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The Liminal Loop: Interaction Between Liminal Cold Wallets and Smart Wallet Refill Solutions

| November 17, 2023

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Enterprise-level secure crypto walltes storage and management solutions provider, Liminal is creating innovative, state-of-the-art blockchain products. With its main focus on crypto businesses of all sizes, family offices, and even individuals whose lives and savings revolve around extensive dealings in crypto assets, Liminal has introduced multiple interconnected crypto wallet infrastructure solutions with standalone operation capabilities. The first two among the lot are Liminal Cold wallets and Liminal Smart Wallet Refill solutions.

Crypto platforms can either choose to implement any of the available Liminal solutions depending on specific requirements or use the entire suite for all-around security and safe management of assets. Liminal Cold Wallets and Smart Wallet Refill solutions, together, make up the majority of the enterprise wallet infrastructure. To understand better, let us take a look at a conventional enterprise wallet infrastructure commonly implemented by crypto exchanges and other platforms.

Conventional Enterprise Wallet Infrastructure

Every crypto business needs to consider the safety of its crypto assets; as a result, they use a combination of different wallets to optimize security while maintaining operational convenience. A standard enterprise wallet infrastructure includes a cold wallet where the majority of the funds are stored; an always-online hot wallet with just enough funds to meet immediate requirements, and an intermediary warm wallet receiving reserve funds from the cold wallet to refill the hot wallets as and when they run low on funds. A dedicated wallet refill team with access to the warm wallets keeps track of hot wallets and initiates refills whenever the crypto asset levels in them go below a fixed threshold limit. Most enterprises generally maintain their cold wallets on air-gapped machines or use software multisig or MPC-based cold wallet solutions with access to these wallets limited to one or few handpicked top-level executives of the organization.

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The conventional process is time and resource-intensive, requiring round-the-clock monitoring and inefficient key management where wallet keys are shared with multiple people just to ensure uninterrupted operations. All these factors introduce vulnerabilities to the wallet infrastructure, exposing the company’s crypto assets to various risks, including hacking attacks, theft, and misuse of keys, and unauthorized transactions. At the same time, proprietary MPC-based cold wallet solutions don’t come cheap and create excessive dependence on the solutions provider regarding troubleshooting, key management, and recovery.

Liminal’s Enterprise Wallet Solution to the Rescue

Liminal’s suite of enterprise crypto asset management solutions addresses the shortcomings of existing wallet infrastructure. The Liminal Smart Cold Wallets, along with the Smart Wallet Refill solution, create an end-to-end secure channel for high-value crypto transactions within the platform’s infrastructure.

Liminal Smart Cold Wallets

Liminal Cold Wallets is a secure, HSM-based multisig cold wallet infrastructure with multiple built-in security and failsafe features. The implementation of tried and tested hardware wallet-only multisig wallet solution instead of the more popular MPC or software multisig option combined with KYC-backed, customizable Policy Shield allows users to implement their desired transaction parameters without compromising the safety of their assets. Further, Liminal’s Cold Wallet solution virtually eliminates the chances of users executing transactions to a wrong address, either deliberately or by mistake, with the help of its wallet whitelisting feature. But that’s not all, as Liminal Signer acts as the final line of defense by retaining the final signing authority to initiate any outgoing transaction from the cold wallets upon satisfactory verification of compliance requirements per user-dictated policies.

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Using Smart Cold Wallets, crypto platforms can easily replenish their warm wallets or transfer funds to other addresses in a few simple steps without worrying about possible security risks.

Liminal Smart Wallet Refill

With assets safely transferred from the cold wallet to the warm wallet, the next task is to secure the hot wallet refill process. The Smart Wallet Refill solution takes care of the subsequent steps by allowing the wallet teams to automate the wallet refill process by programming the applicable refill policies. Each Smart Refill Wallet acts as a warm wallet, receiving funds from the cold wallet and disbursing it to the hot wallets whenever the requirement arises.

Like the Liminal Cold Wallets, the Smart Refill Wallet responsible for initiating refill transactions are multisig in nature. The number of required signatures for refill transactions will be decided by the client, with Liminal Signer being one of the final signatories. To ensure uninterrupted operation, the Smart Refill Wallets secure batches of partially signed transactions from all the assigned participants, allowing Liminal Signer to place the last signature to process refill transactions once the conditions as per refill policy are met.

The client-provided parameters considered by the Smart Refill Wallets to replenish hot wallets include the transaction size, whitelisted wallet address, trigger amount in the hot wallet to initiate refill, cooldown period after each transaction, and more. In addition, the solution also makes allowance for manual intervention to trigger one-time refill transactions if the need arises during the cooldown period. The right implementation of the Smart Wallet Refill solution removes the need for a large, dedicated team just for monitoring and refilling hot wallets, allowing efficient allocation of manpower throughout the organization.

Operating Smart Cold Wallets and Smart Wallet Refill Solutions in Synchrony

Both solutions singlehandedly strengthen the wallet infrastructure and streamline operations to a great extent. Implementing them together can potentially make a huge difference in the way wallets are managed within the organization.

Working in tandem, both solutions will allow organizations to manage the bulk of their funds in a secure ecosystem with inbuilt redundancies. While the Smart Cold Wallets ensures a convenient and safe execution of outbound transactions without compromising the integrity of critical private keys, the Smart Wallet Refill safeguards significant volumes of transactions downstream by minimizing human intervention in the hot wallet refill process.

In other words, implementing Liminal’s solutions such that the outward transaction from the Smart Cold Wallets is sent to the Smart Refill Wallet to be further transferred to hot wallets will significantly improve the overall security standards of the platform’s wallet infrastructure.

A Lot More to Come

The Smart Cold Wallets and Smart Wallet Refills are just two of Liminal’s many products as part of its all-around crypto asset custody and management solutions. More products for enhanced security and convenience will be revealed soon.

Meanwhile, if you wish to learn more about Liminal’s Smart Cold Wallets and how it works in conjunction with Smart Wallet Refill solutions, reach out to us by filling out this form.

Learn more about Liminal here.

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