Self-custodial wallet and automated payouts

At BlockBee, our steadfast belief has always been in empowering our customers with full control over their funds, firmly upholding a no-control policy on our end.

Despite this, a consistently highlighted request since our inception has been the introduction of automated payouts. Our customers sought solutions for issuing refunds or facilitating withdrawals on their platforms—a capability initially absent in our offerings. This posed a considerable challenge for our team: how to accommodate these needs without compromising our fundamental principle of non-custodianship.

Nearly a year ago, we launched the Payouts feature. This allowed for direct payout initiation through your Web3 wallet across both EVM and Tron networks. Despite this advancement, the process remained cumbersome—requiring dashboard logins, payout selections, wallet connections, and manual transaction executions. It was clear that this process was neither seamless nor capable of accommodating payouts on non-Web3 blockchains like Bitcoin, Litecoin, and Bitcoin Cash.

Driven by a commitment to our customer's needs while adhering to our core values, our team pursued further innovations.

Introducing Self-Custodial Wallet and Automated Payouts

By integrating Threshold Signature Scheme (TSS) cryptography, we believe we've struck an optimal balance between ensuring security, maintaining our foundational principle of non-control over customer funds, and providing a seamless experience.

How It Functions:

Upgrading to API Key v2 initiates a process where our system generates three shares, with at least two required for transaction signatures. We securely store one encrypted share, while you receive the remaining two: your API key and a recovery key. This encryption covers all addresses across supported chains for your payout wallet, effectively meeting our three primary objectives:

• Autonomy Over Funds: Our platform is designed to be incapable of accessing your funds without explicit consent.
• Automated Payouts: Facilitate payouts through a simple API call, requiring just your API key to access funds, ensuring a frictionless experience.
• Secure Recovery: With the safeguarding of your recovery key, access to your funds remains secure, even in the event of losing your API key.

With Great Power Comes Great Responsibility

This innovation necessitates a significant, yet essential, compromise: the impossibility of fund recovery should both your API key and recovery key be lost. The onus is on you to meticulously secure these keys, as their loss equates to irrevocable fund loss.

Initiating Usage:

To begin, upgrade to API Key v2 via your API key settings. Post-upgrade, you'll receive both a new API key and a recovery key—essential components to be securely stored, especially the recovery key, crucial for API key resetting if needed.

Subsequently, navigate to Payouts -> Self-Custodial Wallet to view and fund your blockchain-specific addresses for payouts, or opt to directly receive your BlockBee payments.

For direct BlockBee payment receipts, a "Set Self-Custodial Wallet" option has been added, enabling fund redirection to your Payouts wallet seamlessly.

Executing Payouts:

Payouts may be conducted via the Payouts page or through our newly introduced API endpoints—detailed in the updated API documentation. These enhancements support payout executions to up to 100 addresses in a single request.

Prior to payout execution, available balances and estimated blockchain fees can be reviewed, ensuring informed transactions. Note, sufficient funds must cover both the payout and the associated blockchain fees, as our system does not subsidize these expenses. For token transfers over networks like Ethereum, adequate ETH (or the respective base blockchain coin) is necessary to cover transaction fees, else payout attempts will fail.

This feature is now available on all Ethereum Virtual Machine (EVM) compatible chains, Tron, as well as on the Bitcoin (BTC), Litecoin (LTC), and Bitcoin Cash (BCH) networks. It is not available on Doge network due to technical limitations of the Doge node.

We're rolling out this feature in stages to ensure optimal performance and security. If you're interested in early access and want to leverage this innovative functionality, please reach out. We're keen to hear from users who wish to be among the first to experience the benefits of this upgrade. Your input will be crucial as we expand this offering.

We remain dedicated to evolving our platform, striving to offer the most comprehensive cryptocurrency payment solutions. Your feedback is invaluable to us; we eagerly anticipate your thoughts on this new feature.

Warm regards,

The BlockBee Team