Crypto-asset Custody for Gateways

Gateways

Gateways are the recommended method of moving funds into or out of the LX platform. They simplify the process of moving funds from one blockchain-based crypto currency to another. Gateways are basically equivalent to the standard exchange model where the user depends on the solvency of the exchange to be able to redeem their coins.

Generally, gateways issue assets prefixed with their symbol, like LUX, APE, APD. These assets are backed 100% by the real BTC, LUX, ETH or any other coin that people deposit with the gateways. A LUX.BTC is thus, in theory, equivalent to the BTC a user gets on Poloniex, which could be prefixed POLO.BTC. In both cases, the user relies on the service providers to remain solvent in order to back the value of the assets they've issued.

Although gateways only provide a single service, which is in itself just a single part of an exchange's overall operations, the security requirements are nevertheless high. LX, with support from its ecosystem partner, Global Crypto Holdings, has an independent crypto-asset custodian service prototype for the gateways securing their holdings of crypto-assets. This critical security feature will help to streamline gateway setup and lower the risk of centralized management of high-valued crypto-assets.

Hot Wallet Security

The system maintains a percentage of digital assets in an online set of hot wallets stored within a database on the Lux blockchain. These wallets are protected via a non-permissioned and trustless set of smart contracts designed to carry out the capability of copy trades and mirror trades as expert traders make market moves.

The user can voluntarily withdraw his assets from the gateway, which will be automatically sent from the hot wallet, and signed with a cryptographic signature to authenticate the transaction. All seed keys to our hot wallets are produced using OTP to generate entropy and are encrypted with post quantum security hashing algorithms (SHA-3) to ensure the safe storage of our user’s digital assets.

Keccak-f[1600] signing and authenticating any transaction from the wallet.

XMSS

SPHINCS

A HORST or HORS tree is the same as a L-tree but this time containing a HORS few-time signature instead of a Winternitz one-time signature. We will use them to sign our messages, and this will increase the security of the scheme since if we do sign a message with the same HORS key it won’t be a disaster.