When David Marcus said that he expected many Libra-supporting wallets to come to market to compete with Calibra, perhaps he wasn’t expecting such a quick response.
This is the first alternative to the Calibra wallet, a proposed custodial wallet that will maintain oversight of user’s funds. A Facebook subsidiary of the same name will develop the Calibra wallet and other financial services for the Libra currency.
ZenGo’s product – currently available only on the Libra testnet, without a user interface – will instead ensure complete user control over funds. Additionally, by drawing on a Threshold Signatures Scheme (TSS), the wallet will be keyless.
In a note published today on Facebook, Marcus attempted to respond to some of the criticism Libra has seen. He said, “You’ll be able to use a range of custodial and non-custodial wallets that will have full interoperability with one another, meaning you’ll be able to pay and receive payments across wallets from different companies, or use a software wallet you’d operate on your own.”
To some extent, ZenGo's announcement confirms this claim. Though Marcus also said, "Facebook won’t have any special responsibility over the Libra Network. But we hope that people will respond favorably to the Calibra wallet."
Splitting the Atom
Threshold signatures are a sub-domain of multi-party computation, which addresses key management issues by creating a modular lock that allows for several different non-trusting computers to anonymously bring together individual fragments of a complete key.
Instead of having users maintain control over their private key (an extreme reaction against custodianship), which opens up the potential for loss or theft, ZenGo acts as a co-signer with the user, bringing together constituent parts of a fully secured cryptographic key.
TSS maintains user’s authority because transactions can only be initiated by the user, and can never be modified by the co-signer.
“The idea here is to offload the burden of key management from the user. If Libra is going to become a widely adopted coin there is no way a mainstream audience will know how to deal with back-up and key recovery, or even multi signature set up,” said ZenGo CEO Ouriel Ohayon. “By providing a TSS based wallet users will enjoy a custodian grade experience but without the complexities of Self Custodian Wallet.”
While it has not been released yet, the Calibra wallet will likely be password protected, subject to strict KYC regulations, and subject to Facebook’s proprietary orders. For now the Financial Crimes Enforcement Network has ruled non-custodial wallets do not qualify as money services businesses and therefore do not require KYC protocols.
The wallet will be integrated into ZenGo’s existing platform and will be capable of holding multiple assets. Ohayon also said it will support "t out of n" co-signers to further decentralize key ownership and increase wallet security.
Speaking to the quick turnaround, Ohayon said ZenGo spent a lot of time making their TSS compatible and reusable for different kinds of blockchains, including ether and bitcoin, and that it was “pretty trivial” to build support for the edDSA elliptic curve Libra runs on.
“Libra code is extremely sophisticated and well documented… Of course there are limitations and some unknown imperfections. They will have to strive for more decentralization and more privacy. We believe this will be possible to contribute in that direction. That’s why we chose to build from day one on it,” Ohayon said.
Kevin Weil, co-creator of Libra, and VP of Products at Calibra tweeted:
Wallet image via CoinDesk archives
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