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Pay Protocol Secure Self-Custody Solution

· 4 min read
Pay Protocol Dev
Pay Protocol Dev
Pay Protocol Development Team

What is Secure Self-Custody?​

Secure self-custody is a fully smart contract-based solution for managing crypto assets. This solution allows merchants to have complete control over all crypto assets and permissions within their system without relying on any third-party servers or services. At the same time, it ensures multi-node security, preventing the loss of funds or data due to the compromise of a single point of authority.

When evaluating whether a solution meets the standard of secure self-custody, two key considerations must be addressed:

1. Are all services and nodes fully owned by the merchant with ultimate authority?​

Traditional solutions and those based on Multi-Party Computation (MPC), while supporting source code-level private deployments, still heavily rely on the security of conventional servers. However, most merchants lack the capability to deploy high-security servers. Attempting to implement MPC deployments independently may introduce additional security risks.

2. Can the loss of any single node or server authority result in no financial loss for the merchant?​

In a secure self-custody solution, the service module and asset custody module are independent of each other:

  • Service Module: If the service module relies on Web2 servers and the loss of server authority could lead to asset loss, such a solution cannot be considered secure self-custody. A secure self-custody solution ensures that the service module and asset custody module are fully separated.

  • Asset Custody Module: This module is implemented through a fully smart contract-based solution, sharing the same security level as the public blockchain and managed via a multi-signature system. Even if all server authorities are compromised, assets can still be recovered through the multi-signature permissions of senior administrators.

Benefits of a Self-Custody Solution​

1. Elimination of External Attack Risks​

With secure self-custody, merchants have complete control over their funds and permissions without relying on third-party services. Even if servers are compromised by hackers, merchants can continue operating independently without worrying about risks caused by third-party vulnerabilities or malicious actions.

2. Elimination of Internal Malicious Risks​

In traditional crypto asset custody solutions, it can be challenging to trace the root cause of incidents—whether it’s external attacks or internal malicious acts—due to risks in server maintenance, financial management configurations, and executive-level permissions. The PayProtocol secure self-custody solution records all sensitive asset operations on-chain, completely eliminating the possibility of internal malicious behavior.

3. Scalability and Customization​

Many industries require system functionality to be integrated with development needs. Through self-custody, project teams can customize the system according to specific requirements and flexibly meet the unique demands of business development. The self-custody solution is designed with a no-maintenance approach, allowing enterprises to fully control the system's operational state and avoid the aforementioned risks.

Key Elements for Achieving Secure Self-Custody​

1. Fully Smart Contract-Based Solution​

All crypto asset operations are managed by smart contracts, with permissions solely held by the project team, ensuring operational security.

2. Multi-Signature System-Level Configuration​

A multi-signature system is implemented at the system level to reduce the risks and inconveniences of frequent cold wallet operations by avoiding direct interaction with the cold wallet.

3. Strict Permission Management and Isolation​

  • Funds in sub-contracts can only be transferred to cold wallets.
  • Crypto assets in cold wallets can only be accessed through multi-signature operations by super administrators.

4. Continuous Monitoring and Updates​

Although this is a self-custody solution, project teams must still design or integrate automated security updates and monitoring mechanisms. We provide various detection scripts and alert modules to ensure the system is always prepared to address emerging threats.

This secure self-custody solution empowers merchants to maintain complete control over their crypto assets while ensuring maximum security and operational efficiency.