Hedera and Algorand Forge Alliance for Decentralized Wallet Recovery

In this post:

  • Hedera and Algorand have formed the DeRec Alliance, introducing an innovative Decentralized Recovery (DeRec) protocol to enhance digital asset security and recovery, addressing a critical need in the blockchain industry.
  • The DeRec protocol, based on secret sharing among trusted entities, offers a robust solution for digital asset recovery, aligning with efforts to improve security in the DeFi space and setting a new industry standard for wallet safety.

In a significant development for the blockchain industry, Hedera and Algorand have joined forces to address a critical need in the digital asset space: decentralized recovery of digital assets. 

The collaboration has led to the formation of the DeRec Alliance and the introduction of an open-source protocol aimed at enhancing the security and recovery processes for digital wallets.

The DeRec alliance: A new era in digital asset recovery

The DeRec Alliance, launched on January 11 at the Crypto Finance Conference in St. Moritz, represents a major step forward in digital asset management. Spearheaded by key figures from the Hedera and Algorand ecosystems, including the HBAR Foundation and the Algorand Foundation, the alliance is set to revolutionize how digital assets are secured and recovered.

Leemon Baird, co-founder of Hedera, and John Woods, CTO of the Algorand Foundation, introduced the alliance during a joint panel, highlighting its potential to streamline digital asset recovery. The DeRec Alliance aims to bring the ease and familiarity of conventional Web2 experiences to the decentralized finance (DeFi) sector.

Innovative approach to secret management

The centerpiece of the alliance is the Decentralized Recovery (DeRec) protocol, an innovative approach to managing digital secrets. The protocol is based on the concept of secret sharing among trusted entities, such as friends or businesses. It ensures that users can recover their secrets when needed, without any single helper knowing the complete secret. The method provides a robust recovery solution even if a user loses their recovery device.

The DeRec protocol is designed with automatic confirmations to ensure helpers retain shares of secrets. It also facilitates automatic resharing when there are changes in secrets or modifications in the helper group. Notably, the identities or the number of helpers involved in the process remain confidential, adding an extra layer of security and privacy.

Hedera and Alogorand addressing DeFi security challenges

The initiative by Hedera and Algorand is timely, considering the ongoing security challenges in the DeFi space. The DeRec Alliance’s efforts align with the broader industry’s need for improved security measures, as highlighted by recent recommendations from the United States Commodity Futures Trading Commission to mitigate DeFi-associated risks.

Leemon Baird, co-founder of Hedera, has strongly emphasized the importance of collaboration across the industry to establish unified standards and open-source code, aiming to bolster safety within the Web3 environment. Recognizing the rapidly evolving landscape of blockchain and decentralized finance, Baird advocates for a collective approach. This strategy is not only about enhancing security but also about fostering a more cohesive and interoperable ecosystem, where different entities, including blockchain projects, financial institutions, and software developers, can work together seamlessly.

Baird sees the formation of the DeRec Alliance as just the starting point of this expansive vision. The alliance has already garnered attention and participation from a diverse range of players, including banks, credit unions, and various wallet software projects. This early involvement from multiple sectors indicates a strong and growing interest in developing a more secure and user-friendly framework for digital asset management. It’s a promising sign that the industry is moving towards a more collaborative and standardized approach in addressing the challenges and opportunities in the Web3 space.


The partnership between Hedera and Algorand through the DeRec Alliance marks a significant advancement in the quest for a more secure and user-friendly DeFi ecosystem. By developing a standardized, decentralized recovery protocol, they are setting a precedent for the industry to follow, potentially leading to wider adoption and trust in digital asset technologies.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

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