What Are On-Chain Vaults?

Zipper uses secure on-chain vaults to store original assets backing zAssets. These vaults are designed with advanced security measures to ensure user funds are protected and fully collateralized.

How On-Chain Vaults Work

1. Secure Storage:

   • When users wrap (zip) assets, the original tokens are deposited into Zipper’s multi-signature wallets.

   • These wallets are managed using a Trusted Execution Environment (TEE) protocol, ensuring that no single entity, including key custodians, can access or assemble the private keys.

2. 1:1 Backing:

   • Every zAsset minted on Fabric corresponds to an equal amount of the original asset held in the vault. For example:

     • 10 zETH on Fabric = 10 ETH stored in Zipper’s vault.

3. Transparent Operations:

   • All vault transactions are recorded on-chain. Users can verify the status of their wrapped assets and the vault’s holdings at any time via FabricScan.

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Key Features

1. Multi-Signature Architecture:

   • Requires multiple approvals for any asset withdrawal from the vault, preventing unauthorized access.

2. TEE Protocol:

   • Ensures the private keys for the multi-signature wallets are fragmented and never assembled by a single entity, even during transaction approval.

3. Auditability:

   • The vault’s on-chain nature allows users and third-party auditors to verify holdings and transactions in real-time.

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Security Measures

1. Risk Mitigation:

   • By decentralizing key management and requiring multi-signature approvals, the vault system reduces risks like unauthorized withdrawals or insider attacks.

2. Redundancy:

   • Backup systems and contingency plans are in place to handle network issues or unexpected failures.