This article was first published on Stories by ælf on Medium
In the past years, centralized exchanges and their users suffered significant losses from improper management of assets. These exchanges always use a centralized wallet to manage all users’ assets, which hackers can easily target and therefore prone to be the “central point of failure.”
Once the private key of this centralized wallet gets leaked, users’ digital assets will be instantly at stake: over five hacking incidents aiming at centralized exchange occurred solely in the year 2020, with a staggering $286,933,760 total asset loss. Also, administrators of the exchange could take advantage of users’ assets to make risky or illegal investments or speculations solely in their interests.
Therefore, there has always been a fundamental trust gap between users and exchanges. For years, people have taken various measures to avoid these unfortunate events, but none entirely solves the problem. This is why we are so proud today to introduce the first on-chain centralized asset management mechanism, which we call the Centralized Asset Management(CAM). By applying smart contracts on the aelf blockchain, aelf CAM removes these risks on a fundamental level.
How does the system work?
The aelf CAM is essentially a smart contract on the aelf blockchain. It creates a master address for any given exchange, which will be governed by a CAM contract instead of the exchange itself or anyone else.
Under this CAM protection, an exchange can only make basic transactions. Neither could it control user’s assets, nor can it vote for certain purposes, etc.
A user of the exchange will receive a virtual address from the CAM, and the user can then check their balance records through this address to assure the security of their assets.
Under a CAM contract, the exchange can also assign several asset managers who decide whether a token transfer can pass through.
Often, a transaction call for ...
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Stories by ælf on Medium