Upstream’s new vault could help NFT holders sleep at night
Imagine paying millions of dollars for a JPEG of a monkey only to have it stolen from your digital wallet. That’s exactly what happened to actor Seth Green, who ended up begging the hacker (and probably paying them over $100,000) to return the NFT to him.
Green’s predicament is more common than one might think, and it raises the question of how NFT platforms should handle helping their clients get recourse when this happens, if at all. Cracking down on thieves and enforcing ownership rights is particularly difficult in an industry that values decentralization and self-sovereignty as core principles. Still, NFT holders need to feel safe holding the digital assets they buy, Upstream founder and CEO Alex Taub told TechCrunch in an interview.
“Security is very difficult with crypto. People lose their seed phrase, their export keys, they click on a bad thing, they sign – that person can withdraw a lot… Sometimes you’re doomscrolling when you’re half asleep, and you click on a bad link and it’s over,” Taub said.
Upstream, which last raised a $12.5 million Series A round in March, bills itself as a no-code, full-stack platform for building DAOs (decentralized autonomous organizations). Now, the startup has leveraged its knowledge of DAO tools to roll out a new product Taub says will improve security for NFT holders called “Vault DAO.”
A screenshot of the homepage interface of Upstream Vault DAO. Image credit: Upstream
Before we get into how a Vault DAO works, it’s worth examining why Taub might have felt the need to build out a new solution entirely. Security is by no means a new issue in crypto, but the existing solutions, especially for individuals, are limited.
For example, hardware wallets provide a secure option for people to store their wallet private keys on what is essentially a hard drive, but these “cold” wallets aren’t exactly known for being user-friendly. Also, Taub noted, one can just as easily misplace a hardware wallet as they can lose the seed phrase that enables them to access crypto. “Hot” wallets, which are connected to the internet, are another solution, but Taub said he wouldn’t put any valuable assets into one because most solutions for NFTs are escrow or run by a centralized entity. In addition, Taub said he worries about the possibility that assets in a hot wallet could get lost in the shuffle of connectivity issues.
Vault DAO, Upstream’s solution, acts as a multi-signature wallet that can be configured to require sign-off from multiple discrete accounts to authorize a transaction on behalf of a user. A user can set up multiple accounts directly through Upstream and can select a threshold for the number of signers needed to execute a given type of proposal, Taub explained.
A screenshot of several signatories associated with Taub’s own Vault DAO. Image credit: Upstream
For example, a user may require three signatories to sign any transfer of assets from a specific wallet, and these three signatories may either all be accounts operated by the user or may include accounts delegated by the user to a trusted friend. Mechanically, the product acts as a user’s personal DAO, because each transaction takes place in the form of a proposal made by the user, voted on by a predetermined critical mass of DAO members, and then executed as such.
It’s fundamentally similar to Gnosis Safe, a popular multisig wallet tailored for organizations, but Taub says Vault DAO is much more user-friendly from a design standpoint. Unlike most popular multisig wallet products on the market today, Taub added, Vault DAO is specifically designed for individual users to secure their own assets rather than for groups that require multiple parties to sign a transaction.
As for where the assets are actually held, the Vault DAO product connects with major existing wallets including MetaMask and Rainbow as well as the WalletConnect protocol, allowing users to connect assets held in “cold” storage to their Vault DAO, Taub said.
Upstream’s website allows users to register to request early access to the product, although Taub did not share any details about the expected timeline for the public launch.
Taub described Upstream’s platform as two-sided — one side is a “Shopify for DAOs” that helps people set up their groups and the other side helps people manage their DAOs through an easily navigable front-end experience.
“At the end of the day, we don’t hold your NFTs, we don’t hold your crypto. It’s in this multi-signature wallet that you have full access to,” Taub said. “So that’s the way I see it — not only do I feel comfortable that I’m protecting myself from clicking a link and losing all my stuff, but I also feel comfortable because I still own my stuff.”
