The industry security test, self-hosted wallet is the future of Web3

The algorithms are constantly surging, and safety accidents are like the sword of Damocles hanging above the head. They have never happened "if" but "when". Recently, CEX and DeFi have been frequently hacked, with asset losses, contract vulnerabilities, and Trojan viruses covering the market, making the word "security" the focus again. There has never been absolutely security in the crypto world, only ever-evolving security strategies. When the traditional finance "big but not overturned" rule fails in the Web3 world, the industry faces unprecedented questions: Who should we entrust our assets to security?

OKX clearly recognizes that there are security risks in the crypto industry, but we focus on solutions rather than fear – fear does not solve problems, and technological innovation is the answer. We care about the security of all crypto users. No matter where everyone trades, we always advocate higher security standards, and through technological innovations such as self-custodial wallets and PORs, users can truly have their own asset sovereignty. This is not marketing, but an inevitable direction for the development of the industry.

We believe that the future of Web3 is not built on trust-centralized platforms, but on code, transparency and user sovereignty. True security is not about relying on a certain platform, but is controlled by the users themselves. Therefore, the self-custodial wallet we advocate is not only a product concept, but also a transformation of the industry paradigm, which represents the return of detrust, transparency and personal sovereignty. OKX is committed to promoting higher safety standards, providing more transparent and trustworthy solutions not only for itself, but also for the entire industry.

We hope to further strengthen OKX's commitment to encryption and security by helping users understand the concept of self-hosted wallets, helping users make informed decisions and improve security awareness. OKX firmly believes that the industry must continue to evolve to protect the safety of user assets, and we support stricter security standards to ensure the long-term development of the entire industry.

Advantages & Disadvantages of Decentralized Self-Hosted Wallets

Dimension| Decentralized self-hosted wallet

1. Private key control rights

| ✅ Users have complete control over private keys (or shard keys)
2. Actual ownership of the asset| ✅ Assets are completely owned by the on-chain address corresponding to the private key
3. Security dependency| ✅ Relying on cryptography algorithms and the security of blockchain network itself
4. Transaction transparency| ✅ All transactions are traceable on the chain and the address behavior is completely transparent
5. Anonymity| ✅ No authentication is required, the address has no forced association with the real identity
6. Operational autonomy| ✅ Directly interact with blockchain without third-party intervention
7. Risk Type| 🟠 Personal risk control error (private key leakage/misauthorization/operation error)
8. Asset recovery capability| ❌ Loss of private key = permanently lost assets, no recovery path
9. Technical Architecture| 🌐 Pure on-chain architecture, interacting through smart contracts or protocols
10. Applicable scenarios| Long-term coin holders, DeFi deep users, and privacy demanders

There is an essential difference between "platform security" under the traditional paradigm and "autonomous security" in the Web3 era. "Not your key, Not your money", a self-hosted wallet gives users absolute control over crypto assets, and realizes decentralized management through unique private keys. Users can complete asset storage, transactions and other operations without relying on third-party institutions, and truly become the manager of personal digital assets. This security mechanism based on mathematical proof completely breaks out of the traditional security framework that relies on human operation and maintenance. It not only protects the integrity of asset ownership and privacy rights, but also avoids the redemption risks caused by centralized platforms due to operating crises. However, absolute control is accompanied by full responsibility, and users must independently bear security obligations such as custody of mnemonics.

In terms of account generation and private key backup, unlike traditional wallets that only support derive multiple wallets from a set of mnemonic words, OKX Web3 wallet is the only one that creates multiple mnemonic words wallets and a set of mnemonic words to derive multiple wallets at the same time. The wallet of the account improves the flexibility and security of users in asset management and effectively reduces the risk of private key leakage. In addition, the OKX Web3 wallet reconstructs the backup process, and users only need to log in to their iCloud/Google account and set an encryption password to complete off-chain backup. This solution breaks through traditional hardware dependencies, and can quickly restore assets through cloud verification encrypted backups even if the device is lost or the mnemonic is forgotten. Triple protection system: cloud storage + password verification + local encryption, while lowering the operating threshold, it builds an insurance mechanism that can resist single-point failure for crypto assets.

At the same time, OKX Web3 wallet provides powerful private key protection functions , such as prohibiting users from taking screenshots or recording private keys and mnemonics to prevent information leakage. To further improve security, private key segmented copying and other functions are also supported to ensure that every link is protected. Through these protection measures, the user's private keys and mnemonics are always under strict security guarantees, reducing potential security risks.

According to Slow Fog Technology's public audit, all private keys and mnemonics of OKX Web3 wallet users are stored only in the user's local device and will not be uploaded to any external server. In addition, the OKX Web3 wallet-related SDK is also open source, and has been widely verified and continuously reviewed by the global developer technology community, making it more open and transparent. OKX Web3 wallet private key security module complies with financial-grade security standards, ensuring that mnemonic words are stored offline throughout the entire process and never touch the Internet.

In response to the "unlimited authorization" risks that are common in the DeFi ecosystem, O KX Web3 wallet has built-in smart contract permission management function, supports custom authorization limits, one-click risk removal, constant risk monitoring, 30-day non-interaction DApp risk warning, regular Highlight functions such as pop-up windows to remind you of risks, further eliminating the risk of asset exposure caused by over-authorization, and creating a "minimum permission" security paradigm.

For example, many users have authorized various contracts, but contracts that have not been interacted with for a long time may become the target of hackers due to the lack of project maintenance. OKX Web3 wallet records the contracts authorized by the user through the on-chain search function and tracks and manages the risk-free contracts therein. For contracts that have not been interacted for a long time, the system will automatically detect them and promptly send reminders to users after risks are discovered. Every 30 days, the system will give a reminder to users who have not cancelled their long-term uninteractive contract authorization. It is recommended that users regularly manage wallet contract authorization and promptly cancel contracts that are no longer used to reduce potential risks. For example, the OKX contract monitoring engine provides 7*24-hour security protection, scans the user-authorized contract in real time, and prompts the user to cancel the authorization after discovering risks; if it is not cancelled within 24 hours, the system will pop up again to remind you.

For on-chain interaction risks, OKX Web3 wallet provides powerful risk transaction identification functions, such as integrating the Tianyan KYT system to build an active defense network and scanning the risk address tag library in real time. In key links such as DApp interaction and asset transfer, machine learning dynamically identify malicious contracts, phishing addresses and other threats, and achieve millisecond-level risk blocking before transactions. This protection system deeply integrates user autonomy and professional risk control capabilities, so that self-hosted wallets can achieve security protection capabilities beyond the centralized platform while maintaining their decentralized characteristics.

The future appearance of the industry is unknown, but self-custodial wallets are undoubtedly one of the definite paths - becoming the "Noah's Ark" for the security of user assets.