Signing schemes

tag: [Engineer/Developer, Security Specialist]

Different signing schemes provide varying levels of security, control, and use cases for managing cryptocurrency assets. Here’s an overview of common signing schemes, their analogies, use cases, and security implications.

Externally Owned Accounts (EOA)

• Analogy: Traditional bank account with a single owner.
• Control: Single private key controls the account.
• Use: Basic transactions and smart contract interactions.
• Security: Single point of failure if the single key is compromised.

Multisignature (Multisig)

• Analogy: Joint bank account requiring multiple signatures.
• Control: Multiple private keys are needed to authorize transactions.
• Use: Common in organizational settings for shared control.
• Security: High security, reduces risk of single point of failure.

Smart Contract Wallets (Safes)

• Analogy: Digital safe with programmable access controls.
• Control: Controlled by smart contracts with defined rules.
• Use: Advanced use cases, including DeFi and automated transactions.
• Security: Generally seen as High, but depends on the smart contract’s security and configuration.

Threshold Signatures

• Analogy: Similar to a multi-lock safe that requires a subset of keys from authorized staff.
• Control: Requires a minimum number of signatures out of a predefined set.
• Use: Efficient and private alternative to multisig.
• Security: Reduces risk while maintaining group control.

Social Recovery Wallets

• Analogy: Trusted friends helping to recover a lost key.
• Control: Designated trusted contacts can help recover the account.
• Use: Individual use with recovery options.
• Security: High, balances security with ease of recovery from its community-based security model.

Delegated Signing/Proxy Contracts

• Analogy: Authorized bank agent signing on behalf of the account owner.
• Control: Transactions are signed by a proxy on behalf of the user.
• Use: Delegating transaction signing to trusted services.
• Security: Moderate, relies on the security of the proxy.

Account Abstraction (AA)

• Analogy: Like a shape-shifting lock, where the way it opens can change over time.
• Control: User accounts as smart contracts.
• Use: User-friendly wallets, customizable security policies, complex rules and operations for transactions.
• Security: High, but depends on implementation.

Comparison