Protection (Unstealable): The system employs a two-step transfer process — an Unlock Transaction followed by a Spend Transaction with a mandatory yet configurable delay enforced between them. This delay provides a window of opportunity if the user’s key is stolen and used to steal his Coins. When the user sees any unlock transaction not initiated by him, he can co-sign a recovery transaction with his chosen Sentinel and override any malicious spend attempt by the adversary.
- Simple Inheritance: The vaults simplify inheritance planning by allowing users to designate nominees and set up instructions with the Service Provider for seamless asset transfer, eliminating the need for risky, manual private-key sharing.
About VaultCoin
VaultCoin is the native utility token of the Hybrid Custody Ecosystem, a decentralized crypto custody system that blends the strengths of self-custody and managed custody while eliminating single points of failure. By leveraging Layer 2 Smart Vaults technology, interactive zero-disclosure proofs, and a global Sentinel Network, VaultCoin aims to make major cryptocurrencies unstealable, unlosable, and un-confiscatable – unlocking the next era of secure, mainstream crypto adoption.
For more information, visit https://vaultcoin.network
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