Hedera and Algorand partner to develop decentralized wallet recovery system

Source: Cointelegraph

Major players from within the Hedera and Algorand ecosystems, including the HBAR Foundation and Algorand Foundation, announced the launch of a new alliance called the DeRec Alliance on Jan. 11 to build a decentralized recovery system for digital assets.

The alliance was unveiled at the Crypto Finance Conference in St. Moritz by Leemon Baird, co-founder of Hedera, and John Woods, chief technology officer of the Algorand Foundation, during a joint panel.

According to the two decentralized finance (DeFi) executives, the DeRec Alliance aims to streamline the process of securing and recovering digital assets, aligning with conventional Web2 experiences.

Baird encouraged every blockchain and industry to create standards and open-source code to “bring safety to the promise of Web3, without the complexity.”

He told Cointelegraph that the industry needs to make it easy for users to recover keys.

“All blockchains need to work together to create a compatible standard across all wallet software on all blockchains.”

Baird said that Hedera and Algorand are just the start and that they “already have banks, credit unions, and multiple wallet software projects involved.”

Along with the DeRec Alliance, the Decentralized Recovery (DeRec) open-source protocol was introduced as a standardized approach to secret management.

It is built on the idea of secret sharing among a designated set of helpers, such as friends or businesses, and allows users to recover their secrets when necessary. Each helper’s share reveals no information about the original secret, and the system ensures recovery even if a user loses their recovery device.

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Woods commented on the initiative, saying:

“Seamless user experience is core to any great product. We need to maximize ease of use and minimize risk associated with self-sovereignty.”

The DeRec protocol operates with automatic confirmations that helpers retain shares of secrets, along with automatic resharing when secrets change or helpers join or leave. Additionally, identities or numbers of helpers do not need to be disclosed — even the helpers remain unaware of each other.

This development comes as the DeFi space continues to grapple with security issues.

On Jan. 10, the United States Commodity Futures Trading Commission, which regulates the U.S. derivatives markets, released a report of recommendations for policymakers and industry players to mitigate DeFi-associated risks.

EmporioNFT reached out to both developers for additional information.