PAW Documentation

A comprehensive overview of PAW Technologies

L3 Multi Signature

L3 Multi Signature

A multi-signature wallet, more commonly known as a multisig, is a DeFi wallet that requires multiple signatories to sign a transaction for approval. These wallets increase security by preventing any one person from being a single point of failure, thereby protecting the wallet's contents.

Key Features:

       
  • Multiple Signatories: Requires multiple approvals for a transaction to be executed.
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  • Increased Security: Mitigates the risk of a single point of failure.
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  • Collaborative Control: Ideal for organizations and collaborative projects where multiple stakeholders need control over funds.

What is Multi-Party Computation?

Multi-party computation (MPC) is similar to multisig in that it requires multiple signatories to approve a transaction, but it has an additional security measure: using a single private key that is divided into multiple encrypted shards and split among the signatories. Transaction approvals require a predetermined number of these key shards to be used for the transaction to be considered valid. This method increases security by ensuring that the entire private key is never stored on a single device. In the event a device is compromised, the keys to the wallet remain secure, allowing the wallet to continue to be used safely.

Key Features:

       
  • Encrypted Key Shards: The private key is divided into multiple encrypted parts.
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  • Enhanced Security: Even if a device is compromised, the private key remains secure.
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  • No Single Point of Failure: The private key is never fully present on any one device, reducing the risk of theft.

Comparison:

       
  • Approval Mechanism: Both multisig and MPC require multiple signatories for transaction approval, enhancing security.
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  • Key Storage: Multisig uses multiple keys, each held by different signatories. MPC uses a single private key split into multiple encrypted shards.
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  • Security: MPC provides an added layer of security by ensuring that the entire private key is never on a single device, even during transactions.

Summary:

Both multi-signature wallets and multi-party computation offer robust security solutions for managing digital assets. Multisig wallets are simpler and widely used for their collaborative control and enhanced security features. MPC takes security a step further by splitting the private key into encrypted shards, ensuring that no single device ever holds the complete key, thereby offering an additional layer of protection against potential compromises.