I’ve met a mix of teams the last few months that either:
So I wanted to address both of these in this post.
Let’s dive right in!
MPC stands for multi-party computation and it’s similar to a multisig in that multiple trusted third parties are required to approve a transaction. But there are fundamental differences between the two. With a multisig wallet each individual is signing the transaction with their own private key. However, with a MPC-based wallet the private key is sharded and distributed in pieces to each individual that forms part of the quorum. The shards are never pieced together, meaning that a whole private key never exists at any given point in time. Instead, MPC uses threshold cryptography to authenticate transactions when a quorum is met.
You can find out more about MPC here.
Ok so I actually wrote a whole post on why MPC is so much better than multisig, but I’m going to summarise the top three reasons here:
MPC’s inherent flexibility is a major advantage over multisig. MPC allows for ongoing modification and maintenance of the signature scheme. Meaning if you need to add or remove a team member from your approval process, you can do so without having to set up a new wallet. In contrast, with a multisig wallet you’ll have to set up a new wallet any time you want to make changes. This can quickly become a nightmare when scaling your company.
MPC offers users structural anonymity, because each party is authorising a transaction off-chain. This is the opposite of a multisig where each party signs the transaction onchain, making it possible to track and trace quorum members. Keeping authorisations off-chain also means that the governance policies are kept private as its impossible for anyone outside of the organisation to know how many quorum members are required to approve a transaction.
Not all blockchains support multisig wallets. MPC signatures are applied externally meaning it can be used without the blockchain knowing it was ever used.
The short answer is it depends on which MPC provider you’re using. If you’re looking to use a provider that caters to institutional clients then it will be costly. But with Krayon, it’s not expensive at all. We’ve priced our MPC custody solution to scale with you - that means no set up fees and no excessive monthly minimums. You get the same institutional grade custody solution you’d expect from a major provider, at a much lower cost.
I recently got back from EthCC in Paris and whilst I was there I spoke to a bunch of different people about their existing custody and treasury management solutions. And the number one thing that stood out to me was how bad their existing systems are.
So many companies and teams are still using hardware wallets and multi-sigs to secure their crypto assets. And they’re aware that the process sucks. They openly shared how laborious a process it was any time they had to transfer assets. So much so that many of them weren’t actively optimising their treasuries for yield. Instead, they leave their Ethereum and other cryptocurrencies in cold storage and miss out on staking rewards or yields from lending. Of course there are much bigger issues operationally whenever there are changes to the team - handover of hardware wallets, setting up new Safe wallets to change quorums.
But when asked why they weren’t using a more operationally resilient and scalable solution like MPC, the resounding response was that they’d love to, but that existing providers sucked.
Here’s an example:
To use someone like Fireblocks you have to go through three or more sales calls with a non-technical rep who’s main job is to qualify you before they give you more of their time. After that you might be lucky enough to get their API docs, only to find you can’t do what you wanted to do in the first place. But perhaps you could ask them to add new features? Forget it, they don’t have time for that - unless maybe you plan to bring billions of dollars their way, then perhaps they’ll consider it. It gets worse when you realise how much they want from you. We’re talking about tens of thousands of dollars in set up fees and a similar monthly minimum commitment. It’s a lot of effort for founders to go through just to find they can’t afford it anyway.
Now this isn’t to rip on Fireblocks, I get it, they have a very particular client demographic and they don’t want to veer away from it. But what about startups wanting to use MPC custody that don’t have billions of dollars to throw around? How can they leverage institutional grade custody? Well, this is exactly why we built Krayon.
Krayon is building MPC-based wallet solutions for small and medium companies, DAOs, and teams. Our goal is to bring you everything you need to manage your corporate crypto treasury on top of institutional grade MPC custody.
