Hedera and Algorand partner to develop a decentralized wallet recovery system

Key players from the Hedera and Algorand ecosystems, including the HBAR Foundation and the Algorand Foundation, announced on January 11th the launch of a new alliance, the Direc Alliance, to build a decentralized return system for digital assets.

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

According to the two decentralized finance (DeFi) executives, the Derrick Alliance aims to streamline the process of protecting and recovering digital assets, aligning with common Web2 practices.

Baird encouraged each blockchain and industry to create standards and open source code “to bring the security of the Web3 word without the complexity.”

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

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

Baird said Hedera and Algorand are just a start-up and “already have banks, credit unions and several wallet software projects.”

With the DeRec Alliance, the decentralized recovery (DeRec) open source protocol introduced secret management as a standard approach.

It is built on the idea of ​​sharing secrets between a select group of helpers, such as friends or businesses, and allows users to recover their secrets when needed. Each utility share does not reveal any information about the master secret and the system ensures recovery even if the user loses a recovery tool.

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Commenting on the initiative, Woods said:

“A seamless user experience is central to any great product. We need to maximize ease of use and minimize the risk associated with auto-sovereignty.

The DeRec protocol works with automatic validations that enable assistants to maintain shared secrets, with automatic re-sharing when secrets change or assistants join or leave. Additionally, the identities or numbers of assistants do not need to be revealed – even the assistants remain anonymous to each other.

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

On January 10, the United States Commodity Futures Trading Commission, which oversees U.S. derivatives markets, issued a report with recommendations for policymakers and industry players to mitigate DFI-related risks.

Cointelegraph has reached out to both developers for more information.

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