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Blockchain Leaders Join Forces to Develop New Digital Asset Recovery Standard

Input | Output, the research and engineering company behind Cardano, and Hedera, a proof-of-stake network, have become the latest founding members of the Decentralized Recovery (DeRec) Alliance. The alliance, which also includes the Algorand Foundation, Ripple, XRPL Labs, and other prominent players in the blockchain space, aims to develop an open-source protocol for digital asset recovery, with a focus on improving security, accessibility, and user experience in Web3 environments.

The DeRec Alliance was launched in January 2024 by Hedera co-founder Dr. Leemon Baird and other leaders from the Hedera and Algorand ecosystems. The alliance addresses a key challenge facing Web3 users: the complexity of managing and recovering digital assets such as private keys, passwords, and identity credentials. The goal is to develop a unified, industry-standard protocol that simplifies asset recovery processes and reduces technical barriers for users, enhancing the adoption of decentralized technologies.

Alliance Leadership and Vision

Input | Output and Hedera will each hold two-year seats on the Technical Oversight Committee (TOC), where they will provide input on governance and core policy decisions for the DeRec Alliance. Charles Hoskinson, founder of Cardano and CEO of Input | Output, expressed enthusiasm about the collaboration, emphasizing the importance of blockchain interoperability and the need for common standards across the industry.

“We’re delighted to be joining the DeRec Alliance to help contribute to this important new cross-platform protocol. Input Output has always been committed to open-source principles, cross-industry collaboration, and blockchain interoperability. As an industry seeking to drive wider adoption, we should all be committed to the relentless pursuit of security, accessibility, and improving the user experience,” Hoskinson said.

Dr. Leemon Baird, Hedera’s co-founder, highlighted the importance of collaboration in developing the recovery protocol. “It’s exciting to see the industry working together across ecosystems to provide the decentralized recovery that the world needs,” he said.

A New Standard for Digital Asset Recovery

The DeRec Alliance’s protocol introduces a decentralized recovery method for securing a range of data types, including cryptographic keys, identity credentials, and passwords. Using a secret-sharing system, the protocol allows a user’s trusted network—referred to as “helpers”—to assist in recovering lost information without directly revealing sensitive data. The design ensures that even if a user loses access to their device or key, they can recover their assets with the help of their designated helpers.

Each helper holds a portion of the user’s secret, and no single helper has enough information to reconstruct it independently. Only when a sufficient number of helpers combine their shares can the secret be restored. The protocol includes features such as automatic confirmation to ensure that helpers maintain their share of the secret and automatic re-sharing when necessary.

John Woods, CTO of the Algorand Foundation, emphasized that streamlining key recovery is critical for the future of Web3. “Web3 has fallen short in delivering a great user experience for securing and recovering key material. We co-founded the DeRec Alliance as part of our mission to improve the user experience for the entire ecosystem, from regular users to developers,” he said.

Broad Industry Involvement

The alliance is not only supported by its founding members but also by new alliance members, including the DLT Science Foundation, Hashpack, Oasis Protocol Foundation, and Palisade. These organizations will contribute to policy development, voting in TOC elections, and the implementation of the DeRec protocol in various applications.

Dr. Paolo Tasca, founder and chairman of the DLT Science Foundation, highlighted the security benefits of the DeRec protocol. “Managing digital asset secrets can be cumbersome and risky for users. DeRec revolutionizes this by utilizing a secret-sharing protocol with trusted helpers, ensuring secure and reliable recovery,” he said.

Other members, such as Hashpack and Oasis Protocol Foundation, echoed the importance of improving key management systems. Jernej Kos, Director of the Oasis Protocol Foundation, pointed out that “private key management and recovery remains relatively unexplored” and is a barrier to broader Web3 adoption.

As the DeRec Alliance continues to develop its decentralized recovery protocol, members will engage in quarterly meetings and contribute to policy discussions that shape the future direction of the initiative. Founding members will also nominate candidates for leadership positions within the alliance and play a central role in overseeing the implementation of DeRec-based solutions.


Photo by Nitish Meena on Unsplash

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