Our Investment in Torus
Today I’m excited to announce that Multicoin Capital has led a $2M seed round in Torus, including participation from Binance Labs, Coinbase Ventures, Accomplice, Sixth Horizon, and Terminal.
Key management is the single biggest usability constraint in crypto today. Torus offers the most elegant key management solution. Using Torus, logging into Web3 applications is indistinguishable from Web2 applications.
Nick Szabo states that “Trusted Third Parties are Security Holes.” Because the modern web is predicated on trusted third parties storing users’ keys, the web as we know it is a security hole.
Why is key management such a hard problem? Because there is no way to recover lost keys. Keys are the root of trust, and if they’re lost, they’re lost permanently.
Consumers have been trained to assume that there are always backdoors:
- Forgot your password? Click the “Forgot Password” button.
- Forgot to bring your driver’s license to the airport? Talk to the security agents in the backroom.
- Lost your passport while travelling abroad? Go to the local embassy.
- Forgot your login for your online bank? Go to the local branch with a driver’s license.
Consumers depend on trusted third parties. Creating a key management system that puts consumers in control, that elegantly works across devices, and that doesn’t suffer from any false positive or negatives is an extraordinarily difficult problem.
There are many approaches to consumer-grade key management. We’ve considered all of the approaches to key management, and have found that Torus offers far and away the best user experience without introducing any new trust assumptions.
Torus makes Web3 apps feel like Web2 apps.
The Evolution of Consumer Key Management
The first iteration of key management in crypto boiled down to: write down 256 bits of information on a piece of paper and don’t lose the paper. The second iteration reduced the amount of security in terms of bits of entropy by introducing the all too familiar “write down 24 words.” This is better, but not much.
More recently, apps started offering the ability to encrypt keys with a user-generated password, and sync the encrypted files across devices. This innovation was a huge improvement in usability. However, this solution lacks account recovery.
Since then, teams have been playing with a few approaches to account recovery, including approaches based on multisig wallets and Shamir Secret Sharing (SSS). But these approaches have clear drawbacks: they require elaborate setup processes that are intimidating to users.
Other key management service providers are offering solutions based hardware security modules, but these solutions rely on backdoors for account recovery, introducing new trust assumptions that are actually worse than the status quo in many ways.
Torus is the first and only key management solution that works natively across all devices and browsers, includes account recovery, and that doesn’t introduce any new trust assumptions.
How does it work?
The foundation of Torus is a distributed key generation (DKG), which is a specific type of multi-party computation (MPC).
There is a distributed network of nodes—9 nodes run by companies including Binance, Coinbase, ETC Cooperative, Terminal, Kyber, among others—that participate in the DKG. During this process, the nodes collectively generate a sharded key, but—importantly—the key never exists in one place at any point in time. This is makes DKG distinctly different from SSS. Using SSS, the key is still generated in one place, then sharded using SSS. Using a DKG, the key is generated in a distributed fashion.
Traditional key management solutions are logically-, architecturally-, and politically-centralized. The beauty of Torus is that it’s logically centralized, but architecturally and politically decentralized. It offers the same type of logical endpoint that developers and consumers are used to in the Web2 model, but with Web3 trust assumptions.
The Torus network implements the oAuth standard, so users can login with any oAuth provider, including Google, Facebook, and Twitter. Because of oAuth support, logging into Web3 applications with Torus feels just like logging into Web2 applications. The user experience is virtually identical. This also means that Torus can integrate with any oAuth provider, enabling Torus-based logins for enterprise Active Directory installations, as well as 3rd-party apps that don’t rely on Google, Facebook, and Twitter.
As a result of this unique architecture, Torus offers a seamless key management and login experience. Torus works natively across all devices and browsers without any extensions, it supports account recovery via oAuth providers, and it doesn’t introduce any new trust assumptions.
The Torus network is live today for Ethereum based applications. And it will be available shortly for SKALE chains. You can try it for yourself here. The API is also now available for developers and can be implemented with just a few lines of code.
Bridging Web2 and Web3
We expect Torus will help bridge Web2 and Web3 applications. For example, let’s consider an e-sign application like Docusign. Most e-sign applications already ask the user to login using an oAuth identifier. In the future, e-sign apps will implement Torus so that the e-sign applications can record a cryptographic signature on a public ledger. This means that e-sign users won’t have to rely on Docusign as the arbiter of truth, but will be able to verify the integrity of digital signatures themselves on public ledgers.
While this is just one example, we expect there will be many analogs to this usage model. As consumers continue to lose trust in Web2 apps, those application providers will seek ways to reduce trust assumptions using public ledgers. While this seems counter-intuitive - after all, why would web2 apps empower users with web3 freedoms? - this will become increasingly necessary as deep fakes become widespread.
The world is experiencing a renaissance in MPC research and development. Although MPC has been around in academic literature since the 90s, it’s still a woefully underdeveloped area of computer science. The Torus team is at the bleeding edge of MPC, and we’re excited to back them to unlock the power of MPC for the world.
Because Torus maintains the same logically centralized endpoints as web2 applications, and because it so seamlessly integrates with web2 workflows that users already know, Torus is perfectly positioned to bring the best of Web3 to Web2, and the best of Web2 to Web3.
PS, if you’re interested in building the future of MPC and key management, Torus is hiring.