Introduction:

Businesses and individuals are increasingly storing Bitcoin as a reserve asset in multi-signature wallets, as relying on just one person to keep the private key may cause regrettable errors in the security of funds. Yet multi-signature wallets are not a generalization for all use cases either, and new technologies are equally needed. This article focuses on rapidly iterating wallet ecosystem technologies, famous wallet ecosystem projects, and a comparison of advantages, disadvantages, and applicable scenarios.

Multiple Signature：

• Example: Gnosis Safe, Ownbit, Armory, BitGo, Electrum, Trezor Model T (hardware wallet), Ledger Nano X (hardware wallet), WH Cypher, Casa Keymaster

• Example characteristics: compared to other multi-signature wallets on the market, most of the multi-signature wallets mentioned in the article have the following features:

• They were launched earlier (early on, they were bitcoin wallets) and have continued to roll out other cryptocurrency features as they have accumulated a larger user base.

• Integrates with hardware wallets such as Ledger and Tezos

• Basically, developed by renowned labs in this industry

• Strengths and Weaknesses: Multisig wallets enhance security and shared control. Suffering from multi-chain compatibility issues, efficiency problems, and a lack of anonymity.

To be more explicit:

The essence of Multisig is that transactions of digital cryptocurrencies at one address require the signatures generated by multiple private keys to be authorized through a defined contract.

This allows multi-signature wallets to offer higher security than a single private key mechanism. Notably, for business clients, DAOs, multiple wallets give users shared control to prevent internal fraud. Crypto wallets are then gradually starting to cater to the needs of enterprises.

Chart 3: Simplified Multi-Signature Process

Recent innovations:

However, for various conditions, the application of Multsig is only limited to DAOs (market acceptance has not been favorable). Hence, innovating and optimizing the user experience is becoming urgent.

To address the efficiency issue, Gnosis Safe subsequently accesses smart contracts (trace_transaction and trace_blocks) in order to collect all multi-signature information and allows you to collect off-chain signatures and retrieve multi-signature pending transactions. This allows some multi-signature transactions to be signed off-chain, which saves users’ gas fees and time.

To reduce anonymity problems, developers propose combining multi-signature with ZK to decentralize private keys while creating steganography. Wallet, named ZK Dompet is trying to be a pioneer.

When considering better multi-chain compatibility and easier access to structure adjustments. MPC Wallet and threshold signatures might be able to do it.

Threshold Signature (MPC Wallet):

• Example: ZenGo, Lit Wallet, Fireblocks Wallet, OpenBlock, Qredo, Wirex, Paybis, Dfns, Marable wallet, Portal

• Example characteristics: Provide MPC signature functions for business clients while providing diversified asset management solutions and supporting granular access control. Various useful trading SDKs are also provided by these wallets. ZenGo goes even further with three-factor authentication, combining biometrics and eschewing private key design.

• Strengths and Weaknesses: MPC wallets address multi-chain compatibility, lower gas fees, and ensure anonymity but face challenges like inability to revoke keys and are generally geared towards institutional clients (MPC signature algorithms are specific and non-upgradable, each MPC account requires a different signature algorithm, and all are generated offline).

In detail:

With private key slicing technology, the private key is divided into multiple copies and stored on multiple independent nodes, where no one person or machine has full control over the private key (a process called Distributed Key Generation DKG). When performing operations such as transactions, these nodes work together to generate signatures through secure multi-party computing protocols without having to reconstitute the full private key.

To give an elementary example, if A and B jointly manage an account using TSS, they can both control the account at the same time without memorizing mnemonics. If A wants to use it, he should send a request to B. After B agrees, A and B will calculate some intermediate variables (implying numerical relationships) locally by using their own fragments through a set of established rules. After information exchange, A will be able to locally generate a legal, complete signature and A will transfer the money out of the account when the signature is verified.

Chart 4: Simplified TSS-Signature Process

Mechanically:

• TSS does not care about the underlying blockchain as well as the topmost smart contract, and only modifies the signature algorithm of the intermediate digital signature to enhance multi-chain compatibility.

• The signature is generated under the chain, and the information of the participants is not visible, which ensures the anonymity of the users.

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Recent innovations:

For the mentioned above security and revoke issues, ZenGo gives a follow-up optimization:

• Security issue — It is up to the authoritative custodian and trustee to jointly support this work. When a trustee discovers that ZenGo has stopped working, it will get the master key from the trustee and will then publish it to a specified Github account. Each time the user launches the client, it checks to see if that particular Github account is in recovery mode, and then it downloads the master key, plus the user’s own portion of the key to recover the private key.

• Key revoke problems — The original private key cannot be used to calculate the correct signature by means of key refreshing and physical deletion, so the private key is revoked in disguise. Read further, @Safeheron.
  (The article only provides a high-level overview of how ZenGo handles security and key revocation issues, although it lacks detailed explanations on the technical processes involved. Understanding the precise mechanisms may require a more technical dive into ZenGo’s documentation or reaching out to ZenGo for further clarification).

As a new type of MPC wallet, OpenBlock combines multi-signature to realize a more secure wallet public management function and support social recovery.

However, since MPC Wallet：

1. Incompatible with most traditional wallets (no mnemonics, no full private key stored on a single device).

2. Not standardized and not natively supported by institutional-grade security devices such as iPhone SEPs and HSMs.
   Resulting in MPC being essentially geared towards institutional clients such as funds, family offices, exchanges, and custodians. However, as market demand increases, such as higher requirements for asset management, batch trading and other functions (gas subsidization), MPC wallets can not be accomplished on their own. Then the passage of Eip-4337 and the advent of Abstract Account (AA) wallets renewed their hopes.

The pioneering MPC wallet Portal follows this line of thought with its innovations. Combine Portal and ZeroDev to complete the MPC+AA puzzle.

Account Abstraction Wallet (EVM only)

• Example：Metamask, Trust wallet, Ambire Wallet, Argent, Avocado, Blocto, Braavos, Holdstation, Safe, Obvious, Kernel, Unipass, Beam

• Pros:

• Further enhance account security with programmable smart contracts

• Optimize the user experience with native integrations that provide account abstraction, custom signature verification and social recovery support

• Provides wallet flexibility through signature abstraction, roles and policies, and gas abstraction.

• Supports bridge-independent multi-party access

• Cons：

• More on-chain operations mean higher gas fees;

• Limited Compatibility

• EIP-1271 for standardizing signatures on EVM is still largely unadopted

Chart 5: Account Abstract Wallet Working Process

Obviously, if you’ve ever learned about AA wallets, the statement that “AA wallet solution is not looking to use a single technology, but rather to mix and match multiple technologies” is not hard to realize. Such as by combining MPC and AA (Portal and ZeroDev), you get easy and secure off-chain key management, plus flexible on-chain transaction validation. Moreover, Slope also combines both multisig and AA features to get the benefits of both.

In the next section of this article, we will explore the inner workings of this hybrid technology, which would provide a deeper dive to fully understand the implications.

Conclusion：

AA Smart Accounts opens up many new opportunities for Web3 applications and wallets, and due to the special combinability, which has been mentioned above, it draws all the advantages of Multi-sig and MPC wallet functionality. With smart accounts, users can not only manage their wallets more easily, but also have the flexibility to optimize the way they operate. As Vitalik stated, “Account abstraction has always been the dream of the ethereum developer community,” and perhaps smart accounts are expected to be the future of Web3 interactions.