What is a Multisig Wallet?
A multisig wallet, also known as a multi-signature wallet, is a type of digital wallet that requires multiple signatures from different parties to authorize a transaction. In other words, it requires (most of the time) more than one person to sign off on a transaction before it can be executed.
In the Camino Network, a multisig wallet is particularly useful for security and risk management. By requiring multiple parties to authorize a transaction, it reduces the risk of a single point of failure or a single party making unauthorized transactions.
For example, let's say a group of individuals want to pool their funds together in a single wallet for a joint investment. Instead of giving control of the wallet to just one person, they can create a multisig wallet where a certain number of signatories (e.g. 2 out of 3, 3 out of 5, etc.) must approve any transaction before it can be executed.
Members of the multisig wallet are authorized to sign transactions for the multisig alias without needing approval from others. However, to execute a transaction, the signature threshold must be met.
In summary, a multisig wallet is a secure way to manage cryptocurrency funds that requires multiple parties to authorize transactions. It is particularly useful in the Camino Network for risk management and increased security.
What is a Multisig Alias?
In the Camino Network, a multisig alias, or control group, is a technique used to manage a multisig wallet by grouping multiple addresses into a single identifier. This identifier is referred to as an alias and is a regular address with no private keys. The alias represents the control group responsible for collectively managing the multisig wallet.
The use of an alias allows the control group to have a single address with the ability to change owners, enabling the seamless use of applications similar to a traditional wallet.
Aliases define a multisig wallet with members and a threshold.
Remember that multisig aliases are specific to their respective networks. This means an alias created on the mainnet cannot be directly used on the testnet, and vice versa. If you wish to use a multisig alias on a different network, you'll need to set up a separate multisig on that network.
What is Threshold in Multisig Wallets?
In a multisig wallet, threshold refers to the minimum number of signatories required to authorize a transaction. When creating a multisig wallet, the threshold is set as a parameter, along with the list of public keys (addresses) of the signatories.
For example, if a multisig wallet has a threshold of 2 and a control group of 3 signatories, any transaction from the wallet would require at least 2 of the 3 signatories to sign off on it. If the threshold were increased to 3, then all 3 signatories would be required to sign off on any transaction.
The threshold parameter provides an added layer of security and control over the funds held in a multisig wallet. By requiring a minimum number of signatories to authorize a transaction, it reduces the risk of unauthorized access or fraud, as it becomes more difficult for a single signatory to execute a transaction without approval from the rest of the group.
On the other hand, setting the threshold too high can also create inconvenience or delays in executing transactions. Therefore, it's important to find a balance between security and ease of use when determining the appropriate threshold for a multisig wallet.
In summary, threshold in the context of multisig wallets refers to the minimum number of signatories required to authorize a transaction. It provides an added layer of security and control over the funds, while also determining the level of convenience and ease of use for the wallet.
Single Threshold Multisig Wallets
Single threshold multisig wallets are a type of multisig wallet where a single signature is required to sign and execute transactions. This means that a transaction can be authorized by any one of the signatories in the group, making it easier to use and manage compared to wallets with higher threshold requirements.
Single threshold multisig wallets are often used in situations where a group of people or entities need to manage funds together, but want to avoid the risks associated with a single-person control over the funds. For example, a small business might use a single threshold multisig wallet to manage its expenses and payments, with each authorized employee having a wallet for executing transactions.
Advantages:
- Easy to use: With a single threshold, any signatory in the group can sign and execute transactions, making it more convenient and easier to use compared to wallets with higher threshold requirements.
- Flexibility: Single threshold multisig wallets are flexible and can be customized to suit specific needs and use cases, such as adjusting the number of signatories or changing the threshold requirements.
Disadvantages:
- Reduced security compared to higher threshold wallets: Single threshold multisig wallets provide less security than wallets with higher threshold requirements, as they only require one signature to execute transactions.
In summary, single threshold multisig wallets are a convenient and flexible option for managing funds among a group of people or entities, with the added security benefits of multisig wallets. However, they may not provide the same level of security as higher threshold multisig wallets, and it's important to weigh the advantages and disadvantages based on the specific use case and requirements.
Managing Multisig Wallets with Camino Wallet
When logging into your wallet using your key phrase, navigate to the Manage Keys section. If your wallet is a member of a multisig wallet, you will be prompted with an import wallets dialog. You can also access the same dialog from the wallet switcher button. Figure 1 & 2 shows an examples of these dialogs.
After clicking the import button, your multisig wallets and their corresponding addresses will appear, as shown in Figure 3.
It is important to note that while this example includes three multisig wallets, the majority of users who are members of a multisig wallet will typically only have a single multisig wallet.
You can activate the corresponding wallet by clicking the star icon. This allows you to see and transfer its funds, as well as sign and execute transactions.
By clicking the multisig owners button, you can view the other members of the wallet and the threshold, as shown in Figure 4.
In this panel, "linked wallets" refers to the addresses that are imported to the Camino Wallet and can be used to sign and execute transactions. "Unlinked wallets" are the other members of the multisig wallet that are not imported into the Camino Wallet. The owners of these wallets need to log in to the Camino Wallet to sign multisig transactions.
How It Works Behind the Scenes?
Signavault Service
As mentioned previously, the successful execution of multisig transactions requires each transaction to be signed by a minimum number of wallets defined by the threshold. This involves the creation of an unsigned transaction and the collection of signatures. To simplify this process for users, Camino Wallet utilizes a service called Signavault.
When a user initiates a multisig transaction, the wallet generates the transaction and submits it to the Signavault service. This allows other members of the multisig group to utilize the wallet for querying the Signavault service in order to check if there are any pending transactions requiring their signatures. If such transactions exist, they can sign them and save the signatures within the Signavault. Ultimately, when the threshold requirement is met, any member of the group can execute the transaction.