Fintoch Education: Crypto Custody
Fintoch is an innovative blockchain financial platform built by Morgan DF Fintoch. In the very beginning, the positioning of Fintoch is set to be something big – an ecosystem that connects lenders, borrowers, traders, and investors alike.
A lively financial ecosystem is only viable if the underlying security for user funds is solid. Remember in Crypto, we don’t trust but verify. With that said, Fintoch focused on the development of its core technology HyBriid 2.0, which combines “zero-knowledge proof” and “multiple signatures” to protect users’ funds.
For users who are just stepping into the Blockchain world, you might find the two concepts mentioned above hard to grasp. Thus, in this article, Fintoch Education aims to introduce the very basic idea on Crypto custody, which will help the user better understand why Finotch has devoted its effort in developing HyBriid 2.0.
The key idea behind the revolution of Decentralized Finance (DeFi) is the complete ownership of one’s asset. That said, when you created a wallet with MetaMask, and get your first 12 secret recovery phraces, congrats, it might be the first time that you have claimed full self-custody of your assets.
This might feel exciting for the first few minutes. And then the thought of taking full custody of your asset can become nerve-wracking and overwhelming. Newbies are prone to mistakes, especially in Crypto where a “second chance” is rarely granted. If you ever give away your secret phrases, your asset is gone irreversibly. We might get a second chance in other things, but not in Crypto.
DeFi seems exciting and lucrative but never beginner friendly. For users who are risk aversive, they might seek out third-party custody. Third-party custody is not much different from depositing with a bank. An authorized entity like Exchange, Digital Asset manager, or Custodial bank will be the guardian for users’ secret keys.
Yet, when it comes to third-party custody, the old problem of trust come back in place. How can I trust someone to be in charge of my funds? Fintoch’s HyBriid 2.0 technology aims to find a nice balance between self-custody and third-party custody. In another word, it aims to optimize the trust issue with third-party entity by introducing multiple guardians and randomize the guardian selection process.
Put it in a perspective, whenever a FINTOCH user wants to borrow money, the system will randomly select 10 nodes from 100 anonymous supervisory nodes to jointly generate a supervisory secret key by using zero-knowledge proof cryptography and create a special multi-signature lending contract wallet with the borrower and the platform. The lending contract wallet requires two out of the three parties to provide the secret key authorization for funds access. These three parties consist of the borrower, the platform, and the supervisory node, which must jointly follow the agreement to use the funds. According to the rules of the agreement, if you want to cheat or commit fraud jointly, you will need all 10 supervisory nodes to know the borrower, and the probability of doing so is zero, which is impossible to cheat jointly.
HyBriid 2.0 is the most updated version developed by Fintoch dev team. The Hybriid 2.0 smart contract agreement is fully upgraded, supports most mainstream currency borrowings, and borrowings that support up to 5 times leverage, allowing borrowers to borrow more funds with fewer margins, earn benefits in the DEFI field, increase funds in the field of DEFI, increase fundsUse rate.With its promised security feature, we only aim to see a thriving financial ecosystem on the Fintoch Financial Blockchain.
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