Wallets Need to be Smarter | KBW2023

[Music] all right you guys all enjoying the sun I think most of us have been inside the whole day so uh we actually don't mind it's there's like a nice little breeze coming out hi guys thanks for joining us my name is Alex Lim I'm currently head of Business Development and hat Labs also in charge of face wallet but today I'm wearing the cap for uh as a country Ambassador for blockchain game Alliance because we actually have our moon from lab so uh I'll be uh fair and nice to all of you uh today uh as uh it was mentioned the topic of today's session is wallets need to be smarter and I thought uh isn't there is there any more obvious statement than that uh I think that statement itself deserves a conference but today's goal really is to uh dissect what we all mean by web three wallets and what we also mean by it needs to be smarter because I think the people that are joined here uh they all take different parts of the web3 wall because there's so many ways to skin this cat there's the custody non- custody aspect uh there are institutional players there consumer facing players so very happy to have uh these four people joining this panel so why don't we all go around and do a super brief introduction of who you are and then what you guys do fantastic thanks so much Alex and thanks so much for having me here guys it's a wonderful couple of days in Korea um I'm Zen I'm one of the co-founders of web3 off we are a wallet as a service solution that that is powered by MPC and account obstruction in particular we've been around for a while now so we power some of the top wallets in the space you might have heard of some of them uh this includes trust wallet includes sequence on polygon um it includes Kepler on Cosmos we also power some of the top brands uh in web 2 moving to web 3 uh including fox.com and all of the IP Universal Studios we just launched with McDonald's last week um a couple of others uh so yeah that's more or less what we do um and uh over to you thank you hey I'm Constantine I'm the CEO and founder of block Damon block Damon is the largest uh infrastructure provider in crypto we run over 150,000 uh uh nodes across 70 different protocols we're traditionally an Institutional uh uh really backbone um our investors and customers are folks like Goldman Sachs JP Morgan City Bank PayPal stripe uh coinbase binance Gren um You Name It We Run uh institutional um infrastructure for them we also have an NPC wallet uh library and integrated wallet Suite um that we um sell to companies like it uh we have customers like Volkswagen and Rolex as well as City Bank and uh others we try to be um very quiet about who we are block Damon the word Damon implies uh operating system that runs silently in the background and so we um like to stay a little bit behind the scenes um and our view on wallets is you know we think uh wallets are really the inbox of crypto and and and you know we're sort of the isbs here but we've learned that if we don't provide safe an integrated uh wallet services that the general consumer experience tends to suffer and so we wanted to provide a vertical integrated stack to ensure that uh people have a safe and secure wallet experience but we're to bwbc so we have no consumer product and um but yeah it's a super exciting space uh great um my name Ison and I'm the CEO and co-founder of hatchlab uh hatchlab provides wallet and secret auditing business so we provide two different wallets and first one is the local um B2B institutional wallets based on multis so its name is hesis and we also have some joint venture a joint venture with KB G bank is the one of the largest bank in South Korea and it's the first license the V license entity in South Korea and the second one is uh face wallet maybe I'm um I will speak a lot of face wallet in this panel talk uh face wall is is ingame wallet SDK so U we provide some oh to web to like experience for the web firsttime Gamers and game companies and we started our business is a security AUD auditing business so we provided the services to over 500 Global clients uh over five years and yeah here we are so thanks for having us hi everyone my name is Clarice I'm the CEO of Defense defense is a cyber security company we're develop a tool providing MPC wallet infrastructure for our clients or wallets are behind the interfaces of Warner brast yo richmont like cost and other luxury and consumer Brands we're based in Europe but we serve our clients globally mostly split between Middle East US Europe and a bit in Asia trying to increase our presence in Asia awesome thanks everyone uh maybe to kick us off as mentioned I think when we all hear the word wallet in this space uh I would assume that we all have different images and expectations of what wallets can do in fact web3 wallets can be applied in such a variety of different applications so maybe to kick off uh we can go around and just i' I'm curious for each of you uh for the wallet service that you're representing could you just specify your ideal customer Target what exactly is the problem that they're facing and how is your solution helping them so I think um when it comes to the problems that wallets are facing today I think it's something that a lot of people have close to heart today um I think that's what there been statistic that's been going around uh which was quoted by vitalic and issued by a study on CH analysis that basically mentioned 20% of all Bitcoin in circulation has actually been lost due to Lost public private Keepers seed phasers being a very large contributor to that and um that's it's crazy it's like hundred billion dollars a day 20% of total Supply and it's it's when when we're talking about wallets I think two me there two criteria that come to mind most often it's the level of custodial of your wallet everybody ideally if you asked anybody whether they wanted a custodial or non-custodial with cetus parabus properties everybody would say oh yeah I prefer it to be non-custodial I prefer to hold it myself if security if everything was equal in particular and and then the second one is just the usability and the security and the practicality of the wallet itself right um so I think a lot of us here uh providing wallets as a service are all kind of addressing this main overarching problem of how do we reduce loss how do improve usability and therefore allow others to enjoy and reap the benefits of cryptography and all of its fantastic use cases on a much more massive scale uh with lower level not just defi right not high value use cases but you're talking about dayto day you're talking about gaming you're talking about all of that um so I think when it comes to particular demographic and use case for us in web off we're a wallet as a service meaning um I think separate from uh face wallet but similar to dfns as well as uh block Damon we all provide stuff on the infrastructure level we're kind of a little bit more hidden we don't like to show ourselves um and uh showing your face now but yeah I mean it's uh we have to do a bit of marketing right you have to allow me this much um but uh but generally we try to help we try to work with organizations which are trying to get a very interesting goto Market strategy what whatever that might be right and we find that organizations that care about user experience and care about owning that whole experience are often those who who are that demographic yeah kind of what Zen said I mean you know so that's all true and and that's um I think one one thing to um maybe add is just the reminder um and you touched on it is there's so many exploits and and loss of keys and issues around wallet architecture um that really defeats the premise of what crypto is about right and so um we can uh you know trustless networks obviously uh can only really function if you can trust the underlying infrastructure and software to uh protect and secure your assets and so far us the basic premise of crypto is really more inclusion for everyone and so we really try to abstract technology away from that starting point like what do we need to offer so more people can have safe and secure access to utilize crypto in a self- custodial manner where they don't have to do or understand anything um and so I always say that the last five years for us as a company we were the largest importer of compute into crypto via node infrastructure working with Cloud providers and so forth and that was needed because the available compute was often very unprofessionally run we found and I think the next five years um and I've always give the same example if um and I'm I'm aging myself here but uh anyone who remembers the old music days when you used Pirate Bay to T music like that's sort of the state of crypto we're still at stuff gets lost it's really difficult to ensure and protect people um and so we feel the next five years are about these the spotif foration right the integrated uh platforms where people can collect their own tokens and not have to worry about exploitation and I'm always amazed when you build products and infrastructure in crypto how poor often the actual rigor of um QA and testing and underlying software actually is and so it's always amazing to me that basic principles of standard um security practices and and and best practices in developing software are not often applied in crypto right there is a sort of inherent hacky nature that we all love about crypto but it really fell short on the wallet architecture side that was a very clear problem for us and um and so our preferred customers are we have really two distinct wallets uh one is pure self- custodial you download it on your server um you can put Assets in it and it comes pre-integrated with our infrastructure so you can use it right away the use case there is really large scale institutions who have a lot of assets and don't want to hand those out and then we have a um B2B Toc wallet that um is uh you know looks a lot like a multii wallet but uses NPC encryption and allows you to um uh put um uh NPC protector charts on devices and servers so you can retrieve and lose a phone for example that you use as a wallet and uh we can retrieve to whoever your provider is can theoretically retrieve assets um and put them back in a wallet for you and so we try to be holistic there the the guy who builds our architecture is the guy who built Apple pay he's the CTO we recruited him early last year here and so we're kind of sort of looking at that as a standard so a lot of the mobile encryption is really really interesting to us and so we're thinking about like how do we allow entities to put wallets that are similar to an Apple pay experience uh on devices right like it needs to be as simple as that but also as secure and so companies um who look like that are very interesting to us yep great um uh face wallet uh which we provide targets the contents creator who targets the web 3 new Commerce so we believe uh in the next five years many web2 users will uh first experience web 3 through games so we are primarily targeting the gaming companies um and early last year the most of the triaa gaming companies in South Korea approached us saying hey we saw the success achieved by x infinity we made and we don't see them those are games so we want to showcase the very in um exciting games with the blockchain technology uh but uh the most um biggest concern is the wallets because the three billion Gamers who will enjoy their web three games uh will not wouldn't know what the metam mask the orange fox faces means I hope metamask teams are not here but and yeah means and uh forcing them out uh to leave to exceed the game to instore a wallet is something they strongly dislike and and the most uh the most uh the biggest part is the writing down the seed phrases so so that there is where faceb came from so we are solving the problems for the game companies and Gamers so first we exper we provide some in-game experience so so that users can uh create a wallet and play the game and and not leaving the game and second uh it is a we we users can create and sign up the wallets with in two seconds with their social login and third uh we are we users can send a transaction with a six dig pin because like the web to experience it like line pay or neighbor pay or fourth it's if fully non cost AIO we support we support private key exports and users who can access the their user Social account can access their assets and the last one which is the most favorite part uh of our partners is we provide our SDK for free to our gaming Partners um because most of the wallets uh outside uh charge uh to to their wallets like based on the number of users or number of the wallet wallets created but we don't want to make the deal with them we we want to make a win-win relationship with them because uh a user signs up the game uh we also acquire the user so we want to make some win skin in the game uh relationship so I think the uh the reason why triaa Korean gaming companies like Nexon caca games and Japanese g triaa game companies like scare enx have chosen us uh within the last in a year since our launch is maybe our differentiated uh value proposition lies in our approach like saying not saying hey here's the Complete product and documentation use it and pay for it uh rather than uh working together with our partners to make some uh best user experience ux and UI and ensure that their success is our success yep thank you and H our side we're cyber security company so security is a huge emphasize on which we're putting a lot of efforts we we are the Forefront of MPC research we believe there's a lot of performance still to be brought to the stack uh it needs to be faster better cheaper and so we're working every day with our scientific team to improve the algorithm and and make it more usable now we do believe that there's no security without usability you're actually putting user your user at risk if security is difficult so we also put uh to together we release on the product site new uh Innovation on the B2B Toc with Apple pay like experience where you scan your face and you have a wallet and last but I think it's super important you cannot build good user experience if you don't have good developer experience and we put a very strong emphasiz on making our stack accessible to developers making it easy to use building the right sdks work writing good documentation and maybe also one last point because we're selling into uh customers that have a lot to to lose sorry whether it's in term of assets so they have a lot of volume of assets on our platform or reputation we also are very um I would say focused on providing the right certification so we're also a suu type 2 audited by the Lo we have every time we push a code audits we go through strong um uh certification that we make available to our clients so those are I would say the unique focus and so if you look at our customer base today 50% of it is regulated on the rest we target a lot of B2 b2c use case which are mostly focus on fex so anything retail but also retail on the large consumer Brands loyalty program web programs cool thanks guys for all of your input uh I think with the time that we have left uh perhaps I mean I have so many questions that I like to ask each one of you uh but I think for the audience so that we all have some things to take away with this session um what I want to focus for the remaining time is perhaps the Asis and to be with your already smart wallet that I hope can be smarter and will be smarter in the next five and 10 years so uh if I may just open this to all of you um I'm really curious about I think one thing that unites all of us is that in One Way Or Another We're All pushing forward uh the W3 main adaption right uh for the mainstream whe whether it's institutional or consumer faing so I'm curious with each of your solution what are some of the biggest challenges that you face um and given that those challenges are resolved with your product what is the uh ideal picture and the vision that you guys paint either internally in your organization or externally that you talk about your partners uh if I could provide some guidance I mean Zen you guys are really have been at the Forefront of the concept of decentralized authentication I'm curious uh what kind of challenges that were there in terms of kind of pushing the for for organizations and consumers Constantine I think when you talk about wallets like metamask which is very self-explanatory in terms of users using their individual wallets uh a lot of the things are not known in terms of what's what goes behind the scenes for the institutional usage of of different wallets uh for face wallet especially Moon you talked a lot about the gaming vertical what are some of the specific challenges and problems that game companies go through and what do they want really last but not least Claris I think defense is really well known for the this concept of modularized uh wallets uh you could maybe share more about that uh how modularized or customizable do your customers or Partners want and what are some of those features so maybe some challenges and the ideal picture uh SL vision would be nice to kind of wrap up this session um yeah fantastic thanks so much Alex and uh for going through all of that um I think when it comes to decentralized off the way we really try to think about it is how best to manage what's the best theoretical limit of managing a users's public private keypad in a non-custodial way and when we think about and ask ourselves that question um the natural answer that we came to isn't so it it isn't so different from kind of the way we think and the way we represent ourselves digitally today it's through passwords for example things that we know right things that we only us know and understand um it's true things like Biometrics only things that we us and us have it's also through the devices that we own right these different um your phone your laptop um your browser whatever that might be so I think when it comes to decentralizing off our end goal is really to ensure that a user's key can be distributed across all of these different setups including you know including like their devices their social logins their uh Biometrics whatever it might be and replicate that in a intuitive manner that it is for users to set it up such that such that we can replicate how people already are putting themselves online digitally but just in the web 3 space right um and I think that's how we think about decentralized off it's really and it it's how it translates down into our product as a whole um because uh we have a large focus on you know different sdks for different devices different SDK for different uh Frameworks for different devices like on mobile we support all literally flut react native uh as well as the native sdks um on uh on we we we we support any ooff level when it comes to any social logins we support we support Biometrics as well pass Keys uh more recent standard that's cropping up UB keys so Hardware things that you could take for yourselves authenticator applications really the list goes on and it's it's it's all about just mixing and matching that for the best representation of a individual but in a non-custodial context cool um yeah I'm going to try and be Swift I think for us again we're we're trying to deliver the promise of crypto and I think one of the things with wallets that's also really important to consider is that uh over time we want every transaction and everything to occur on chain right and so um there's the wallet Frameworks for security and I think then there's the Integrations that also allow for um perfect visibility for every owner of any wallet about any transactions that occur um also um behind the scenes and so one of the interesting complexities we've seen last year FDX is a good example is that a lot of the enablers of volume and flow um you know ultimately use Omnibus wallets and take assets and and it's it's um we we've done a very poor job of actually delivering the transparency that the source technology bring um on an organizational layer so it's really an authentication hierarchy that allows for um uh wallets to um ultimately be identifiable by their owner and having access to the tokens at any point in time and so ultimately we we don't like you know fractional Reserve Banking and all that type of stuff and so I think it all lives in a wallet architecture where um every transaction over time is Will visible and so for example we work a lot with Bas like coinbase's project uh is really exciting to us as block demon we for a long time thought about building our own L2 to actually use in order to um um Channel transactions through a wallet where everything gets recorded and so um we stopped that when we started to meet um coinbase and and and uh base the base team specifically early on but I think you have to look at the wallet in the context they live in right and so um and so that's what I hope happens is that ultimately um there is perfect transparency um over time and and that's going to be really challenging to achieve but um uh you know right now we're we're building the easy integration wallet stack so institutions can start to do it and then we try to force them uh onto chains that provide perfect perfect visibility for cross train transactions and so we're hoping to create the reality that we like to see in 5 years Time by um the stack we're building today cool um uh at first I believe the the unnecessary user experience caused by technology should all disappear and Fade Into background um looking back into the early days of Internet um you you just need to uh connect to a modem and configure the IP address and DNS settings to use the to uh feel to realize the value of the internet provid but nowadays um us just can feel the value of the internet just with just a few clicks so I believe the web three the blockchain Technologies um the value can the value that blockchain and web3 Technologies can bring to the humanity is uh providing people with true digital ownership and um lowering some Financial barriers and eliminating the barriers but right now some there are so many unnecessary user experience uh to for technology the limited to the to realize the value so uh I think uh to answer your question the biggest challenge to the game is game company is facing is I think um uh there is no successful web3 game in the market yet uh and I think the we3 gaming Market is at an infant stage and uh the we3 gaming Market is taking shape and at that point uh what I can do and what wallet companies can do is uh to uh disappear to eliminate uh the unnecessary user experience like you just need to memorize the uh it's hard to memorize the wallet address and you just need to recharge the gas fees every time and it's it's very challenging uh to verify if the recipient's address is correct or not or assra so that that is what wallets and we need to focus on in my opinion and the the Future Vision you asked um uh I often uh visualize uh the the vision of wallets like in the next decade uh to ref by referencing the movie you know Ready Player one in that movie uh users uh play enjoy the game in a virtual world and they get they receive the uh these are assets and these are money as reverse which they can use uh to buy some real world assets uh real world purchase so I think the wallet is kind of a deser finance infrastructure that facilitates kind of in experience I mentioned and uh enables people uh that can bring some full digit ownership and Ena some enable seamless interaction between virtual world and the real world this is my answer I believe that the the smart wet is the one that actually adapt to the user and and and our client's constraints and so because we're targeting different use cases we've seen that constraints are very different whether you're a tokenization platform you're an exchange you're doing crossb payments etc etc and so those clients have very different constraint in term of onboarding time in term of security in term of compliance in term of regulatory constraints and so we we wanted to give them options options on for instance Authentication can you use Biometrics UV Keys default to pin code or or just you know uh email address and password because you don't want to change anything to the user experience you already have uh also we wanted to give options in term of what you can do with the where you can actually store the shares so we have a decentralized key management Network where we can have shares stored in different uh environment and for instance when you look at institutions in Switzerland they need to actually show The Regulators that all the keares are located in Switzerland and so in order to show the flexibility of our Network for instance we've made the first Bitcoin transaction from space by putting keares on satellites and showing that our Network could be very flexible also we think that the options needs to obviously be given in in terms of multi assets and interoperability so providing our clients with 27 blockchain Integrations uh and last also in terms of custodianship right do you want to have self custodial deployment do you want to operate based on Omnibus accounts because you have a custodial uh deployment scheme so all that is is very modular as you were saying in our infrastructure but I believe that when you look we look in at the challenges we're facing and mostly Through The Eyes of our clients when they Benchmark us against other players is the lack of standardization the lack of standardization comes mostly from the fact that still use cases are very nent and so we lack patterns to actually uh uh know user behaviors and so we like standards around what features should have a wallet this is one basic you know uh standard that we add we add standards around things like should you provide key export or not to your clients you were mentioning you providing key export this is to me something that is very essential I don't understand how you can be a a service provider today doing self custodial uh um schemes and not give back the private key if your user want it I also believe that it's not gdpr compliance and and once this subject will come it will be something that becomes a standard uh standards around as well the technology we're using So today we're leveraging MPC MPC is not standardized nist are starting work on threshold signature so there's you know the the the there will be some standards coming up in 3 to four years but it's not enough and so I'm B member of the MPC Alliance and we've started uh working on reference documents so Regulators can have guidance into what is a good or not good MPC implementation so lack of standardization uh at large is definely a big challenge today once again for cl for our clients to know what is the right solution for them and now in terms of vision maybe two seconds on that I believe that to me the ultimate obviously the with all say that right the smart wallet is the one that can obviously enable you to trade assets and interact in a friction L way with you know uh a UI but in my opinion it's to go a bit further the smartest wallet or the wallet of Tomorrow is the one that have a onetoone correlation with your identity where your wallet is your identity and we're pretty much imagine this world where you can exchange any assets you want you you know for sure that you're never going to lose them because they're attached to ident your with your identity and only you can recover them so to me that making sure that wallet is no longer paired to a password a backup phrase something that is Sav in the cloud but is actually who you are is the future of wallets all right thank you very much everyone for sharing your Insight and perspectives I promise you there was no dress code but these guys all made it so obvious where they work at so if you're interested in of the wallet solutions that they're working on please uh find them and grab them before we all leave I hope you found this uh interesting and useful for you and have a nice rest of the day thank [Music] you