Company Name: lava
Founder: Shezan Maredia
Established date: January 2022
Headquarters: New York, USA (some employees work remotely)
Amount of Bitcoin held by the Treasury: N/A
Number of employees: 7
Website: https://www.lava.xyz/
Public or private? private
Shehzan Maredia wants to make it easier to store bitcoin.
This is why he founded lavais an app he and his team created that allows users to buy Bitcoin, trade both Bitcoin and stablecoins globally, and self-custody their Bitcoin without having to write down their seed phrase.
Maledia said seed phrases, a list of 12 to 24 words used to recover funds from lost or stolen cryptocurrency wallets, Preventing Bitcoin from going mainstreamHe believes a seedless alternative to self-care could help gain public support.
“We realized that seed phrases were a huge barrier to adoption,” Maredia told Bitcoin Magazine, “and we did extensive research to find something better.”
After months of research and development, Maredia developed the solution that is at the heart of the Lava app’s design: Lava Vault.
Lava Vault
After testing various self-managed configurations, Maredia and his team arrived at a proprietary multi-signature solution that would become the backbone of Lava Vault.
“We’ve built a two-in-one recovery solution where one of the pieces is attached to your cloud account and the other is a four-digit PIN for self-management,” he explained.
Introducing Lava Vault, the perfect self-managed app for those who want to save in Bitcoin and spend in dollars without compromising security.
Free, instant, global payments
Buy Bitcoin with the lowest fees
Protect your assets with seedless 2-of-2 recovery pic.twitter.com/nEIYIHD6Dg
— Lava (@lava_xyz) July 16, 2024
“Even if I had your four-digit PIN, I couldn’t steal your money because I don’t have access to your cloud account. Even if I did have access to your cloud account, I wouldn’t be able to brute force it because I don’t have your four-digit PIN,” he added.
Maredia and the Lava team call their design the “Lava Smart Key,” and they believe it will help make self-management easier for people who don’t want to take on the responsibility.
“In fact, we’re seeing a lot of people who previously bought bitcoin and stored it on Coinbase now using Coinbase,” he said.
In addition, Lava Vault Lava Exchangeanother product recently released by Lava.
Lava Vault + Lava Exchange = Automated Onboarding to Self-Management
For Bitcoin beginners, it is often difficult to tell the difference between exchange-provided custodial wallets and self-custodial wallets, especially when an exchange offers both (e.g. Coinbase).
However, Lava removes this difficulty by allowing users to buy Bitcoin within the app (at the best available rate) and then have that Bitcoin automatically sent to their own custody.
“We have an exchange aggregator that we built ourselves,” Maredia said.
“If you want to buy Bitcoin today, you need to decide which exchange: Kraken, Coinbase, etc. So we partner with a lot of exchanges. We know the price they will give you based on your order and we just direct you to the best exchange through our mules,” he added.
Once a user makes a purchase, the Bitcoin appears in their Lava Vault.
“This is extremely useful when you’re trying to get users onto self-custody,” says Maredia. “Now you can point them directly to download it, which greatly increases the likelihood that they’ll stick with self-custody.”
Once users have self-custody of their Bitcoin or stablecoins through Lava, they can use either asset to transact permissionlessly with anyone in the world, and soon they will also be able to borrow dollars against their Bitcoin as collateral, without ever handing their Bitcoin over to a third party.
Lava Loan
Maredia and the Lava Team recently released a beta version of a new product called Lava Loan, which Maredia describes as “self-managed.” BlockFi.”
The now-defunct BlockFi was a platform that allowed users to use Bitcoin as collateral for loans. The main difference between BlockFi and platforms like Lava was that users had to hand over custody of their Bitcoin to BlockFi in order to use the service.
“Lava loans are the first and only way to borrow against bitcoin without having to hand it over to a custodian or bridge,” Maredia said.
Maredia developed this product because he saw a demand for it and he wanted something like this himself.
“There are a lot of bitcoin users who don’t want to sell their bitcoin,” Maredia said.
“Bitcoin is going up in value, so I don’t want to sell it. I’d rather borrow against it at a lower interest rate than see it go up in value,” he added.
He also realized that other ways of borrowing against bitcoin were highly inefficient and expensive.
“Billions of dollars of bitcoin-backed loans are being made through custodians and banks. Wrapped Bitcoin (WBTC),” he explained.
“To get wrapped bitcoin, you need to Identification “You could put the bitcoin on an exchange yourself, pay a fee to mint it, pay the network fee to move it to Ethereum, then when you’re done with the wrapped bitcoin, move it back to the exchange, pay an additional fee to unwrap it and put it back into your custody, and you’d still owe tax on wrapping the bitcoin,” he added.
“I want to get these people to use native Bitcoin, so we can expand the market size of people using actual Bitcoin as collateral.”
Discrete Log Contract (DLC)
Lava Loans uses a specific type of smart contract on Bitcoin. Discrete Log Contract (DLC).
Maredia explained that DLC is more secure than the types of smart contracts commonly deployed on other major crypto networks.
“DLC is interesting because it essentially uses layer 1 of Bitcoin to lock up bitcoin and then just releases it under a predefined set of conditions,” he explained.
“As opposed to Ethereum or Solana smart contracts, which get hacked all the time, DLC is essentially a series of encrypted, pre-signed transactions. You know that the money locked in the smart contract between you and the other party can only move under this pre-defined set of conditions that are verified, so you almost get formal validation of the system by default,” he added.
“So it’s a lot less technical risk than deploying and writing arbitrary code into an EVM that anyone can examine and exploit.”
Maredia also said that the Lava team is made up of a number of engineers who contributed to early DLC standards.
“There are probably around 10 people who know about this technology, many of whom work at Lava and are currently contributing,” Maredia explains, adding that DLC’s potential has yet to be fully realized, mainly because the technology is new: “Not many people[know about DLC]but that’s because the technology is still in its infancy and we’re building it.”
Move slowly and protect things
Unlike many in the crypto and tech industry who take a “move fast and break things” approach, Maledia and his team are analytical and thorough: they prefer to thoroughly research and test their products before bringing them to market.
“We’ve been doing a lot of research and development over the last two years,” Maredia said.
“We were experimenting with a lot of things. Even before we built Lava Smart Key, Lava Exchange and Lava Loans, we were experimenting with different ways of doing loans, self-managed security, on-ramps and off-ramps,” he added.
“This new self-managed security solution is the culmination of experimentation over the last 8-10 months.”
Maredia added that it could be several months before Lava Loans goes live, but the beta version of the product is performing well and providing him and his team with critical feedback.
“All is well,” he concluded.
The mule is UTXO Managementa regulatory capital allocation firm focused on the digital asset industry. Bitcoin Magazine is owned by BTC Inc., which also operates UTXO Management. UTXO invests in various Bitcoin ventures and holds significant amounts of digital assets.
