An increasing amount of enterprise clients have crypto assets on the books for operational expenditure and strategic investments

Problem: the market doesn’t provide a product suite that allows enterprises to deploy these assets with ease.

As we’ve seen, the crypto market is growing rapidly, and increasing number of non-retail users are entering the space. Predominantly these are either:

  • crypto-native enterprise, utilizing cryptocurrency to conduct their daily operations, or

  •  financial asset management firms looking to invest cryptocurrency effectively.

However, both of these groups face obstacles to high scale growth:

  1. Lack of security, governance and interoperability prevents enterprises from moving more assets on-chain and managing those assets once they are on-chain.

  2. Crypto Banking Challenge: there is no all-in-one product suite that enables crypto-native enterprises to run their daily operations - such as we see in traditional banking. Instead, they are forced to use a mixture of hot and cold wallets, DeFi interfaces, analytics, custodial services, and other extraneous tools which fail to provide an efficient and secure solution.

  3. DeFi Challenge: crypto-native and asset management firms have great a opportunity to deploy idle funds in DeFi to generate interest but have no means of doing so efficiently and securely. Subsequently, DeFi markets are often restricted to a niche set of tech-savvy, retail investors.

The asset management practices and day-to-day operational needs of such enterprises and institutions are different from that of the retail participants. A significantly higher volume and value of assets and more complex organizational structures demand platform-level governance mechanisms, high security, and close management of the asset treasury.

This brings us to a technological problem that is currently holding back such enterprises to efficiently be able to operate within the crypto space - either crypto native enterprises or financial institutions managing crypto assets: the problem of key management.

 

Pros

Cons

Custodial wallets

 

Centralized and regulated

 

high security over funds usually including insurance

  • costly and illiquid

  • fall short of providing all the required tools including interface to DeFi networks

 

Hardware wallets

E.g. USB wallets

 

 

high cyber security for assets

  • single user access – no governance

  • difficult to use

  • focus only on self-custody of funds

Hot wallets

App based

 

low cost and easy to use

  • single-user access – no governance

  • relatively insecure

There is no incumbent platform that has all the required features. Current solutions have serious limitations around security, accessibility, and governance.