Truth over Trust

The emergence of decentralized finance brought a new wave of innovation in financial technology, offering individuals unprecedented control over their assets. However, this shift comes with a number of challenges. Central to these challenges is the management of private keys used to create the digital signatures required to access, control, and manage digital assets in the investor’s blockchain accounts. 

Prevalent approaches to key management offer a binary choice—centralized or decentralized solutions—each with its own set of limitations.

Centralized solutions, including custodial wallets offered by many cryptocurrency exchanges, provide convenient key management to investors. However, these solutions entrust key management to exchanges or custodians who sign blockchain transactions on the investors’ behalf.

Decentralized solutions, including self-custody wallets, give investors complete ownership of their private keys, promoting a self-directed and autonomous experience. While this approach eliminates reliance on custodians by allowing only the owners of self-custody wallets to sign blockchain transactions, it places a security burden on investors and increases the risk of permanent loss of digital assets. For instance, an investor may misplace private keys (or equivalent mnemonic seed phrases) by losing access to their mobile device or computer.

Figure Markets addresses challenges with asset custody on centralized exchanges through an unique implementation of multi-party custody (MPC) technology. Through our MPC methodology, investors remain in control of their assets through self-custody with the added reassurance that keys are not easily misplaced, all while taking advantage of trading efficiencies traditionally limited to custodial-only exchanges.

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