Vitalik Buterin, the co-founder of Ethereum, has written a post on Reddit about how he thinks about choosing guardians for multisig and social recovery wallets.
He discusses the benefits of using multisig and social recovery wallets and the importance of choosing guardians who can minimize the risk of losing their keys and colluding to steal money.
Self-custody is important. And social recovery and multisig is a great way to do it.
— vitalik.eth (@VitalikButerin) March 17, 2023
A quick reddit post on how I think about choosing guardians for social recovery and multisig wallets:https://t.co/FY1iyJ6BFC
"A close cousin of multisig wallets is social recovery wallets, where a single key can be used to sign transactions but if that key is lost, a group of keys held by other people can be used to recover the funds. Social recovery wallets are much easier than multisig wallets to use, especially with the rise of ERC-4337 account abstraction and upcoming wallets like Soul Wallet that will make the technology user-friendly. In general, once social recovery wallets become mature enough, my recommendation will be to use social recovery for hot wallets that store a small portion of a person or organization's funds, and multisigs for cold wallets that store a person or organizations's savings." Buterin wrote in the post.
Buterin recommends that enough guardians should be controlled by other people to ensure that if the user disappears, there are enough other guardians left to recover their funds. He stated:
"My rule of thumb is that enough guardians should be controlled by other people that if you disappear there are enough other guardians left to recover your funds. That is, you should control at least 1 guardian, and at most N-M guardians. Also, each guardian should be on a separate device (laptop, phone, old phone, etc)."
He also suggests that guardians should not know each other and should ask a security question before approving an operation. "Choose guardians who do not often talk to each other or ideally do not know each other", Buterin suggested.
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