Cryptocurrency wallets are the wallets that enable customers to securely store, send, and receive cryptocurrencies. They can come in various forms, such as software applications and hardware devices. These wallets utilise cryptographic techniques to secure private keys, which are essential for accessing and managing cryptocurrency holdings on the blockchain.

Temperature-based wallets

Liminal offers all three types of storage–hot, warm, and cold. Each of them are described as follows:

Hot wallets

Hot wallets are wallets where your keys are accessible online. The hot wallet transactions are signed automatically. In Liminal, these wallets are created and managed via APIs. Additionally, you can access hot wallets through the Liminal Vaults user interface to view the total wallet balance, individual asset balances, configured policies, etc. These wallets are of two types—deposit and withdrawal wallets which are described as follows:

• Deposit wallet: It is used to collect assets from your customers. As an exchange, you can receive assets from customers by deploying a deposit wallet with multiple addresses, assigning each address to an individual. When your customer sends assets to their corresponding address in your deposit wallet, you can acknowledge and credit that address with the equivalent digital asset amount.
• Withdrawal wallet: It is used to draw assets out. When your customers want to process assets out of your exchange, it is sent to an external wallet from your withdrawal wallet.

To learn how to view your all hot wallets and deposit wallet addresses in Vaults, see View hot wallets in Vaults. To learn more about the related APIs, see the API references section.

Warm wallets

Warm wallets are wallets where the Multi-Party Computation (MPC) shard is held by an internet-connected mobile device. The transactions are not automated, and require manual initiation and approvals using the Liminal Vaults mobile application. The transactions are signed on the mobile device. Warm wallets provide a middle ground between hot and cold wallets. It is more secure than hot storage but more accessible than cold storage. It offers the following advantages:

• Accessibility: Warm storage allows for relatively quick access to assets, though not as immediate as hot storage. It requires a few additional steps or layers of authentication.
• Security: It offers better security than hot storage by keeping the assets offline or in a semi-offline state most of the time, reducing the risk of hacking and unauthorised access. However, it is not as secure as cold storage, which is completely offline.
• Use case: Typically used for holding larger amounts of cryptocurrency that need to be accessed more frequently than cold storage but still require enhanced security.

Cold wallets

Cold wallets are where the keys are kept offline and you need to manually access those keys to sign a transaction. The keys are stored on a hardware device called Ledger/Trezor. This type of wallet is considered extremely secure as the keys do not get exposed to the internet. Virtual Asset Service Providers (VASPs), say treasuries, who only secure assets might only opt for the cold storage.

Liminal utilises the protocol-level or smart contract-based multisignature (multisig) technology combined with hardware wallets as signing devices, to provide a highly secure cold storage solution.

Wallet types by signing device

Liminal offers both mobile wallets and multisig hardware wallets, which are described as follows.

Mobile wallets

A mobile wallet is a wallet where you sign transactions using your mobile devices. This type of wallet is built on top of the MPC technology, where the key is divided into multiple shards. The shards are distributed among different parties. This makes it highly secure because no single party has full access to the key. A mobile wallet can be a hot or a cold wallet. The wallet has the following advantages:

• Fast transaction signing: Accelerates transaction approvals by enabling signing on mobile devices.
• Enhanced security: Operates a layer above the blockchain, enhancing security measures.
• Seamless implementation: Simplifies the integration of new chains into MPC.
• Additional support: Offers expanded assistance for DeFi, staking, and custom contract deployments.
• Flexibility: Well-suited for both medium to smaller amounts transfers.
• Add ons: Ideal for constructing APIs on top, making MPC the preferred choice.

Multisig hardware wallets

A multisig wallet is a wallet that requires multiple signatures or approvals to authorise a transaction. Instead of having a single private key, which is typical for most wallets, multisig wallets have multiple private keys, each controlled by different individuals or entities. This wallet requires a hardware device, such as a Trezor or Ledger, to sign a transaction. Liminal offers cold multisig wallets with the following benefits:

• Highly secured: Stores keys offline in hardware wallets, such as Ledger or Trezor.
• Easy deployment: Allows for seamless cold wallet deployment.
• Large asset storage: Allows for storing large amounts of assets securely.
• Large asset transfers: Suitable for transferring large amounts of assets.
• Client adaptability: Particularly adaptable for large-scale clients, for example big chains like Bitcoin and Ethereum.

While a multisig wallet has many advantages, it also has the following limitations:

• Digital inaccessibility: You need to connect the hardware device with your laptop to sign a transaction. This process is slow. If you are doing fewer transactions and holding larger amounts, then the multisig wallet is the ideal choice.
• Multiple signatures: For multisig wallet transactions, multiple signatures are required from different parties.

Multisig wallets are available for a limited number of protocols, as listed below.

Wallet versions: v1 and v2

Wallet v2 refers to the newly introduced wallets which have enhanced security and functionality. These type of wallets support transaction flow through Liminal Firewall, and also offer team management, allowing you to associate initiator and signer team with your wallet.

Liminal Firewall adds a layer of security by filtering your transactions through your defined policies and rules. The policies result in the outcomes based on the evaluation of the risk factors involved in the transactions. Liminal Firewall combines all the policy outcomes and declares the final outcome for a transaction. Using Firewall, you can:

• Automatically approve any transaction
• Automatically block any transaction
• Add additional dynamic approvers to any transaction

All of the above can be done by configuring appropriate rules in the Firewall-supported policies. To learn more about Firewall, see Liminal Firewall.

Liminal is upgrading all existing wallets to v2. Currently, all cold mobile (MPC) wallets are v2. You can also create v2 hot withdrawal wallets for supported chains, as listed in the following table.

Note: It is advisable to use v2 wallets where possible. However, if you already have an established infrastructure using Liminal APIs, you can continue to use v1 wallets without encountering any issues.

Firewall-supported chains and v2 wallets

The following table illustrates the list of chains and v2 wallets supported by Liminal Firewall.

The unsupported chains as illustrated above are currently in the process of integration with Liminal Firewall. These chains will soon be available for your v2 wallets.

API references

• To create v1 or v2 wallets for the above available chains, use the Create a hot wallet API.
• To generate a single or multiple addresses in a deposit wallet, use the Generate a single address API or Generate multiple addresses API, respectively.
• To send transaction requests from a v2 wallet, use the Send multiple transaction requests (V2 wallet) API.
• To send transaction requests from a v1 wallet, use the Send multiple transaction requests (V1 wallet) API.