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PolySign & Standard Custody & Trust

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On 4/23/2020 at 1:02 PM, ADingoAteMyXRP said:

Alternately, PolySign could be the tech side of things and SCT handles all the custodial solutions (both DA and fiat) to keep them legally isolated (and also isolated on the regulatory side). In that scenario PolySign would be more about designing and licensing the solution and SCT could afford to be more sales and service using those tools. 

Thank you for sharing your thoughts. I can see that making sense also.

Was hoping for more discussion on this?

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I saw this content description in the html source from standardcustody: "Standard Custody is a digital asset custodian dedicated to bringing ultra-security, ease of use, and unparalleled support to institutions around the world."

versus the description on polysign website: "PolySign develops state-of-the-art, secure, scalable infrastructure for financial institutions to fully leverage their digital assets."

It seems SC&T is fully focussed on custody and that Polysign is more focussed on infrastructure. Polysign has placed a mention of a custody solution only at the bottom of their site, i.e. mentioning that they developed it. So it seems SC&T has been positioned to manage the custodian aspect (perhaps with reason being the better regulatory climate in NY?). So I kinda lean to the explanation from @ADingoAteMyXRP

What I find the interesting question (but maybe beyond the scope of this thread) is how this all fits with ODL. I would imagine the custodial assets that are managed by Polysign can be used as collateral for and in the process of providing ODL liquidity (using the polysign infrastructure), but would you also need fiat as collateral and how would the market makers fit in? If both Fiat and XRP are custodized at this platform, then both can be used as collateral and both can be available as loans for e.g. market makers. But I can not reason it further than that, the loans have to be paid back at one point, for which you need some other liquidity, etc.

 

 

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On 4/23/2020 at 5:02 PM, ADingoAteMyXRP said:

Alternately, PolySign could be the tech side of things and SCT handles all the custodial solutions (both DA and fiat) to keep them legally isolated (and also isolated on the regulatory side).

That's a natural pick and one I would have been leaning towards. However this is muddied somewhat by the the Polysign leadership team, made up as it is of tech and finance folk. I've seen some ex-bankers try to run tech companies. It was a disaster.

I think the strongest indication of what this is going to look like is in Polysign's choice of CEO and what his last job was - keep in mind that this CEO isn't some young whippersnapper out to revolutionise finance and change the world. He has a very specific set of skills and relationships:

"Conifer Financial Services LLC operates as an asset services firm. The Company offers trade break reporting and resolution, asset and price verification, calculate net asset values, preparation of investor tax reporting, tax consulting, securities lending, client reporting, and brokerage services."

(https://www.bloomberg.com/profile/company/1251523D:US)

:smile:

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3 hours ago, Pablo said:

I think the strongest indication of what this is going to look like is in Polysign's choice of CEO and what his last job was - keep in mind that this CEO isn't some young whippersnapper out to revolutionise finance and change the world. He has a very specific set of skills and relationships:

I agree with you here. Also, Polysign's Tim Keaney, career sheds light as to the direction Polysign is headed. Serving as BNY Mellon's former Vice Chairman and CEO of Investment Services, that included BNY Mellon's Asset Servicing, Corporate Trust, Depositary Receipts, Global Markets, Global Collateral Services and Broker Dealer Services businesses as well as Pershing LLC, a BNY Mellon company. Tim and Jack are heavy hitters within the traditional financial marketplace. Their connections to the long-established financial sector will be critical to on-boarding clients, as I'm sure they already have major players on-board.

4 hours ago, Pablo said:

I've seen some ex-bankers try to run tech companies. It was a disaster.

This is true, however, I think that's where David and Arthur come in to play to round things out a bit. So, you have a good mix of those who know what institutions want in an institutional-grade custodian and those who know the tech. 

On 4/23/2020 at 10:21 AM, KarmaCoverage said:

What if PolySign does the Digital Asset custody with a "Poly", aka multi-sig custody offering actually on the XRPL; while SC&T provides the Fiat Custody part?

@KarmaCoverage could you elaborate a bit more on this for me. From the little that's on the new Polysign webpage, it talks about how the platform is a:

 "3rd generation, proprietary, private blockchain technology is foundational to the development of digital asset infrastructure"

How would they ensure privacy if they do custody offerings on the XRPL?

 

 

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20 hours ago, King34Maine said:

could you elaborate a bit more on this for me.

I'm just guessing here, but "poly" means many/multiple, and sign means to sign a TX with a secret key. So I just figured PolySign leans towards an M-of-N multi-sig type of setup.

I know that when you start adding multi signatures to a wallet, mathematically the difficulty of guessing the proper key(s) to take over the wallet gets exponentially more difficult. I can also see institutional clients desiring distributed control, sort of like the military has multiple keys for launching nukes.

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4 hours ago, KarmaCoverage said:

I know that when you start adding multi signatures to a wallet, mathematically the difficulty of guessing the proper key(s) to take over the wallet gets exponentially more difficult.

I’m not sure if that is correct or not...   but I am sure that it is not a significant factor.  
If a single key is not secure enough then the whole model is broken.  In fact of course, as I’m sure you know, it is secure.  
 

There are any number of large value wallets that would have long ago been emptied by hackers if it wasn’t.

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5 hours ago, Dogowner5 said:

I’m not sure if that is correct or not...   but I am sure that it is not a significant factor.  
If a single key is not secure enough then the whole model is broken.  In fact of course, as I’m sure you know, it is secure.

From a "technical security" perspective yes it is secure, but in institutions you need multiple access solutions both for job segregation as well as a continuity & back up perspective in order to avoid fraud and single point of failure scenarios.

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26 minutes ago, Frisia said:

From a "technical security" perspective yes it is secure, but in institutions you need multiple access solutions both for job segregation as well as a continuity & back up perspective in order to avoid fraud and single point of failure scenarios.

Oh yes absolutely.  I merely point out that ‘extra security against decryption’ as was suggested earlier is not the reason to do it.  
 

Obviously enterprise custody needs multi sig and other aspects that are not required for personal custody.  My comment was only that the extra difficulty of decrypting multi sig is not the reason it’s done.

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2 hours ago, Dogowner5 said:

Oh yes absolutely.  I merely point out that ‘extra security against decryption’ as was suggested earlier is not the reason to do it.  
 

Obviously enterprise custody needs multi sig and other aspects that are not required for personal custody.  My comment was only that the extra difficulty of decrypting multi sig is not the reason it’s done.

Yeah, this makes sense. I dont think I have a solid understanding of exactly what their offering is yet, but MofN seems like it would certainly be an aspect. 

My main point (someone correct me if I'm wrong) is that the math gets harder, at an exponential rate, when adding multi signatures?

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2 hours ago, KarmaCoverage said:

Yeah, this makes sense. I dont think I have a solid understanding of exactly what their offering is yet, but MofN seems like it would certainly be an aspect. 

My main point (someone correct me if I'm wrong) is that the math gets harder, at an exponential rate, when adding multi signatures?

I'm wondering if the Polysign platform will employ features of the XRPL like Escrow as well as ILP's Multihop feature that uses 'two-phase commit' payment scheme (last three paragraphs of Escrow link):

Use Case: Interledger Payments

"Background: In the quickly-developing world of financial technology, one of the core challenges is coordinating activities that cross multiple digital money systems, or ledgers. Many proposed solutions to this problem (including early views of the XRP Ledger!) can be reduced to creating "one ledger to rule them all." Ripple believes no single system can meet the needs of everyone in the world: in fact, some desirable features are mutually exclusive. Instead, Ripple believes that an interconnected network of ledgers—an interledger—is the true future of financial technology. The Interledger Protocol  defines standards for making as many systems as possible connect securely and smoothly."

"The most fundamental principle of inter-ledger payments is conditional transfers. Multi-hop payments have a risk problem: the more hops in the middle, the more places the payment can fail. Interledger solves this with the financial equivalent of a "two-phase commit ", where the two steps are (1) prepare conditional transfers, then (2) fulfill the conditions to execute the transfers. The Interledger project defined a crypto-conditions  specification to standardize automated ways to define and verify conditions, and settled on SHA-256 hashes as a "common denominator" of such conditions."

"Solution: The Escrow feature makes the XRP Ledger ideal for bridging multi-hop payments using the Interledger Protocol, because it natively supports transfers that deliver XRP based on PREIMAGE-SHA-256 crypto-conditions, and it executes those transfers within seconds of being presented with the matching fulfillment."

I think ILP's Multihop feature would remedy the risks associated with adding multiple signatures from known and unknown parties involved in a single or multiple transactions. Hopefully, I'm thinking about this in the right way. I confess that I'm an expert by any stretch of the imagination.

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On 4/27/2020 at 11:21 PM, Pablo said:

That's a natural pick and one I would have been leaning towards. However this is muddied somewhat by the the Polysign leadership team, made up as it is of tech and finance folk. I've seen some ex-bankers try to run tech companies. It was a disaster.

I think the strongest indication of what this is going to look like is in Polysign's choice of CEO and what his last job was - keep in mind that this CEO isn't some young whippersnapper out to revolutionise finance and change the world. He has a very specific set of skills and relationships:

"Conifer Financial Services LLC operates as an asset services firm. The Company offers trade break reporting and resolution, asset and price verification, calculate net asset values, preparation of investor tax reporting, tax consulting, securities lending, client reporting, and brokerage services."

(https://www.bloomberg.com/profile/company/1251523D:US)

:smile:

Lloyd Blankfein has been on sabbatical of late, would be a terrific shout !

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