Company Name: Lava
Founders: Shehzan Maredia
Date Founded: January 2022
Location of Headquarters: New York, U.S.A. (with some remote workers)
Amount of Bitcoin Held in Treasury: N/A
Number of Employees: 7
Website: https://www.lava.xyz/
Public or Private? Private
Shehzan Maredia wishes to make custodying Bitcoin easy.
This is why he established Lava, an app that he and his group have actually produced that enables users to acquire bitcoin, negotiate with both bitcoin and stablecoins worldwide and now hold their bitcoin in self-custody without needing to jot down a seed expression.
Maredia is among a growing list of business owners in the Bitcoin area who thinks that seed expressions — lists of 12 to 24 words utilized to recuperate funds from lost or taken cryptocurrency wallets — are impeding mainstream adoption of bitcoin. He believes that seedless options to self-custody will assist onboard the masses.
“I realized that seed phrases were a big barrier to adoption,” Maredia informed Bitcoin Magazine, “and I went down the rabbit hole [to make] something better.”
After months of R&D, Maredia developed a solution that’s now at the heart of the design of the Lava app: Lava Vault.
Lava Vault
After testing a number of different self-custody setups, Maredia and his team arrived at a unique multisignature solution that became the backbone of the Lava Vault.
“We built this two-of-two recovery solution for self-custody where you can attach one part of the two-of-two to your cloud account and the other is a four digit PIN,” he discussed.
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secure your assets with seedless, 2-of-2 recovery pic.twitter.com/nEIYIHD6Dg— lava (@lava_xyz) July 16, 2024
“If I have your four digit PIN, I can’t steal your money because I don’t have access to your cloud account. If I have access to your cloud account, I don’t have your four digit PIN, and I can’t brute force it,” he included.
Maredia and the group at Lava call this style the Lava Smart Key, and they think that it’s assisting to offer easier self-custody for those who otherwise may not wish to handle the obligation.
“We’ve actually seen a bunch of people using it that previously would have just bought bitcoin and kept it on Coinbase,” he stated.
What is more, Lava Vault works perfectly with Lava Exchange, another item Lava just recently presented.
Lava Vault + Lava Exchange = Auto-Onboarding To Self-Custody
It’s typically tough for brand-new Bitcoin users to discriminate in between a custodial wallet that an exchange supplies and a self-custody wallet. It can be frustrating for somebody brand-new to Bitcoin to go through the procedure of moving their bitcoins from an exchange wallet into self-custodial wallet, particularly if the exchange uses both (e.g., Coinbase).
Lava eliminates this trouble, however, as it enables users to acquire bitcoin within the app — at the very best rate readily available — before instantly sending out that bitcoin into self-custody.
“We have this exchange aggregator we’ve built,” stated Maredia.
“If you want to buy bitcoin today, you have to figure out which exchange — Kraken, Coinbase. So, we work with a lot of them. We know what price they offer you based on your order, and we just route you to the best exchange through Lava,” he included.
Once users make their purchase, the bitcoin appears in their Lava Vault.
“This is super useful if I’m trying to onboard users to self-custody,” stated Maredia. “Now, I can tell them to download directly to self-custody, which largely increases the likelihood that they will continue to use self-custody.”
Once users have their bitcoin or stablecoins in self-custody through Lava, they can utilize either property to make deals permissionlessly with anybody on the planet. And quickly they will also have the ability to obtain dollars versus their bitcoin without needing to turn their bitcoin over to a 3rd party.
Lava Loans
Maredia and the Lava group just recently launched a beta variation of a brand-new item called Lava Loans, which Maredia refers to as a “self-custodial version of BlockFi.”
BlockFi, now defunct, was a platform that enabled users to utilize bitcoin as security for a loan. The primary distinction in between a platform like BlockFi and Lava is that users needed to quit custody of their bitcoin to BlockFi to utilize the service.
“Lava Loans is the first way to borrow against your bitcoin without giving it to a custodian or bridge,” stated Maredia.
Maredia produced this item since he both saw the need for it and desired something like this for himself.
“There’s a lot of Bitcoiners who don’t want to sell their bitcoin,” shared Maredia.
“I don’t want to sell my bitcoin either, because it’s appreciating. I’d rather borrow against it at a lower interest rate than it’s appreciating,” he included.
He also observed that the other approaches of loaning versus one’s bitcoin are both extremely ineffective and pricey.
“There are billions of dollars of bitcoin-secured loans happening with custodians or with Wrapped Bitcoin (WBTC),” he discussed.
“To get Wrapped Bitocin, you have to take your Bitcoin, KYC yourself, put it on an exchange, pay fees to mint it, pay a bunch of network fees to move it onto Ethereum and then once you’re done using Wrapped Bitcoin, move it back to your exchange, pay extra fees to unwrap your Bitcoin and move it back to self-custody. And you probably have tax obligations for wrapping your Bitcoin, too,” he included.
“I want to get these people using native bitcoin. We can increase the market size of people who are using actual bitcoin as collateral.”
Discreet Log Contracts (DLCs)
Lava Loans uses a particular kind of wise agreement on Bitcoin called Discreet Log Contracts (DLCs).
Maredia discussed that DLCs are more secure than the kinds of wise agreements typically released on other significant crypto networks.
“DLCs are interesting because you’re basically just using the Bitcoin layer one to lock your Bitcoin and release it under some predefined set of conditions,” he discussed.
“[As opposed to] smart contracts on Ethereum or Solana that constantly keep getting hacked, DLCs are basically a bunch of pre-signed transactions that you encrypt. You almost get formal verification of your system by default, because you know that the money that’s locked in the smart contract between you and your counterparty can only be moved under this predefined set of conditions that you have verified,” he included.
“So, there’s a lot less technical risk versus writing arbitrary code deployed on the EVM that anyone can poke around with and exploit.”
Maredia also shared that the Lava group is made up of a variety of engineers who added to early DLC requirements.
“There’s probably like 10 people, a lot of which work at and contribute to Lava right now, who know about this tech,” discussed Maredia, who also shared that the capacity of DLCs has yet to be completely understood mostly since of how brand-new the innovation is. “Not too many people know about [DLCs, but] that’s because the tech is early and we’re building it.”
Move Slowly And Safeguard Things
Unlike lots of in the crypto and wider tech area who take the “Move fast and break things” technique, Maredia and his group are analytical and comprehensive. They choose to perform research study and test items carefully before bringing them to market.
“We’ve been doing a lot of R&D over the last two years,” stated Maredia.
“We were experimenting with lots of things. Even before we built Lava Smart Key, Lava Exchange and Lava Loans, we had been experimenting with a lot of different ways to do loans, to do self-custody security and to do on-ramp and off-ramp,” he included.
“This new self-custody security solution is a product of the last eight to ten months of experimentation.”
Maredia included that while Lava Loans is most likely months far from going live, the beta variation of the item has actually been operating well and supplying he and his group with crucial feedback.
“Everything’s coming together,” he concluded.
Lava is a portfolio business of UTXO Management, a regulated capital allocator concentrated on the digital properties market. Bitcoin Magazine is owned by BTC Inc., which runs UTXO Management. UTXO buys a range of Bitcoin services, and keeps substantial holdings in digital properties.
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