Cryptocurrency wallets today are a marvel of engineering and cryptography, but they suffer from a few key flaws that make it easy for scammers to steal money from unsuspecting victims. Therefore, the Odsy Foundation announced last week that it raised $7.5 million in seed funding at a significant $250 million valuation for the Odsy Network, a blockchain hosting a new type of smart wallet they call dWallets, which they hope can solve many of the issues plaguing “simple” public and private key wallets.
Odsy maintains that the issue with the classical wallet type is fundamentally about access control. Blockchain wallets are operated by knowing the private key of a public key, which corresponds to the wallet address. This knowledge gives anyone full control over the funds on that address.
Under the hood, private keys are used to sign messages (in this case, transaction instructions) while guaranteeing to external observers that the signer knows the private key behind a particular public key (wallet address) — but without ever revealing the private key itself. Signed transactions “blobs” are a flexible tool, as you could pretty much give them to anyone, and the worst that they’ll be able to do is execute your transactions for you. Nobody can change the contents of the transactions without requiring a new signature, meaning they’d have to control the private key.
Odsy, with its dWallet technology, wants to make private keys just one small element of the authentication process so that stealing one piece of data doesn’t result in total loss. The same tools can be used to create complex access control logic, for example, by limiting the actions that any individual private key holder is able to perform. Thus, you could have multiple wallet user levels, such as admin access, regular user access, etc.
The project uses a cryptographic technology called Multi-Party Computation (MPC) to create the dWallets. This enables reliably generating a final private key by combining multiple “secrets” or pieces of the final private key. A key element of any MPC application is that nobody can piece together the full secret just from one or a few components — they need to know all or at least most of them.
In Odsy, users own their own piece of the secret, while each individual validator of the network has their own small piece as well. The network actually relies on thresholds so that only a majority of valid secret holders can execute transactions without needing the entire set of keys. This helps keep the list of validators decentralized and fluid, and it also allows multiple users for the same wallet, perhaps with different permissions.
The dWallet smart contracts verify if the specific user is allowed to perform the action they’re requesting. If they are, they will generate the full signed transaction for the dWallet, which can be applied to any other blockchain and execute transactions in that destination. As mentioned before, this doesn’t have any security risks because signed transactions cannot be modified. This system is also quite unique and enables a lot of cross-chain interaction use cases.
Overall, Odsy is designed for more complex and security-minded use cases such as custody, multi-chain decentralized organizations, and crypto businesses, while its cross-chain interoperability features are great for decentralized finance and blockchain games.
The project attracted significant interest from the space, with the Odsy Network funding round seeing major investors such as Blockchange Ventures, Rubik Ventures, No Limit Holdings, Node Capital, Insignius Capital, FalconX, SolrDAO, TPC, and others.
The ecosystem already includes other significantly funded startups such as dWallet Labs, which secured $5 million from the likes of Digital Currency Group (DCG) and Node Capital, as well as Fun, which raised $3.9 million in a round led by JAM Fund, founded by Tinder co-founder Justin Mateen. Given the significant slowdown of the crypto market and investment climate, the results are promising.
That said, the funding is necessary for good reasons, as Omer Sadika, Odsy Network co-founder and dWallet Labs CEO, explained, “The technical and scientific challenges we are facing are amongst the most complex in crypto today, and we have one of the best research teams in the world with over 10 world-class experts in modern cryptography.” Sadika added that in the next few months, the team will publicly unveil the cryptography advances that made Odsy possible.
The Odsy Network is a unique solution to the issues of crypto wallet security, compliance, and utility today. But even if the technology is promising, executing on it and competing with many other infrastructural solutions will not be easy. Only time will tell if dWallets will become the massively adopted, revolutionary technology they have the potential to be.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
