ChainX 1.0 leveraged a light-node + trustee with KYC system on BTC custody. It has been operating safely, reliably, and stably for nearly two years. With the launch of ChainX 2.0, some new technologies in the industry have been applied to BTC’s asset custody, forming a new multi-faceted system of ChainX 2.0 asset custody. Let’s take a close look at the solutions:
In the system adopted by ChainX 1.0, a limited number of trustee nodes together take the responsibility of custody of BTC assets. Each trustee node needs to invest significant resources in software, hardware, and internal control processes to improve asset security. Each trustee operation must go through the internal process of the trusted node, meaning that user requests involving trust operations such as withdrawals cannot be completed in realtime.
In the Asset Vault system, anyone can apply to become an Asset Vault. During the actual custody period, the Asset Vault needs to mortgage the corresponding amount of collateral (that is, other cross-chain assets such as PCX or X-DOT).
When cross-chain users deposit assets, they need to select a vault on the chain that can meet the amount of the deposit, transfer BTC to the vault’s address for the lock, and notify ChainX’s smart contract. The contract will be verified immediately, lock the corresponding collateral of the vault, and then automatically issue X-BTC to the user.
Correspondingly, when withdrawing BTC, users destroy X-BTC through the smart contract. The Asset Vault monitors the destruction event and transfers BTC to the user on the bitcoin chain. The Asset Vault can then request the smart contract to unlock the corresponding mortgage asset.
When using the Asset Vault system：
- A single vault does not need to use multiple signatures to operate Bitcoin, which can significantly reduce the Bitcoin tx fee.
- A large number of vaults forms a system with deep decentralization, which as a whole significantly reduces the risk of the entire system.
- At the time of withdrawal, multiple vaults compete to respond to withdrawal requests, which can significantly speed up the processing of withdrawals.
This system is similar to Polkadot’s BTC bridge system, but ChainX can give vaults more incentives: In addition to the basic fee incentive, mortgage assets can also get additional PCX mining revenue. For example, using DOT as a vault’s mortgage assets, the Asset Vault can obtain the dual mining capabilities of DOT and PCX while collateralizing. In this way, positive incentive feedback is formed: innovative incentive methods can significantly attract more vaults into the system, which in turn significantly improves the overall security of vaults.
Traditional multi-signature systems, including BTC’s multi-signature and some other popular blockchain’s multi-signature, guarantee the safety of assets by multiple signatures on transaction data. However, this inevitably leads to a significant increase in the length of the TX message, which in turn causes a significant or even doubled increase in the TX fee. In some blockchain implementations, a multi-signature account is a special account with various restrictions.
The threshold signature technology has solved the above-mentioned drawbacks. In this system, MPC (Multi-Party Co-computing) technology ensures that a complete private key can be safely decomposed into private key fragments and distributed to multiple people, who together can jointly sign a transaction based on these private key fragments. Threshold signatures can be applied to common accounts, and the whole signature process is a black box to the target blockchain, so there is no increase in TX fees. This system is similar to BTC multi-signature but is essentially a decentralized key management technology independent of the asset chain.
In order to support this system, there will be an independent decentralized network composed of trader nodes on ChainX 2.0, responsible for implementing the MPC protocol. The network will open 100 node seats in advance, with an election period every 28 days. Every 48 hours, all nodes will be randomly grouped, with the corresponding key fragments refreshed. For example, when there are currently 5 nodes in a group and the threshold is 3, the user’s withdrawal request requires the signature of 3 nodes in the group.
Features of this system：
- Wide Adaptability
This system can adapt to most chains, as long as it supports the signature algorithm used by MPC.
- Low TX Fee
The threshold signature will not increase the TX length, so the handling fee is the same as that of ordinary transactions.
- Strong and Decoupled Security
The threshold signature is completely transparent to the chain. From the perspective of the target chain, the threshold signature is an off-chain behavior, so any security vulnerabilities on the chain will not affect the security of the threshold signature.
The system is based on the threshold signature system to strengthen the user’s own control of trust operations. That is, the user himself becomes a participant of the threshold signature by holding one of the private key fragments and has the right to veto the activities related to his own assets.
This party’s proposal is an innovative exploration of decentralized asset custody technology, that is, the introduction of weighted multiple parties. The real users of cross-chain assets not only participate in the custody process, but also have a relatively greater weight. This not only allows users to regain control over the assets under custody, but also greatly reduces the threshold for mortgage assets of other custodians, thereby greatly increasing the amount of cross-chain assets that can be carried by ChainX.
It can be seen that ChainX 2.0 provides more options for asset custody. Different solutions have different best practices. For example, the asset custodian system may become the first choice for the frequent flow of small assets; the threshold signature system may be more popular with large BTC holders; the decentralized autonomous control system can carry super large asset custody.