With the fast-paced and capricious nature of web3 rendering certain technologies and ideologies obsolete after six months, one industry consensus seems poised to stick around for the long haul: people hate wallets.

We’re not talking about the technology behind crypto wallets, we’re talking about setting up a wallet for non-native web3 users, many of whom detest the process because of its complexities. Those include keeping seed phrases and private keys safe.

Helping to simplify the sign-in process—which includes wallets and an assortment of other tech—is Lit Protocol, a decentralized and programmable key-management network. The two sides of Lit’s key-management technology—signing and encryption—are utilized for gated publications by companies like Fox, Collab.Land, Patch Wallet, and Lens Protocol, and as a signer for abstract vendors like Alchemy and Biconomy.

“We are a leading network in the uncaptured cloud, which is cloud computing infrastructure not captured by the powers of web2,” David Sneider, co-founder of Lit Protocol, said to me in a recent interview. “When I say web2 platforms, I’m talking about multi-factor authentication in terms of being able to login to a wallet with a web2 identity.” Think of Google when 2FA is needed to sign into gmail. 

Lit Protocol is using design principles developed over the past 15 years that enable systems to be distributed, programmable and leaderless, then applying those lessons to the world of key management. This creates more capacity for what developers can build.

“Asymmetric cryptographic or digital signatures functionally have two core features associated with key pairs in general,” Sneider said. “The ability to sign things—as in signing a transaction—and the ability to encrypt things, like encrypting a message when using a texting app, such as Signal.”

The use cases for Lit involve being able to write programs that dictate how a distributed key will sign or encrypt something, because it’s ultimately a developer platform.

“The benefit of having your signing keys managed by a decentralized network is that you can do all kinds of really coherent onboarding, where a user can use things like web2, social and multi-factor authentication,” he said. “They don’t have to store any seed phrase material, and the benefit is that there’s no centralized custodian to trust. There’s no capture.”

Wallets, bridges and oracles can use programmable decentralized keys to also scale blockchains.

“Sign-in with Google is basically what you do with sign-in with Google on Coinbase,” Sneider said. “You have Coinbase or some centralized exchange on one side and Lit on the other. For Coinbase, you sign-in with Google and you pass an authorization token, email, or SMS to Coinbase. Coinbase then verifies it’s you, shows you your account, and lets you send transactions. The trust model there is that you’re fully trusting Coinbase or any centralized exchange to hold your keys safely.”

While Sneider thinks Coinbase is an amazing company, he also notes that not all centralized exchanges are created equal. (Looking at you, FTX).

Read more: Wyoming's New Law to Recognize DAOs as Legal Entities is Just the Start, Lummis Says 

“We’ve also seen teams using the Lit decentralized keys almost as a co-processor—offloading compute into Lit such that it can be settled on a blockchain later for more performance,” Sneider said. “There’s also been some really interesting work we’ve been leading around crypto domains on-chain so that people can use their crypto domain—such as Alice.eth—not just for receiving funds, but for logging into decentralized applications.”

In this way, Lit becomes a layer in the stack to build out things like the user-owned web, where users have access to their data that’s privately and provably theirs, and where they can then opt for selective disclosure.

“That’s more on the encryption side of user-owned data,” Sneider said. “The other part of what a key can do—like in the Signal app—if you text, you’re encrypting there. Dynamic and rules-based encryption is not possible in a world where everyone is holding self-custody keys. If you and two friends are in a Signal group chat and you add another friend, they won’t be able to see the historical messages because all of the previous messages have not been encrypted to their address.”

According to Sneider, web3 will become even more dynamic as we move into a world of machine-to-machine transactions. Things like decentralized access control, decentralized licensing, decentralized data marketplaces, token-gated data on social media, and digital product non-fungible tokens (NFTs) are all some of the use-cases generated by the underlying capacity of Lit’s decentralized keys acting in an encryption context.

“Fox Corporation has a product called Verify, an open news protocol that uses IPFS, Lit Protocol and Polygon to let journalists publish content, create an attestation about the date of publishing to establish authenticity, and encrypt the content stored on IPFS,” Sneider said. “It’s encrypted with Lit and then any given party can purchase a license to that media. When the license is purchased, the transaction is happening on a blockchain, and Lit is able to read it.”

The idea is that if an article is published through Verify, another user could secure the license and re-publish the piece in a different form.

“What we’re envisioning here is the article would be encrypted but would also be tagged with its subject matter,” Sneider said. “My Large Language Model (LLM) bot could do a micro on-chain transaction to get the license and consume the article. Essentially, the syndication has now happened between the author and the LLM bot as the secondary publisher, and is consumed along with other articles by the LLM bot, which then populates a daily report. Media is moving in this direction, AIs are moving in this direction, and content is moving in this direction.”