New Partnership Forms to Create Decentralized Recovery System for Crypto Assets

Key players in the Hedera and Algorand ecosystems, including the HBAR Foundation and the Algorand Foundation, announced on January 11th the formation of a new partnership called the DeRec Alliance, with the goal of creating a decentralized recovery system for crypto assets. The partnership was revealed during a joint panel at the CFC St. Moritz conference by Hedera’s co-founder Dr. Leemon Baird and Algorand Foundation’s CTO John Woods.

What’s Next for the Process?

According to two DeFi executives, the DeRec Alliance aims to facilitate the process of securing and recovering crypto assets in a way that is compatible with traditional Web2 experiences. Dr. Baird encouraged all blockchain networks and the industry to create standards and open-source code to bring security to the Web3 sector without complexity:

“All blockchain networks need to work together to create a compatible standard in all wallet software on blockchain networks.”

Baird stated that Hedera and Algorand are just the beginning, and that banks, credit unions, and multiple wallet software projects are already involved. The DeRec Alliance introduced the Decentralized Recovery (DeRec) open-source protocol as a standardized approach to secret management.

Noteworthy Details About the DeRec Approach

DeRec is built on the idea of secret sharing among a set group of helpers and allows users to recover their information when necessary. Each helper’s share gives no information about personal data, and the system allows for recovery even if a user loses a recovery device. Woods commented on this initiative:

“A flawless user experience is the foundation of every great product. We need to maximize ease of use and minimize the risk associated with self-sovereignty.”

The DeRec protocol operates with automatic re-sharing when data changes or helpers join or leave, as well as automatic confirmations that helpers are holding their shares of the data. Additionally, there is no need to disclose the identities or numbers of the helpers, and the helpers can remain unaware of each other.