In this webinar, three Web3 experts, Igor Teslya, Jack Lee, and Shane Layman sat down to discuss how your brand can secure its enterprise Web3 assets, like domain names and other NFTs, and the risks posed to your brand in this emergent landscape and how you can mitigate them.

Web3: Brand Security and Asset Management Webinar – Full Transcript Including Q&A

Editor’s Note: The following transcript, including the questions and answers (Q&A), has been edited for clarity.

Introduction, Title Slide, 0:00

Speaking: Natalie Brownell

Today we are presenting our webinar on Web 3 brand security and asset management, and we are very excited to have a few leading industry experts with us.

Today’s Presenters, Slide 1, 0:14

Today we have Igor Tesla, he is the Sales Director for North America and the European Union at Metamask Institutional and Jack Lee, responsible for institutional sales and business development at BitGo and Markmonitor’s own Shane Layman, Manager of Global Industry Relations. (And if you’ll be in San Juan next week for ICANN 79, make sure to say hello to Shane while you’re there.)

And with that, I will pass you off to Shane. You are all in very good hands.

Agenda, Slide 2, 0:52

Speaking: Shane Layman

Great.

Thank you, Natalie for the introduction and again thank you to Jack and Igor who could be here to discuss all things Web three and asset management.

We’re fortunate enough to be partnered with companies like BitGo and MetaMask, or Consensys — I’m excited to hear what they have to say. But before we do anything, let’s go over the agenda today so you know where we’re going with this.

To start it off, we’ll start, we’ll talk about Web3, Blockchain and Web2. We’ll then move into brand assets on the blockchain.

One of the one of the big talking points will be around brand risk and Web3 and what you as a brand owner should be aware of. And we’ll explore what Web3 custody looks like, and qualified custody solutions.

And then, we’ll have some presentations from BitGo and MetaMask Institutional as well.

What is Web3?, Slide 3, 1:46

Let’s talk Web3. What is it?

Web3 is the new iteration of the Internet built on blockchain technologies.

Web3 is the decentralized net. Think of this as a difference to the traditional ICANN internet model which is all centralization. So, you know in the traditional sense, computers connect to central servers. They view and interact with like websites, all navigable by the Domain Name System, or DNS.

A blockchain is a digital database or ledger — this is what Web3 is built on. Transactions are distributed on nodes of a peer-to-peer network (can be thought of as a replacement to the Web2 central servers), and then data is grouped into blocks all chained together, each supporting the next block.

We have a little comparison here for web three to web versus web two. So again, that decentralized nature, peer-to-peer networks versus centralized servers, there is no central authority, so no single point of failure. And in the Web 3 space, users own their own data.

Blockchain Tech in Action, Slide 4, 2:58

We have a great little graphic here that from the start where the user requests at or you know initiates the transaction.

This is then permitted across different nodes or computer networks. These nodes then validate the transaction using their consensus mechanisms.

Once confirmed by the majority of nodes, the new block of data is created and added to the blockchain. This makes it virtually impossible to alter or corrupt.

And now the transaction is recorded on the blockchain ledger and complete.

Brand Risk in Web3, Slide 5, 3:33

Now let’s talk about brand risk in Web3 — this is one of the biggest issues that exists in the Web3 space for rights holders in general.

The biggest issue is that there are no standardized rights protection mechanisms yet. This (RPMs) is all going to be decided at the registry level or Web3 marketplace at this time.

That being said, some of the major players in the space, Unstoppable Domains, the Ethereum Naming Service, Handshake Domains, they actually decide what course of rights protection is allowed on their platforms.

There are some registries that are exploring cease and desist notices. Those will be sent from a central authority to the owner of the NFT Domain Names Wallet address.

However, there’s no formally adopted RPMs, rights protection mechanisms, or recourse available in Web3 currently.

Why does that matter? Why should you care? If someone claims your brand name in Web3 before you do, it can be difficult to retrieve, if at all possible.

What we advise our clients to do is to minimize and mitigate the risk as much as you can by proactively claiming your brand name in the space.

I know it’s hard to predict the future about what’s going to happen in the Web3 space — is your consumer base only going to be Web3 native in five years or not? But, either way, at least you’ll have that asset, your Web3 or NFT domains, claimed.

In summation, you have just one shot at registering them yourself. If someone else does and you end up wanting that name, you must proceed through an acquisition or other forms of acquiring the domain name after it’s been minted to the blockchain, which aren’t guaranteed to be successful.

One thing to note is that not all Web3 marketplaces are created equal. What that means is that there are only certain marketplaces and registries that Markmonitor is going to interact with. We have vast, vast experience in vetting these vendors, and take it quite seriously to decide which ones to partner with for our clients’ benefits.

You need to know who you’re interacting with in Web3 — if it’s someone in a suit jacket in their basement offering second level domain registrations to anyone that wants to mint them, or if it’s a trusted entity.

And knowledge is power. Familiarize yourself with Web3 and its terms.

I can’t stress enough that there are some comparisons between domain management in Web3 and domain management in Web2, you will see these themes pop up as you learn. But also, there’s going to be new terms, like minting, mining, claiming custody. Familiarize yourself with these terms so that you’re able to better be informed when making these decisions.

And with that, I’ll turn it over to Jack Lee from BitGo who’ll give you a little discussion on the Gateway to Web3. Take it away, Jack.

BitGo – The Gateway to Web3, Slide 6, 6:40

Speaking: Jack Lee

Thank you, Shane. First and foremost, I want to reiterate a thank you to the Markmonitor team for putting together the presentation, the webinar here today, and MetaMask Institutional for joining us as well.

So, a couple of words and themes you’re going to hear me touch on in this presentation: safety and security, trust, compliance, and insurance.

And if there’s one thing that I want you to take away from this discussion on the BitGo side, it’s that we’re a veteran in the blockchain infrastructure and custody space and we want to enable our clients and our partners to make the Web2 to Web3 transition in a safe compliant manner, whether that’s buying Bitcoin, holding NFT domain names or tokenized real-world assets. We want to make that a smooth process for you.

10+ Years Pioneering Crypto Market Infrastructure, Slide 7, 7:50

Who is BitGo? Where do we come from and where do we sit in the space? We’ve been around for over a decade.

Our co-founder CEO Mike Bell is a good example of the Web1 to Web2 to Web3 conversions — an early employee at Netscape Navigator then their move to Google and built out the Google Chrome engine that we use today. So, in 2013, while playing around with the Bitcoin blockchain they really recognized that there was no truly secure way to hold digital assets. And so he pioneered this multi-signature wallet technology as an architecture to hold digital assets in a more secure manner.

In 2013, and in preparation for institutional corporate enterprise adoption, we sought to become regulated, and we achieved that in 2018 with our South Dakota trust charter. That made us the first purpose built qualified custodian for digital assets, NF, TS, Crypto.

You’ll see that we’ve since expanded this, we have a number of regulated entities worldwide not only here in the US but in Europe and elsewhere. And on top of these regulated product offerings we’ve built services more in the prime space, such as trading and financing.

In a nutshell, BitGo is the leader in digital asset security, custody and liquidity with 1500 plus clients in in more than fifty countries worldwide. And this is a list that includes other regulated entities, institutional investors, enterprise corporates, as well as platforms.

Powering the Digital Asset Economy, Slide 8, 9:55

Let’s dive a little bit into who those clients are and what the segments look like. I won’t go through all the line items here, but to give you an idea, it’s the institutional investor segments.

These are hedge funds, asset managers, VCs and, top of mind today, ETF issuers with the spot Bitcoin ETFs here in the US — we work with the builder side of the equations.

And the more B2B to C use case — these are Fintech Neo banks, payment processors, exchanges, etc., as well as Fortune 50 brands — working with them on NFT loyalty programs, domain brand management. That’s particularly relevant to our conversation here today and even government agencies.

We work with these different client segments across custody, wallet, infrastructure, NFTs, trading, financing. Everyone’s a little bit different and we’re able to cast a wide net, in part with our strong product offering, our regulatory compliance, as well as our global footprint.

Compliant and Secure Digital Asset Technology, Slide 9, 11:18

I think this is a good way to visualize the BitGo product line and the services as well, in that the foundation is really that regulated fiduciary custody. This includes $250 million of insurance coverage underwritten by Lloyds of London. This is SOC 1 Type 2, SOC 2 Type 2, audited through Deloitte.

To go a little bit further on the qualified custody term, what does that really mean?

We gained this approval back in 2018 after going through rigorous audits and standards that we had to meet, all to protect client funds against loss.

The term qualified custodian stems from the Investment Advisors Act of 1940, and to qualify as a QC the entity must hold client funds in a segregated manner, meet rigorous regulatory standards, again aimed at protecting client funds against loss, theft or misuse.

And it only applies to certain regulated entities, like a State charter trust (which is what BitGo is). This could also be a federally regulated bank, as the entity needs to operate with fiduciary duty to their clients.

Some qualified custodians, such as BitGo, offer additional protections such as insurance, backup keys, customizable policies, permissions and operational controls.

This regulated offering that BitGo built covers over 700 coins and tokens, covers NFTs, and even tokenized real world assets. And on top of the regulatory compliance component, we have the wallet infrastructure custody, NFT wallets, and some ancillary products such as trading, financing and staking which are really geared towards our institutional investors and helping them generate alpha, run their strategies, etc.

Key Scheme: Regulated Fiduciary Custody, Slide 10, 13:39

And with that, let’s talk about the key security.

As mentioned, our co-founder, CEO, pioneered the BitGo wallet infrastructure with this multi signature scheme. We don’t need to go into too much detail on this, but I think it is important to speak to the safety and security of the underlying architecture here.

We can better understand it using the mailbox analogy, which I think is pretty useful. Think of your mailbox, your mailing address, as your public key in a Web3 world, and the private key is how you open the mailbox to access what’s inside.

The private key side is where BitGo specializes and focuses on security. Instead of having one private key which is a single point of failure, the multi-signature scheme uses a three key system. In this system, two of three private keys need to come together to sign a transaction for it to be validated and confirmed.

If you take a look at the top left, that client key —  to give you some insight on the procedures that that we follow from a security standpoint — that client key is broken into shards, and those key shards are held on physical SD cards in safety deposit boxes in bank vaults with armed guards.

It’s really the gold standard of digital asset NFT security, boasting a track record of 10+ years without any loss or thefts or hacks of client assets. That’s something we’re really proud of and these procedures help us to continue on that path.

Robust Risk and Operational Controls, Slide 11, 15:42

In addition to the private key security, we want to give our clients the ability to set up policies, permissions, assess risk environments, and operational controls to meet their needs as a business.

What this means is assigning different permissions at the user level.

Perhaps you have a junior person on the team who you only want to be able to initiate withdrawals or transactions, and then there’s your Chief Operating Officer who you want to have more of an administrator type role where they can initiate and approve transactions.

We have quorum-based approvals. So, two of three users, three of five, etc. Or view-only access for finance tax audit is helpful as tax season is coming up… so want to make sure that that plug is in there.

Then, on a per wallet per transaction level, things like whitelists and setting limits either on a per transaction basis or over a given rolling period. So, if you don’t want more than $500,000 or X amount of coins or tokens leaving a wallet, you can set that up and you can get really customized here to meet the needs of your business and your team.

Custodian Evaluation Guide, Slide 12, 17:13

I want to leave you with a good framework for evaluating digital asset custody and NFT Web3 domain wallet providers. There is an attachment in the handouts list that that speaks to some of these these items as well.

At the wallet security level: Is there insurance offered? Are there backup keys? Are they SOC audited? Are there human procedures with bank vaults and armed guards that complement the technology? Can you set up different policies and permissions to customize your risk mitigation tactics?

And from a regulatory standpoint: Are they a qualified custodian? Do they hold a fiduciary duty to me as a client? Do they hold funds in a segregated manner? These are really valuable questions to ensure that you’re working with a trusted, safe, secure and compliant partner as you make the transition from Web2 to Web3 for your own businesses, be it in the NFT space, Web3 brand domains, Bitcoin, Ethereum, etc. It’s good framework to use when thinking about the space.

With that, I’m turning it over to Igor from the MetaMask team, one of our trusted partners. Thank you again for having me.

MetaMask Institutional – The Web3 Wallet for Organizations, Slide 13, 18:43

Speaking: Igor Teslya

Thanks so much, Jack. Appreciate the introduction and thank you so much for your comprehensive overview.

For those of you who joined a little late, I’m Igor Tesla. I’m the Sales Director for Metamask Institutional at Consensys.

Before I begin my presentation, I’ll do a quick level set of what the Ethereum blockchain is and how you might be interacting with it.

Ethereum is the first programmable blockchain that was launched in 2015. And the fundamental difference between this kind of network and the existing Web2 infrastructure is, whereas in Web2 the functionalities were really reading and writing, where you can read what’s on the page and write to it, in Web3 you also have ownership.

A lot of the assets that we’re talking about, both brand assets as well as monetary assets are owned on something called wallets. And Jack Lee had a great metaphor for how wallets operate.

Consensys Introduction, Slide 14, 19:50

So, Consensys has been around since the first Ethereum block was mined. It was founded by Joe Lubin, one of the Co-founders of Ethereum. We’ve had the fortune to partner with many of the biggest companies in the world, including JP Morgan, MasterCard, Microsoft.

We’ve had thousands of clients globally. We’ve done tokenization projects where we’ve LED CBDC pilots for major banks and where we’ve worked with some of the major NFT platforms we’re also responsible for.

Also, managing and essentially maintaining MetaMask, which is the world’s most used self-custodial crypto wallet. It has 35 million monthly users and it is what essentially gives access to this Web 3 space. Think of it as like the Google Chrome browser that you would use to access the traditional Internet.

Aside from that, we run many of the validators or the nodes that operate the Ethereum blockchain.

We are one of the top auditors in the blockchain space.

We have an NFT platform called Phosphor as well as running many of the access points within the Web 3 space through Infira.

And finally, we have our own Layer 2, which is essentially a network on top of Ethereum, which has even greater security and cheaper fees for use, which we use to help scale this ecosystem further.

MetaMask Institutional – Secure, Stable, Reliant, Performant, Slide 15, 21:14

Now, I want to talk a little about MetaMask Institutional and why it’s important.

We are the access point. We are the ones that provide a way for the custody, that BitGo is so well known for, to essentially be able to connect with the OpenSeas, the ENSs and the Unstoppable Domains of the world. This essentially allows any asset that is securely custodied by BitGo to now have good capacity to be deployed, or to interact with many of these Web 3 protocols.

We are SOC 2 Type 1 certified. We’re in the process of having our SOC 2 Type 2 certification, and we take security very seriously as we are.

We are maintaining the self-custodial wallet for 35 million monthly users, and we’re pen tested by third party auditors annually.

We discovered as we launched this wallet that many institutions wanted to get involved in Web3…

And so, we launched the version of Metamask called Metamask Institutional that integrated with the likes of BitGo, one of our most popular and strongest custodians, as well as offering institutional portfolio monitoring tools, NFT tracking, reporting toolkits, and a host of other uses.

You’ll see on the slide, it’s mentioned that our NFT tracking system shows the average sales price, the booking prices, the floor prices — basically, information about the assets that you’re purchasing and holding, and it also allows you to report on this information. So when auditors or accountants come in and want to understand what you’re doing and what your books look like, you have a way to visualize all of this historic information across any blockchain and download it as a CSV as well as access it by APIs.

MetaMask Portfolio Monitoring, Slide 16, 23:12

I wanted to give a visual reference to some of the tools that I talked about. This is an example of our portfolio monitoring tool.

Here you can see that assets are distributed across multiple sectors and you can filter them by the different accounts. This allows our partners like Markmonitor to easily and effectively manage the accounts of many, many different institutional partners and clients.

MetaMask NFT Tracking, Slide 17, 23:42

We have all of the NFT information organized into essentially bundles. So, you have a whole series of NFTs for easy viewing. You have all the analytics in place as well as where the NFT came from.

MetaMask Robust Reporting Tools, Slide 18, 24:02

Here you can see an example of our reporting tools. You’ll see that there are transaction hashes as well as the fees associated with each one of these purchases.

This is important because you want to understand how much you paid for the asset and also how much you paid for using this network. Therefore, you can more effectively and precisely understand the profit and losses around all of these assets and also how each of these transactions can be further specified with various notes, like which chain it came from or which account it came from.

All of this allows for a robust institutional experience that will eventually enable further growth in our Web 3 space.

And I believe that’s the last slide. I will hand it over to Shane Layman.

Questions and Answers, 24:54

Speaking: Shane Layman

Awesome. Thanks Igor and Jack, thank you both for everything. Igor, Jack, I’ll let you guys decide who wants to answer

The first question is, “What is the benefit of you know, cold stored asset management?”

Speaking: Jack Lee

I can start with that one. So, a couple of things.

One is when we think about the private key material and how it’s generated, how it’s stored, in a hot wallet environment which is online, right? That private key material might be encrypted and stored in your browser window or elsewhere.

And similarly, with that type of setup, if you’re using a self-custody solution, you may be required to take on the private key management security on your own.

Have you heard the phrase “not your keys, not your crypto”? If you lose access to that private key you could risk losing access to the assets in that in that wallet.

The cold wallet set up kind of takes it a step further with the qualified custody set up, the private key material is generated and held offline.

Think from an attack vector surface area versus being held in your browser — it’s significantly less [risky] right? It’s going to be pretty hard to compromise the BitGo Trust bank vaults and key management practices with the armed guard and safety deposit boxes, etc.

From a burst mitigation standpoint one could argue it’s more secure. And then additionally, on the key management fronts, you’re working with the fiduciary partner who is reviewed, audited and regulated for their practices, procedures etc. in in managing and really securing private key material.

So those are some items that I would consider and posit to answer the question, yeah, that’s a really comprehensive answer.

Speaking: Igor Teslya

Just gonna give a big thumbs up to Jack Lee there.

I think there are a lot of different types of ways to manage private keys now, and they’ve evolved over the last few years, where the distinction between hot wallets and cold wallets can be further distinguished with newer types of custody.

You can break up the keys into smaller chunks, leave them digitally, you can have multiple cold wallets signed off together.

And it’s an exciting space because we’re continually innovating on this. But yes, cold storage by iits very definition is significantly more difficult to compromise.

Speaking: Shane Layman

Thank you both. I think that’s a that’s a great answer to that to that question.

Building off that, there is the thought that “you want to keep everything in house, manage your assets yourself.” So, next question, “Why is using a third party custodian important or why is that something that brands should adopt?”

Speaking: Igor Teslya

I can start with this one. Many of my conversations with clients revolve around understanding the custody landscape.

While we work with BitGo, we are the only multi-custodial platform in the world. We have other custodians on our platform and part of my conversations with clients is to understand what their needs are.

Do they have investor needs or regulatory needs based on their jurisdiction to use a qualified custodian? Do they have the technical acumen in house to manage these keys? How is their browser setup? How is their security setup? How many fonts are being used? How many other users will be interacting with these keys?

If it’s just a single person, you know, running your brand asset management shop, then perhaps a multi signature scheme is not as necessary.

Additionally, if you’re headquartered in Europe versus the US versus China or really anywhere in Asia, you may require a different level of custody or you might require two different custodians, one for your operations in the US and one for your operations elsewhere.

It’s a nuanced conversation and often times it really does take a few minutes of conversation to really get there.

Jack, do you have any thoughts you’d want to add?

Speaking: Jack Lee

All good points, nothing specific to add, but that for some of the larger enterprise corporate institutions entering the space, they’ll have entities, they’ll have offerings in the US, in Asia, in Europe and there will exist different standards and different requirements in those regions.

And so working either with one partner or multiple to meet the needs for those relevant onshore regulators is critical.

Speaking: Shane Layman

That is something to consider for sure, I think that sums it up really well.

I hope you guys can answer this next question or share what you’re allowed to say.

The question is, “You mentioned discussions with clients and whatnot. Can you share how brands are approaching their Web3 strategies?” I can speak on some of the Markmonitor stuff that we’re doing as well. And a similar question, “Can you share any names or like plans that you guys have discussed?”

Obviously, answering with nothing that’s confidential, but perhaps some of the stuff that you’ve worked on that you’ve been associated with that’s already live and that’s out there?

Speaking: Jack Lee

Yeah, I can kick us off. Our client base spans 50+ countries — 1500+ names globally in the Fortune 500 space. There’s an NFT rewards program for one of the largest footwear consumer brands globally — I’ll leave the audience members to do a little bit of due diligence.

Look, I think the NFT loyalty reward space, and not only that but Web3 brand domain management, is going to continue to proliferate and to be able to partner with have a front row seat as an infrastructure layer to enable that, is super exciting for us.

That’s my initial thought on the topic.

Speaking: Shane Layman

To touch on that, it’s great to see brands that have these forward thinking projects in place.

You know about the next wave of things that are going on as brands are partnering with companies like the two of yours to ensure that their assets are managed correctly, their projects are going through smoothly, and stuff like that.

Igor to you.

Speaking: Igor Teslya

Thank you. Oftentimes, my conversations take one of two routes.

One is this consumer engagement route where NFTs are a strategy for working with a highly engaged consumer base, or to increase engagement by issuing these entities and sending them to wallets. One example is MAC cosmetics that we’ve worked with in the past.

And then the other route is around managing the domains and being able to have those assets. Now, Markmonitor has done a tremendous job doing this on behalf of clients.

I think there’s a little bit of friction where a certain amount of technical experience is necessary to do that [managing the domains], but we do have some folks coming to us.

Then there’s a third route the conversation can take. There are more and more companies that are comfortable holding crypto assets on their books, in the case of Ethereum and certain stable coins, or perhaps they want to accept crypto payments internationally.

And so, we work with clients like that alongside a custodian, because we [MetaMask] don’t have money licensing capabilities. We oftentimes need a custodian to do some of the on/off ramping and purchasing, but what we do offer is our staking services.

If you’re already holding Ethereum and you believe it’s a good investment and you’re holding it long term, then it’s advantageous to put that Ethereum to work on the Ethereum network in order to secure the network and also to derive yield.

So, it’s almost as if your treasury is able to make money without actually risking losing the asset because of the stability of the of the validator ecosystem.

Again, I want to mention this is not investment advice, so just putting that out there.

But yeah, those are the three conversations that I tend to have with some of the larger brands.

Speaking: Shane Layman

Thank you for that. And to touch on the Markmonitor side of it, I think it’s a knowledge gain for our consumers or our clients.

You mentioned brands that want to accept crypto payments if they have an online storefront or something like that and allowing consumers to pay in crypto — that’s one example or application that we share with our clients. The possibilities are endless of where you want to take your brand in Web3.

Jack, you mentioned the one that’s doing the NFT loyalty program. I think that’s an amazing example of ways you can engage with a different consumer base.

So, the other questions we’ve received have been addressed with the answers that you’ve already given.

I would like to again thank everybody who was able to attend today. This was informative.

If you want to learn more, please reach out to your Domain Portfolio Advisor or contact us here.

And again, thank you to Jack and Igor for taking the time to join this webinar. We really value your partnership and are excited for the future.