Koinos Smart Wallets - What features do you want to see?

The first bitcoin wallet required you to run your own bitcoin node, over time a seperate program was created to interact with the bitcoin blockchain and the first independent software wallet was created.

Today, we have developed multisig wallets and smart contract wallets. Both multisig and smart contract wallets are not extremely popular for the normal user and that is because they are limited by the clunkyness of their design. Smart contract wallets cost money on fee based chains and multisig wallets carry all of the difficulties of a normal wallet, such as having to protect your seed phrases.

With Koinos, every feature of a Koinos Smart Wallet can be powered by Mana, allowing an unlimited number of uses.

What pain points have you had when using your wallet? What features do you want to see in your wallet that makes your user experience better?

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We’ve discussed a number of features within the community. Here are a few:

  • Automatically creating short-lived wallets, delegating mana to those wallets and using the new wallet for app authorizations. This allows for anonymous app usage with no risk to the assets in your main wallet.
  • Decentralized account recovery. (require multiple approved/trusted parties to act together to create a new wallet for you and transfer all assets)
  • Delayed, cancelable withdrawals
  • Requiring approval to receive air dropped tokens (avoid taxable events from things you don’t want)
  • Safe transfers that require a password or other authorization by the receiver to complete the transaction.
  • A dead man switch that will transfer your assets to other wallets based on “your will” if you don’t send a signed message to a smart contract every 12 months or so.

Parametring blockchain endpoints so that the wallet can be used for any blockchain using the Koinos Framework

A way to integrate KYC into the wallet would be huge. One of the billion dollar questions in DeFi is how we can stay anonymous but also compliant. Of course someone needs to solve this first but once it’s there it’s a vital part of the wallet.

This sounds more like a decentralized KYC where the DEFI exchange atleast knows that the person isnt some kind of black listed user. You could require a minimum dKYC score to be allowed on an exchange, although im not sure who this would benefit. If you dont perform KYC under AML laws, whos going to accept it?

A few thoughts:

  • For the “short lived wallets” I can see this prepaid sim card situation where mana delegators create these short lived wallets with 100,000 MANA or 1,000,000 MANA pre loaded and last for X days after activation. Once activated the timer starts and the account is thrown away at the end.

  • Decentralized account is massive. Just thinking out loud about how users see wallets. It seems like the idea of “security” varies greatly between the users and what they are trying to access. Some users just want to try something out, others want to become power users and control everything. It’s difficult to force the same on everyone, and its also equally difficult to build something specific for everyone. So instead, it might make sense to build 1 thing and then allow security to be enabled as layers.

The layers would look something like this:

Tier 1 -
No custody. Tier 1 wallets are considered child wallets that get generated by parent wallets. Password log in to dApp. You never see your seed phrase. (short lived wallet)

Tier 2
Partial custody. Tier 2 wallets are also child wallets. You have access to the PK.
Access to “savings vault” that protects only the tokens you put inside of it.
Seed phrase is handled by owner of parent wallet.

Tier 3
Partial custody. Tier 3 wallets are parent wallets. You have access to PK and Seed Phrase.
Savings account.
Parent wallet can generate Tier 1 wallets.
Multi level back up enabled using Shamir* backup using 2 of 3 recovery.
The wallet service remotely holds 2 of the 3 backups locked behind standard 2FA for a simple fee $1/month.
*(Shamir backup is currently used in Trezor https://github.com/satoshilabs/slips/blob/master/slip-0039.md).

Tier 4
Full custody. Same as Tier 3 but you hold 2 of the 3 instead of the service.

Tier 5
Full custody. Same as Tier 4 but with hardware wallet.

The ecosystem I see here is that everyone can access a tier 1 wallet or has the ability to create tier 1 wallet. As people feel more comfortable, they may use a tier 2 wallet and store their tokens in savings account. Power users get tier 3 and above wallets.

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A poor choice of words on my part. Although I like the idea of decentralized KYC, what I had in mind was more like a ‘basic AML’ integration meets Trustpilot. Based on the trustworthiness of the sites you interact with and the history of your transactions you get assigned a certain profile / trust score. This is no replacement for KYC of course but could provide some basic transparency. By ‘the history of your transactions’ I mean the chance that ‘dirty’ coins from flagged transactions end up in your wallet.