Bridging Institutional Capital w/ Custodians & Validators | Lorenzo Barbantini Scanni - Colossus

[Music] my name is Loreno barbantini I am the founder of Colossus Colossus is a European company we actually started off as a validator and then I say that we became custodian by accident um as we were faced with the initial challenge of delegating assets from regul custody so basically what we do our vision is that we believe that the um the future of web 3 rests on the shoulders of institutional capital and and that's why our mission is to Foster that Innovation and to help institutions coming into this space how do we do that so first of all one step back and let me discuss who's in The Journey with me so we have a core team four Founders Johnny is the it expert more than 25 years in in it myself I have been in Telco and startup spaces for over 10 years uh Andrea is comes from the institutional Finance background Florian who's our fourth founder is a lawyer and then we have Andrea torrente and Raj one is our CTO and the other one is product manager so with quite diverse backgrounds so we see and we believe that there is a big gap in the market which is the the whole reason for my talk so the Gap in the market is that it is very complicated to interact with regulated and licensed cust platforms so very few tokens support it I'll just do some examples I don't know you know here how many of you are actually utilizing uh custody Solutions but let's start with fire blocks one of the market leaders fire blocks only supports presently three assets and when they support these assets of course I'm staying about Cody they support thousands of assets for custody but only few for staking so and even when they support them they have deals with validators and so the choice that an institution has is very limited okay so that's that's the first point second one is that the support for new tokens is very slow because these uh these companies have other focuses and when you're talking about things like Bitcoin staking which you know has been the flavor of the months during the month of December there it's not even on their on their timeline and so if you want to interact you have to develop uh the transactions yourselves and with with what that means so the market is quite fragmented but I'll get into that um in a second so the market asset holders want to hold multiple assets they are today utilizing multiple custody providers and they want to use multiple validators so of course in this what's happening is that you have both the custodians and the validators that are developing their staking dashboards so custodians of course have their staking dashboards but even there support for assets is very slow maintenance of these dashboards is very common every time that there's a soft fork or something happens on the Chain you have to update the transactions otherwise nothing works anymore same thing goes for the validators and now if you're an asset holder in this case you end up having to interact with many different platforms so you would have the platform of your custodian that maybe doesn't speak to the validator you want to speak with so you end up having multiple platforms you need to access and there is no central place where you're able to generate to to manage your assets so coming back to custodians they're limited to what their custody solution providers enables them to do so if you're using fire blocks and you want to uh I don't know do uh Bitcoin staking on Babylon it's not supported today you can stake but the transaction unstake and un bond is not yet supported and so that kind of creates I would say uh an issue and of course even custodians today if you again using fire blocks there's only two validators one is Kil and one is figment validators are facing basically the same issues they have customers these customers are large customers that are holding their Assets in um in a licensed custody and those assets are complicated to get out so institutional users many of them let's start you know from from the from the end so asset managers I already described these are uh companies that are holding uh large quantities of assets they uh they need to be able to generate yield when the assets are idle and so here what we're allowing them to do is to access a very simple platform and to be able to generate yield directly from custody without moving assets I think that you know the the events of the recent days keep on reminding the institutional customers that counterparty risk is a very significant uh topic to to um you know to to be careful about the other one VCS now VCS these are companies that make investments into new projects so now of course once they make an investment this project needs to be custodi inside their custody solution and if that project is in the infancy stage there's probably a lot of decisions to make in terms of governance and no custody solution today supports governance governance is a very close relative to staking so one of the things that we're doing is also enable governance um exchanges exchanges have hundreds of tokens um supported and and uh and launched on their uh centralized or decentralized platforms and they want to be able to offer those customers their customers staking and they want to be able to offer it natively without having to go around their own security procedures therefore doing everything from within their custody solution Foundation even more because as a foundation you're launching a new project and this new project um is probably not going to be supported by any of the codyy solutions because it's just launched so one of the things that a platform does it allows you to store these assets inside a Cody solution through through the mechanism of derivation wallets and then allows you to also stake that same token if of course staking is available custodians and validators have exactly the same problem just seen on different ends so the custodian wants to send assets to the validator but doesn't have the technology to do it and so therefore it doesn't know how to craft a transaction directly from within the C solution and the validator has exactly the opposite uh problem wants to get those assets but is not able to to pull those assets because those two platforms don't speak meet the institutional Hub so basically we've created a Marketplace a two-sided Marketplace that on one side connects to the custodians the ones that I just described so anybody that is holding Assets in a custody solution um and on the other side allows those customers to interact with any validator of their choice so it's a two- side B2B Marketplace think of it like a retail staking Hub but instead of connecting your metamask your wallet or anything of that kind you're connecting the API of your custody solution so you're using fireblocks you're using ler Enterprise you're using dfns you can do all of that directly uh from this platform again if you're an asset manager and you're using three different custody Solutions and you're using multiple validators this platform allows you to access the Assets in different custody Solutions and to stake them to any validator of choice so when you stay from custody here you have a very simple toggle menu you go from Firebox L your Enterprise the FNS then we're working also on other Solutions we also have uh online HSM so cloud-based hsms offline signing with offline hsms so it's basically bring your own custody to the platform and we'll interact with that Cy solution and this everything is pure raw signing no smart contracts no widgets no iframes no D apps nothing that can be fiddled with and everything totally transparent because transparency in this market is the name of the game and so okay the tokens that we support many tokens but here just what I wanted to to highlight is that you have fire blocks that supports three assets Ledger Enterprise supports six now it was five before we support all of the other assets so of course as customers require more assets we're you know now last month was the beta chain month and so we're now supporting beta chain and the next one's going to be ton it's so now we're driven driven by customer by customer demand so our unique selling points are very simple we make it usable we make it safe we make it compliant and we allow every single part of the transaction to be verified so nothing needs to be done on trust how do we do that so we've created something in the flow so I'm going to show you uh a brief video in in a sec of how the platform works I actually have it live but as I was told that everything needed to be offline I have a video uh but I'm I'm happy to show anybody live that wants to see a full uh transaction from fire blocks Ledger or dfns of any token that we support so this is a transaction lens so when you are when you create a transaction before you sign the transaction inside your custody solution you're able to verify the hash hash is a one-way function so from the clear transaction you can get the hash from the hash you can get to the transaction so the only way of having mathematical proof that what you're signing is what you want to sign is to verify that you're that you're generating the same hash so the transaction lens shows you the clear transaction on top the readable format of the transaction and then the hash which is the one which needs to be the same one that you're going to be signing inside your custody solution we've even got one step further we have created a decoder based on open source libraries that we give away for free to all our customers and then invite them to insert their libraries because verifi don't trust but you know you shouldn't just trust us you need to trust yourself and Trust the codee and so here again you do the same thing you take the clear transaction that you have copied from the transaction lens you insert it here you get the readable format and you get the hash once you have the hash sets which are the same now when you sign it you have mathematical proof that what you're signing is what you want to be signing okay so I'm just going to show it to you might as well so so this is how the the platform looks so we're going to be using fireblocks this is the UI of the platform and now we will go to the back end now this is what I was showing you before this is how you interact with different custody Solutions you interact one custody solution at the at the time and the API is a readon API there's no signing there's no moving it only initiates a transaction so that you're always 100% Ure that you know if if anything would happen you know this API can do anything that you don't wanted to do okay so now here we're checking fire blocks it's the one that we're using at the time so now we're just going to do a delegation of atom okay so now when we click on delegate the API is checking what we have inside now we've just inserted we've inserted the secret of the AP I which we've created on fire blocks of course the same thing it's you know slightly different but depending on on the custody solution that you're using and so now that makes sure that we're signing and we we can send the transaction to our custy solution now what we have here um on this side uh institutional customers want to do things in a compliant way so maybe they have a a compliance policy or transaction authorization policy that um that requires them to sign the transaction in more than one user and so in this case we have an MPC on top that basically shards the the key and therefore more than one user crafts the same transaction only as if the transaction is the same are you able to send the transaction on so now no threshold needed we send the signature request and as you saw before this is the trans action lens that pops up immediately this is something that the operations teams of large custodians very much like because that means that everything is Blended into the flow of the transaction everything is done in front of them of course then they still have to take a a a separate source which is the Colossus decoder or something that they want to do to make sure that they're signed the correct hash so now you copy the transaction you go to the loses decoder you choose the token that you want to use and you get exactly the same of course you get exactly the same result now here you see we're inside fireblocks this is the custody solution and so now we have a transaction pending authorization so this is a transaction which has been initiated by The Hub so the marketplace has initiated transaction the only way of knowing what it is is checking the hash and the hash is what we check through the transaction lens so basically what I'm going to do is I'm going to show you the same transaction done on all of the other platforms so this is how you sign on fireblocks you have a fireblocks app and this is how you sign you come back to the institutional Hub because now you have to check that the transaction is broadcast so you see the latest transaction up there okay now you go to the explorer link and you check the transaction has really been done so everything all always checking never trusting now we do exactly the same thing on on Ledger Enterprise I didn't have to show you how the the initial piece works but it's exactly the same you insert the transaction greable format clear hash and we check it inside Ledger Ledger has this is the UI Ledger requires a signing through an API so here you'll see the transaction is signed now so there was a pending a pending transaction and now the transaction there has been signed by the API of Ledger Enterprise and again we come back to the hub we broadcast a transaction we verify the transaction went how it should go here we have the Explorer to confirm everything and now we will do the last custody solution which is dfns just a different solution exactly it works exactly the same so the experience is consistent even when you're changing custody Solutions so imagine institutional customer that is using multiple custody Solutions like they do that can access the platform and has it all in one place perfectly neatly done in a very simple way so here we have the the decoder again we check that everything is kosher that we're signing the hash that we want to be signing and this is the signature inside dfns and Ledger Enterprise have a wallet architecture fireblocks has a volt architecture this is a wallet architecture so in this case I'm signing a raw signing this is where the hash would be down there and so before approving it I have checked on the transaction lens and I have checked on the decoder that the transaction is what I want to be signing we approve the transaction so first we checking that the hash is correct approving the transaction and there you go and that is it so super easy I hope I uh I managed to uh to give you some insights about this market and uh I'd be more than happy to uh to show you the platform live um please check me out if uh if you have any questions my telegram is down there so looking forward if there's any questions I'd be happy to to answer thank you