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✳️ dcposch on daimo
@dcposch.eth
What counts as self-custody? I've seen orgs ship what's effectively a 2-of-3 multisig or MPC where they keep 2 of the 3 shares. While arguing that this is still noncustodial for legal purposes! This allows nice UX like phone or email recovery. No judgement, just curiosity: does that work?
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Matt Schoch
@md5
For sure. Typically 2/3 mpc will require the user share, so the provider cannot initiate, only co-sign. Non-custodial means provider does not custody; not necessarily that the user holds the keys.
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✳️ dcposch on daimo
@dcposch.eth
In the cases I'm talking about, they *dont* require the user share. How do I know? Because the user can recover their account with just email or phone auth.
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Matt Schoch
@md5
Typically this can be "non-custodial" still, but does introduce censorship/coercion risk in favor of UX/recovery safety. Storing an encrypted backup of a key doesn't constitute custody b/c it can't be used without changing the rules of the system (but, changing the rules could be possible..)
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