We have to realize that we’ve become too used to one way of thinking about decentralized access control with crypto wallets says Omer Sadika the Co-Founder of Odsy Network. Is a dWallet a new solution?
Access control is an important part of your daily life — think about when you lock your house, or store important documents in a safebox. You need the right mechanisms to ensure that these valuable things are safe. However, you also need mechanisms that are flexible enough for you to use and share them at will.
The online version of this concept has traditionally looked like sharing access to documents on Google Drive or using a password manager for your social media accounts. By relying on centralized, server-based systems, these forms of access control are robust and highly customizable. However, as do all things Web 2.0, they come at the cost of trusting a third-party with your information. But that’s changing.
In Web3, Public Key Cryptography (PKC) is used in order to make sure that only the holder of a private key has full control over their assets. This is why “not your keys, not your coins” is a common saying. It echoes the underlying philosophy of decentralization that no middle person or centralized third party needs to be involved for you to access your funds.
Web3’s Access Control Problem
Web3’s radical ownership paradigm — where access can never be revoked from a person holding the private key — has a flip side. The problem is that the same logic applies for anyone they want to share access with because anyone holding the private key will have irrevocable and complete access as well. That creates serious barriers in the real world where users have grown to expect robust and customizable access control mechanisms when handling their funds on banking apps and other Web 2.0 fintech solutions.
The way things are now, wallets are static, not dynamic. You either have complete control over your private keys or you don’t. Users are restricted to a binary choice when it comes to access control. There’s no in-between, no customizability, no programmability.
If a user chooses to hold their coins, they take on a set of risks that most people aren’t comfortable with. Being completely self-custodial at the moment means that you also assume the responsibility of having the right operations security (OpSec), that you are methodical about data backups, and that you will keep your seed phrases in a safe physical place. And even then, what happens when a key holder is incapacitated or passes away unexpectedly? BeInCrypto reported on data from Glassnode suggesting that nearly 34% of the total Bitcoin supply is lost in dormant wallets, presumably due to scenarios related to one of these risks.
This is also a problem for organizations that rely on access control mechanisms for managing their funds. While many Web3 projects already resort to multisig solutions for the same reasons, these systems have to be tailor made and are usually tied to a single blockchain.
Risks Are Everywhere
However, not everyone is comfortable with being their own banks due to the risks associated with losing control of their private keys, and most organizations need more functionality than what multisigs can offer. Since the decentralized approach to access control is currently static and limiting, many users opt for centralized solutions instead that offer more flexibility and an often-empty promise of better security.
The folly in going back to centralized solutions couldn’t be more obvious than in recent examples of custodial services that have become insolvent and put user funds at risk. Not to mention a case where a combination of static access control and centralized custody resulted in the loss of $250 million in user funds. Relying on centralized wallet solutions defeats the purpose of building on decentralized networks, and that’s where we’re headed if we don’t re-imagine access control in Web3.
dWallets: Are They a Solution?
To solve this issue we have to realize that we’ve become too used to one way of thinking about decentralized access control with crypto wallets. This is called path dependency: we’re only using wallets the way we do because everything has been built under one particular understanding of what wallets are and what they can do.
At a basic level, wallets are just systems for signing messages with a private key. We can start seeing that simple function as something we can use on its own or re-combine with other parts of Web3 in new ways. What if we had wallet-dedicated smart contracts that made access control programmable? And what if wallets had their own purpose-built blockchain to ensure their security? What if you had one wallet that could sign transactions across almost all major chains?
If we take the time to re-imagine wallets from the ground up, we find that this vital part of the Web3 experience can be improved drastically in terms of:
Programmability: What logic we can bind wallets to (e.g. policies like spending limits).
Security: How they keep our assets safe without the need to trust another party.
Compatibility: How we can use them in different ecosystems to ensure cross-chain interoperability.
Transferability: How we can treat wallets themselves as assets, including the ability to transfer ownership.
These are all things that are improved upon when we are able to have wallets that are not just decentralized but also dynamic — dWallets for short.
dWallet: A New Concept
This new dWallet concept takes that same signing mechanism that is a part of most blockchain networks and provides it with its own dedicated network.
As a result, dWallets can count on wallet contracts,a special kind of smart contract that allows developers to create access control policies and make them fully programmable. Likewise, their security is ensured in a decentralized way with a network of validators. It also means that dWallets can sign transactions on most blockchains. Finally, it allows dWallets to be transferable.
dWallet and The Future of Access Control
The solution to the current limitations in Web3 access control is to stop seeing wallets as secondary components of a blockchain network, and instead have a dedicated network for them. That’s what we’re building at Odsy Network. dWallets are a new primitive, a building block we can plug into other applications and tinker with freely in complement with other layer-1 blockchain ecosystems. It will allow users to interact with the rest of the space in new and more fully-featured ways.
In the future, an entirely new class of protocols, solutions and applications could be built with this new concept for what wallets are. dWallets could enable simple yet currently unavailable features such as access sharing, secure and decentralized digital asset custody, and interoperable infrastructure for DeFi. They could also introduce and improve on things like multi-chain DAOs and Custody-as-a-Service. In fact, dWallets themselves could be transferable digital assets with their own marketplaces, something that can enable the transfer of entire multi-chain portfolios at once, and also create market pricing and liquidity where they couldn’t exist before.
A secure, flexible, and granular solution for multi-chain decentralized access control would effectively work as a single portal into all of Web3. It could serve as a unified solution that starts with the right kind of decentralized access, to provide the right kind of user experience.
About the author
Omer Sadika is a serial entrepreneur with deep expertise in technology, cybersecurity, and crypto. Sadika is the Co-Founder of Odsy Network, a secure and programmable decentralized access control layer to all of Web3. He is also the Founder and CEO of dWallet Labs, a cybersecurity company specializing in blockchain technology, where he oversees strategy and vision for solutions built on top of the Odsy Network. Sadika, a YCombinator alumni, was previously Co-Founder and CEO of the first API Security company, Salt Security, a unicorn.
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Source: https://beincrypto.com/dwallet-web3-access-problem-dwallet-solution/