To address your questions about how trading is done and where the funds are stored, as well as KYC concerns, both trading and fund storage in TEX are conducted in a decentralized manner, similar to decentralized exchanges. Funds from liquidity providers are stored in smart contracts, while traders' funds are held in their own wallets. Just like decentralized exchanges, TEX does not require KYC verification.
There is still a point I don't fully understand, if you say that:
Both trading and storing funds in TEX is done in a decentralized manner, similar to decentralized exchanges. Funds from liquidity providers are stored in smart contracts, while traders' funds are held in their own wallets.
If TEX works like decentralized exchanges what is the need then ERC-4337 social retrieval method, as long as everything is decentralized then you don't need to use your private key on the exchange, hence the need for a way to recover it.
Can this point be clarified, when using TEX do we need to use the private key of the wallet or not?
Regarding the use of ERC-4337 social recovery method in the context of TEX, which is designed to offer transparency and security like decentralized exchanges (DEXs). Let me clarify the role of ERC-4337 and the need for private keys when using TEX.
In most cases, users will not need to use their private keys when interacting with TEX. However, it's important to have a backup plan in place to address potential risks, such as losing access to the private key.
While it is true that in a fully decentralized environment, users maintain control of their private keys and do not need to share them with the exchange, there are still potential risks involved. For instance, users may lose their private keys due to accidents, device failures, or security breaches. In such cases, the funds in the associated wallet become inaccessible, leading to a significant loss for the user.
The ERC-4337 social recovery method is introduced to address this issue by providing a mechanism to recover access to funds without compromising decentralization. With ERC-4337, users can assign trusted contacts who can help recover their wallets if the private key is lost. It is important to note that these contacts do not have direct access to the user's funds or private key, but their collective approval can enable the wallet's recovery.
Of course, users also have the option not to add any friends or KOLs as guardians, ensuring the highest level of security. In this case, it is crucial to remember and keep the private key safe, as losing it will result in permanent loss of access to the wallet.
To summarize, when using TEX, users still maintain control of their private keys and do not need to share them with the exchange. The ERC-4337 social recovery method is an additional security layer to help users recover their wallets in case of lost private keys, ensuring a more user-friendly and secure experience.