1/ With the recent FTX debacle, a lot of people have been talking about self-custody and its importance
While it's easy to say, there are some best practices that need to be followed for safe self-custody.
We asked one of our devs to share his experience with us, a thread 🧵
While it's easy to say, there are some best practices that need to be followed for safe self-custody.
We asked one of our devs to share his experience with us, a thread 🧵
2/ Avoid Centralized exchanges.
In 2017, @lebed2045 Had a bad experience with a Tier 1 exchange which led to the loss of his funds. Since, then, he set a rule for himself: Avoid centralized exchanges at all costs.
#NotYourCoinsNotYourKeys should be this space's motto.
In 2017, @lebed2045 Had a bad experience with a Tier 1 exchange which led to the loss of his funds. Since, then, he set a rule for himself: Avoid centralized exchanges at all costs.
#NotYourCoinsNotYourKeys should be this space's motto.
3/ What DeFi protocols to use? There's many decentralized and on-chain alternatives for what your CEX offers.
▫ Exchange tokens? @1inch
▫ Trade with leverage? @dYdX
▫ Yield Farming? @iearnfinance
▫ Leveraged yield ? @GearboxProtocol
▫ Exchange tokens? @1inch
▫ Trade with leverage? @dYdX
▫ Yield Farming? @iearnfinance
▫ Leveraged yield ? @GearboxProtocol
4/ While there's no decentralized on-ramp/off-ramp you can use P2P services such as Binance P2P as an alternative.
The problem with Binance P2P is the need of a Binance Account. It would be wonderful to see totally decentralized on/off ramps in the future.
The problem with Binance P2P is the need of a Binance Account. It would be wonderful to see totally decentralized on/off ramps in the future.
5/ #NotYourKeysNotYourCoins ! But, how many wallets should I have? Hot wallets? Cold Wallets?
Our dev has three wallets, one hot wallet, one cold wallet and one public wallet.
For the cold wallet, he uses a @Ledger Nano wallet that doesn't interact with any smart contract.
Our dev has three wallets, one hot wallet, one cold wallet and one public wallet.
For the cold wallet, he uses a @Ledger Nano wallet that doesn't interact with any smart contract.
6/ For the hot wallet, he uses Metamask but there are also other alternatives such as @AmbireWallet, a smart-contract wallet, and also a protocol friend of Stable Unit, so check it out 👀
7/ His public wallet is the one that has his @ensdomains (.eth) and his @LensProtocol linked to it.
He doesn't trade on it and uses this wallet for hackathons, poaps, etc.
As the industry matures, the on-chain history and reputation of a wallet will become more important.
He doesn't trade on it and uses this wallet for hackathons, poaps, etc.
As the industry matures, the on-chain history and reputation of a wallet will become more important.
8/ How to safely keep your private keys?
This is also an important question as humans can forget, electronic devices can break, etc.
One possible way is to split the key into halves, and list all possible hiding places and their risks. Evaluate and choose the best ones.
This is also an important question as humans can forget, electronic devices can break, etc.
One possible way is to split the key into halves, and list all possible hiding places and their risks. Evaluate and choose the best ones.
9/ Devices can also be compromised, for example, when you cross the UK border, you can legally be obligated to unlock your phone.
Always follow the 2FA philosophy: "something I have" + "something I know" + 3 place redundancy.
Always follow the 2FA philosophy: "something I have" + "something I know" + 3 place redundancy.
10/ Now that you have multiple wallets, how should you interact with DeFi and its smart contracts?
First and foremost, never interact with smart contracts using your cold wallet.
Always transfer first your tokens from your cold wallet to your hot wallet before any transaction.
First and foremost, never interact with smart contracts using your cold wallet.
Always transfer first your tokens from your cold wallet to your hot wallet before any transaction.
11/ For the hot wallets you use to interact with DeFi. Before even using the dApp, check if the address is legit and if the protocol's socials are followed by experts and knowledgeable people in the industry.
This is just a simple way to assess if a protocol is fake or not.
This is just a simple way to assess if a protocol is fake or not.
12/ When you first use a dApp, it usually asks you for a token approval.
If a protocol's token approval is an unlimited approval and it doesn't offer the ability to set a limit, that's a signal to be careful.
Metamask gives you the option to set it manually.
If a protocol's token approval is an unlimited approval and it doesn't offer the ability to set a limit, that's a signal to be careful.
Metamask gives you the option to set it manually.
13/ The next thing would be to copy/paste the contract address on @etherscan to check if the contract is verified (if not, 🚩🚩🚩), see the other transactions that happened, etc.
People can also leave comments on @etherscan if they stumble upon scams so look for them.
People can also leave comments on @etherscan if they stumble upon scams so look for them.
14/ After interacting with a dApp, it is advised to go on @RevokeCash to see existing approvals.
It is highly suggested to revoke approvals for any upgradable contract, for safety reasons, even when it comes to reputable protocols.
It is highly suggested to revoke approvals for any upgradable contract, for safety reasons, even when it comes to reputable protocols.
15/ For any important transfer, the whole team uses Safe Transfer, a tool we developed during a hackathon and won a nomination from @safe.
https://twitter.com/SchorLukas/status/1543956221614489601
16/ We all make mistakes but some mistakes were costlier than others and Safe Transfer was developed to enable ✨stress-free✨ transfers.
Learn more about Safe Transfer here, it also works with gnosis safes ;) : medium.com/stableunit/avo…
Learn more about Safe Transfer here, it also works with gnosis safes ;) : medium.com/stableunit/avo…
17/ These are some simple actionable steps you can follow for a safer self-custody.
Yet, there's a problem that isn't mentioned enough, the risk of centralized on-chain assets such as $USDT or $USDC.
Yet, there's a problem that isn't mentioned enough, the risk of centralized on-chain assets such as $USDT or $USDC.
18/ Even if you had a secure wallet such as @ngrave_official, Tether (USDT) and Circle (USDC) can seize your money at any moment of time.
$USDT for example has a backdoor that can be found at the line 341:
etherscan.io/token/0xdac17f…
$USDT for example has a backdoor that can be found at the line 341:
etherscan.io/token/0xdac17f…
19/ We cannot accept this simply for the sake of the argument against criminals. Who decides who is a criminal?
Banks froze accounts belonging to trucker protest in Canada newsweek.com/banks-have-beg…
Just being able to do it is already excessive.
Banks froze accounts belonging to trucker protest in Canada newsweek.com/banks-have-beg…
Just being able to do it is already excessive.
20/ You can’t imagine how easy it will be with CBDC (Central Bank Digital Currency) - it would be a totalitarian nightmare straight out of the Orwellian 1984.
And it's already starting,
newyorkfed.org/newsevents/new…
And it's already starting,
newyorkfed.org/newsevents/new…
21/ You don’t agree with the government? They will be able to starve you with a single crypto signature.
Gladly, we’re not there yet, but OFAC is coming and it costs them close to nothing to force Circle (the company behind USDC) to require KYC for all users.
Gladly, we’re not there yet, but OFAC is coming and it costs them close to nothing to force Circle (the company behind USDC) to require KYC for all users.
22/ But, what is the solution? As easy as it may seem, the simplest answer is: Bitcoin & Ethereum.
Yet, the volatile price might deter more than one. There are other stablecoins such as $DAI.
Yet, the volatile price might deter more than one. There are other stablecoins such as $DAI.
23/ But the problem with DAI is its reliance on USDC or its derivative.
24/ This is the exact reason why we're involved in Stable Unit's development.
It is currently on testnet but design-wise the system doesn’t have any centralization issues.
It is currently on testnet but design-wise the system doesn’t have any centralization issues.
25/ it has several level of stabilization, on the top of the MakerDAO model, to resist even severe market crashes, and, it has a built-in saving account in every single $USDPro.
Join us on Telegram and Discord to get your free early SU DAO NFT now! linktr.ee/stableunit
Join us on Telegram and Discord to get your free early SU DAO NFT now! linktr.ee/stableunit
26/ Read now the for the full article on how to safely self-custody your assets.
medium.com/stableunit/saf…
In the meantime, follow us to learn more about Stable Unit, decentralization, DeFi and how we're changing the world. 🐧
Our links: linktr.ee/stableunit
medium.com/stableunit/saf…
In the meantime, follow us to learn more about Stable Unit, decentralization, DeFi and how we're changing the world. 🐧
Our links: linktr.ee/stableunit
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