Technical Deepdive: Wallets and Security at Parallax

Written by
Mika Reyes
Published on
April 16, 2024
Technical Deepdive: Wallets and Security at Parallax

We initiated this major upgrade to Parallax Thunder to make Parallax faster, safer, and more reliable for remote workers around the world.

As we release our Thunder upgrade, we're excited to unveil a novel approach to digital wallet security.

Here's a detailed deep dive at how we're enhancing security, privacy, and user control at Parallax.

Before & After

Previously, Parallax managed assets in partner-controlled custodial wallets. However, we faced transaction unreliability and compliance challenges that limited our expansion.

Now, every USD balance on Parallax is kept safe in the form of USDC stablecoins held in self-custodial wallets enhancing security and control. Let’s define these terms.

  1. USDC Stablecoins: Embracing blockchain's potential, we use stablecoins, which are digital currencies designed to maintaing a stable value pegged to a currency such as USD. Issued by Circle, a leading and trusted stablecoin provider, USDC facilitates innovative, stable global transactions.
  2. Self-Custodial Wallets: Moving away from third-party controlled wallets, self-custodial wallets empower you with full control over your assets. Transactions require your account's explicit consent and PIN, ensuring unmatched security and autonomy.

How Our Wallets Work

To enhance security without overwhelming users unfamiliar with things like “seed phrases”, we've developed a system that blends intuitive user experience with cryptographic security, inspired by password managers like 1Password.

How it works: Our security is built on a 3-shard system, requiring 2 for wallet access. Think of it like a lock that requires two keys to open.

  1. PIN Shard: A six-digit PIN for transaction authorization. Secure it as you would a bank PIN.
  2. Security File Shard: A downloadable file containing a six-word security phrase for PIN recovery. Note: This is NOT to be confused with a seed phrase. This is just an easy way to help you recover your PIN.
  3. Enclave Shard: Held within a secure enclave, accessible only through the Parallax app.

During setup, you'll create a PIN and download the Security File. It's vital to keep these secure, as even Parallax cannot access them.

Setting Up and Accessing Your Wallet

Upon upgrading to Thunder:

  1. You'll set up a PIN. Always remember your PIN has you’ll need it for every transaction. Keep this safe!
  2. You’ll download a Security File. This is the ONLY WAY you can recover your PIN in case it’s compromised or lost. Keep it safe and away from anyone’s prying eyes.

To clarify how these items will be used or what happens if they are lost:

PIN Recovery Flow

Should you forget your PIN or feel it's compromised:

  1. Initiate the recovery flow in your settings.
  2. Upload your Security File.
  3. Create a new PIN and download a new Security File

No Security File Recovery Flow

There is no way to recover a Security File if it is lost. Please keep this safe.

Transaction Security

To further secure transactions:

  • Login and MFA: You are signed out of Parallax every 12 hours and will need to login and go through authentication to initiate any sort of transaction.
  • PIN Requirement: A PIN is now required for ALL transactions.
  • (Soon) MFA for High-Value Transactions: Transactions over a certain threshold will trigger additional Multi-Factor Authentication.

Exporting Your Wallet from Parallax

Your Parallax wallet is a self-custody wallet and it would be possible to export the Parallax and import to another product.

However, at this time, know that you will lose access to transactions and services on Parallax as it relates to this wallet.

We're committed to providing a secure, user-controlled platform. This upgrade to self-custodial wallets and enhanced transaction security measures underscores our dedication to your financial autonomy and safety.

Ready to get started?

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