In the Web3 landscape, the absence of robust tools for securing and managing private keys has emerged as a significant infrastructure deficiency. Effective key management is crucial for ensuring the security and integrity of digital assets and transactions. To address this gap, there is a growing need to develop infrastructure focused on this mission. Connecting applications to a modular, permissionless custody protocol can offer enhanced security and flexibility. Open Custody Protocol is designed to meet these needs, providing a comprehensive solution for secure key management in the Web3 ecosystem.

What is Open Custody Protocol (OPEN)?

In 2020, Open Custody Protocol (OCP) began its journey to build a secure infrastructure focused on managing private keys, recognizing the lack of adequate tooling as a significant infrastructure gap in Web3. Initially, their approach failed to address single points of failure, but as decentralized technology advanced, so did their vision. OCP evolved to connect applications to a modular, permissionless custody protocol, creating a seamless mechanism for key management. This protocol functions like a mesh network, enabling end-users to leverage various key management protocols through “Keychain Aggregation.” This approach simplifies development and aggregates the economics of multiple commercial relationships.

OCP’s roots trace back to 2018, when Anthony Foy and Brian Spector co-founded Qredo Network. Spector identified that the crypto market’s fragmentation stemmed from private key management issues. Qredo’s protocol utilized multi-party computation (MPC) to generate segregated deposit addresses and mitigate private key theft risks. By 2020, the need for a more robust solution led to the rebranding and evolution into OCP, maintaining the mission of secure key management and expanding into modular custody solutions.

OCP’s development journey included significant milestones. In Q2 2024, the integration with Fordefi and the rebranding of the OPEN token were completed. The first deployment of a relayer on Warden Protocol and the testnet assets Keychain deployment using Fordefi MPC technology were also achieved. Moving into Q3 and Q4 2024, the focus is on expanding integrations, deploying new keychain solutions, and enhancing liquidity pools. The ultimate goal remains to develop a trustless relayer for modular custody operations, marking a significant advancement in the Web3 infrastructure landscape.

How Does Open Custody Protocol Work? Keychain Aggregation and Governance

The Open Custody Protocol (OCP) is designed to provide a modular and decentralized solution for managing private keys. At its core, OCP introduces an innovative relayer mechanism that seamlessly connects applications to a modular permissionless custody protocol. This setup operates similarly to a mesh network, allowing end-users to leverage a diverse set of key management protocols, known as “Keychain Aggregation.” This approach simplifies the development process by abstracting away risk and complexity, while also harmonizing and aggregating the economics associated with having multiple bilateral commercial relationships.

Keychain Aggregation within OCP allows for seamless integration with various key management technologies, including Multi-Party Computation (MPC), distributed multisig (dMultisig), Hardware Security Modules (HSMs), and trusted custodians. This modularity is crucial for developers building and managing secure applications across different blockchain ecosystems. By offering a protocol connecting multiple key management solutions, OCP ensures that developers can choose the best tools for their specific needs without being locked into a single solution. This flexibility is particularly important in the evolving landscape of decentralized technology, where the proliferation of new chains and the tokenization of real-world assets (RWAs) demand versatile and robust solutions.

One of the primary benefits of OCP’s Keychain Aggregation is its ability to provide a unified and secure interface for key management. This enhances security by mitigating single points of failure and simplifies the user experience by providing a consistent method for key generation and transaction signing across different platforms. The initial integration with Fordefi, a next-gen MPC platform, and Lit Protocol, a decentralized key management network, demonstrates OCP’s commitment to incorporating cutting-edge solutions. The expectation is to continuously expand this ecosystem with more innovative and complementary key management technologies.

OCP’s Keychain Aggregation transforms how developers and businesses interact with key management protocols, fostering a more interconnected and resilient infrastructure. As the demand for decentralized and secure solutions grows, especially with the impending influx of RWAs into the blockchain ecosystem, OCP’s approach to modular custody becomes increasingly relevant. This paves the way for traditional Web3 businesses to integrate effortlessly with various key management technologies, enhancing security and operational efficiency.

Source: opencustody.org

With the foundation of Keychain Aggregation established, OCP also focuses on governance mechanisms to ensure decentralized decision-making and continuous protocol improvement. The governance framework allows stakeholders to participate in the protocol’s evolution, ensuring that it remains aligned with the needs of its diverse user base. This governance structure enhances transparency and fosters a community-driven approach to innovation and security.

Governance

The Open Custody Protocol (OCP) leans on community governance, allowing OPEN token holders to have a significant voice and vote in shaping the protocol’s future. The governance model is designed to be as decentralized and community-driven as possible, ensuring all stakeholders can contribute to the decision-making process.

Discussions and proposals originate in the community forum, where users can initiate or engage in conversations, present ideas, and debate various aspects of the protocol. This inclusive approach encourages active participation and diverse viewpoints, fostering a collaborative environment for protocol development. Once proposals gain traction in the community forum, they move to the voting phase on the Open Custody Protocol Snapshot space.

To participate in voting, users must hold ERC-20 OPEN tokens in a wallet compatible with Snapshot, such as MetaMask or any WalletConnect-supported wallet. Voting power is determined by the number of OPEN tokens held when the voting snapshot is taken. This snapshot mechanism ensures that only tokens held at the block during the proposal’s creation are considered, preventing last-minute accumulation of tokens to sway votes unfairly.

Staked tokens also contribute to voting power. Users with tokens staked in various staking contracts can vote without withdrawing their tokens, providing a seamless experience for active participants. Additionally, tokens in vesting contracts can be used for voting without withdrawal, thanks to integration with Sablier. This functionality ensures that all vested interests can participate fully in governance decisions.

To vote on Snapshot, users need to connect their wallet and meet the specified requirements of the voting strategies, which involve holding OPEN tokens. Users sign a message via their wallet extension after selecting their preferred choice and confirming the vote. This process is gas-free and does not affect token holdings, making participation accessible and straightforward.

Through this robust governance framework, the Open Custody Protocol empowers its community to actively shape the protocol’s evolution, ensuring it remains aligned with its users’ collective vision and needs.

Open Custody Protocol Use Cases

The Open Custody Protocol (OCP) is designed to address the critical need for secure and modular key management in the evolving Web3 ecosystem. By introducing an innovative relayer mechanism, OCP connects applications to a permissionless custody protocol, facilitating a range of use cases that enhance security and interoperability.

Key Use Cases:

• Secure Key Management: OCP enables seamless integration with key management technologies such as MPC (multi-party computation), dMultisig, HSMs, and trusted custodians. This ensures that private keys are managed securely, reducing the risk of single points of failure.
• DeFi Applications: By automating transaction signing and execution through a decentralized network of Keepers, OCP supports complex DeFi strategies like yield farming, automated trading, and staking. Users can automate routine tasks and enhance the security and efficiency of their DeFi operations.
• Tokenization of Real World Assets (RWAs): With the impending tokenization of assets worth trillions of dollars, OCP provides a robust framework for managing and securing the digital representation of these assets. This includes ensuring that transactions are executed accurately and securely across multiple chains.

OCP’s innovative approach to modular custody and key management addresses the core infrastructure deficiencies in Web3. By providing secure, scalable, and interoperable solutions, it opens up new possibilities for developers, DeFi users, and institutions looking to leverage the full potential of blockchain technology.

Source: opencustody.org

Open Custody Protocol Main Features

Open Custody Protocol (OCP), with its innovative modular custody solutions, addresses the absence of adequate tooling in Web3. This protocol introduces a decentralized and permissionless layer for automatic smart contract executions, significantly enhancing transaction efficiency and security.

The Supernova Spark - Igniting a New Era

OCP marks a significant milestone by concluding the initial phase of the Next Frontier initiative. It aims to revolutionize modular custody, becoming the “Stripe” of custodial and key management solutions. With the launch of OPEN Staking, users can generate yield and reduce circulating float by locking their tokens through a smart contract permissionless staking dashboard. Additionally, the first Keychain MPC product, leveraging Fordefi’s wallet infrastructure, will be tested on Warden Protocol’s Buenavista testnet, involving nearly 500,000 users. This phase signifies OCP’s commitment to developing essential components for its broader protocol vision.

Open Custody Protocol Points Program

The OCP Points Program, in collaboration with Guild.xyz, aims to engage and reward community members for their contributions. Users can earn points through various on-chain activities such as staking, holding OCP tokens, and participating in DeFi activities like providing liquidity. Off-chain activities, including social engagement and active community membership, will also be rewarded. This program fosters a vibrant and active community, driving engagement and development within the protocol, ensuring a dynamic and interactive ecosystem for all participants.

What is the OPEN Coin?

OPEN is the native token for Open Custody Protocol, facilitating modular custody solutions. Its total supply counts 1,278,227,864 units, of which 799,036,673 are already in circulation (July 2024).

The OPEN Coin is the native token of the Open Custody Protocol (OCP), serving as a crucial component for facilitating economic transactions between builders, users, and custodial solutions. The OPEN token ensures seamless exchanges involving native gas tokens, stablecoins, and custodial fees, underpinning the protocol’s economic model. Unlike many protocols where staking to a validator is required to earn economic incentives, OPEN democratizes participation. Holders can derive value from the ecosystem by participating in liquidity pools, thus benefiting from the protocol without complex operations. This approach powers the economic incentives needed for protocol operations and introduces potential deflationary mechanisms for OPEN.

With the introduction of OPEN Staking, users can further contribute to the ecosystem by staking their tokens, reducing the floating supply, and securing the network. This staking mechanism is designed to be user-friendly, enabling participants to stake and lock their tokens through smart contracts and a straightforward dapp frontend dashboard.

Source: docs.opencustody.org

Is OPEN a Good Investment?

Open Custody Protocol (OPEN) presents a promising investment due to its innovative approach to modular custody, enhancing security and efficiency in key management. This positions it well within the evolving Web3 ecosystem, offering significant utility for developers and users. However, the project faces challenges, such as reliance on widespread adoption and integration within the broader blockchain community. This could slow growth and impact the protocol’s long-term success if not adequately addressed. Balancing these factors is crucial when considering OPEN as an investment.

How to Own OPEN?

To own OPEN, you can use the services of a centralized crypto exchange. Start by creating a Gate.io account and get it verified and funded. Then, you are ready to go through the steps to buy OPEN.

News on Open Custody Protocol

According to what was reported on the official Open Custody Protocol blog dated 28 June 2024, OCP has achieved significant milestones in growth and deflationary mechanisms. Over 100,000,000 OPEN tokens have been staked, and the OCP Foundation plans to burn 10,000,000 tokens, representing 10% of the staked tokens. Additionally, 865,380 OPEN tokens will be burned due to operations and wallet generation on the Warden Protocol. This combined burn showcases OCP’s commitment to maintaining a deflationary economy and sets the stage for exciting future developments.

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