Self-custody of relations within an organization refers to the mechanisms that allow individuals to act as backups for one another, ensuring mutual support in maintaining self-custody. This concept is fundamental to the resilience of the organization, as it enables a collective approach to security and recovery. By creating a system where individuals can assist in recovering lost access or assets, the organization forms a robust network of support. Additionally, the use of multi-signature mechanisms allows these relations to double as a decentralized voting system for key organizational decisions.

In practice, the self-custody of relations means that if an individual within the organization loses access to their own self-custody (such as losing a private key or hardware wallet), the remaining members can step in to assist in recovery. This network of individuals effectively acts as a ”decentralized forgot-your-password” system, often referred to as social recovery. Social recovery allows for the rebuilding of an individual’s self-custody using the collective support of trusted members within the organization, without the need for centralized control or reliance on external entities.

There are two primary ways to implement this backup scheme: on-chain and off-chain.

1. On-Chain Mechanism (Multi-Signature): The on-chain method involves the use of a multi-signature (multi-sig) contract. Multi-signature contracts require multiple authorized parties to sign off on any significant actions involving the organization’s digital assets, algorithms, or machines. This decentralized control ensures that no single individual has unilateral authority over the organization’s resources. In the event that an individual loses access to their self-custody, the remaining authorized parties within the multi-sig contract can help recover control over the assets. Multi-signature contracts also provide flexibility, allowing the organization to define complex rules for consensus and decision-making, making it not only a recovery tool but also a governance mechanism for the organization.

2. Off-Chain Mechanism (Shamir Secret Sharing): The off-chain method involves Shamir Secret Sharing, a cryptographic technique that splits a private key or wallet seed into multiple shares. These shares are distributed among trusted individuals or stored securely, with a minimum number of shares required to reconstruct the original secret. This method provides an offline solution for recovering lost self-custody, as the organization can recover access to assets even if one or more members lose their shares. Shamir Secret Sharing ensures that the risk of a single point of failure is minimized, as the organization can recover access through a combination of shares from different individuals.

While both mechanisms provide robust backup and recovery options, they serve different roles within the organization. Multi-signature contracts allow for real-time, on-chain recovery and governance, making them ideal for managing active digital assets and organizational decision-making. Shamir Secret Sharing, on the other hand, offers an offline recovery mechanism, safeguarding against catastrophic losses like hardware failure or theft.

By implementing both multi-signature contracts and Shamir Secret Sharing, the organization ensures a layered approach to the self-custody of relations. Not only does this empower individuals to support each other in maintaining self-custody, but it also creates a decentralized, secure environment where key organizational decisions can be made through consensus. This multi-layered system allows for more complex forms of social recovery and governance, strengthening the organization’s resilience in the face of unexpected challenges.