A pair of ethereum startups have banded together to provide users of the world’s second-largest blockchain with account security comparable to that being used by big banks.
“We are thinking about not just crypto users but also new users – and so the end goal is to repeat what they get from their bank,” said Argent co-founder Itamar Lesuisse.
The smart contract will act as the first line of defense. To prevent thieves from draining a wallet, the smart contract will temporarily freeze all transfers that go beyond a set daily spending limit for addresses that aren’t on a user-created white list.
Similar to how banks prevent card fraud, the smart contract will give users 24 hours to cancel the frozen transfer.
Backup insurance fund
Nexus and Argent also have a backup plan in case the smart contract ever fails. The two companies are forming a fund that can be used to insure members against possible losses.
Users will be able to participate in the fund by staking Nexus’ NXM tokens. Any claims that are paid out will be taken from the staked tokens.
Just like how a mutual insurance company’s policyholders receive dividends, fund participants will also receive rewards.
“In general, what we are trying to do is provide cover to the crypto community when it can’t access it via the normal means,” said Nexus founder Hugh Karp.
Securing DeFi smart contracts
Nexus and Argent’s security and insurance product went live last week, and Argent was first in line to stake NXM against their wallet’s smart contracts.
“We want to show people that’s how confident we are; we are staking ourselves,” said Karp, so also noted that they will also be looking to provide security for assets locked up in decentralized finance (DeFi) smart contracts.
“Maker and Compound and Uniswap and all of those that are coming are starting to accumulate assets at a rapid click,” he said.
“Obviously, these are fairly hardened contracts but more and more are coming and there is still a non-zero risk that they could have a bug.”