Why Multi-Party Computation Alone Fails for Decentralized Identity

MPC distributes key shares, not key control. The node operators holding the shares become centralized liveness bottlenecks, creating a single point of failure for recovery and signing. This is the same custodial risk disguised as cryptography.

• Centralized Failure Mode: Node downtime or censorship blocks all user access.
• Regulatory Target: A handful of identifiable entities can be coerced.
• Contradicts Self-Sovereignty: Users cannot independently prove or recover their identity.

MPC protocols have no inherent mechanism to prevent a single entity from generating infinite anonymous key shares. Without a decentralized, sybil-resistant root of trust (like a blockchain), you cannot map MPC keys to unique, credible identities.

• Unlinkable Identities: Nothing stops one user from creating 10,000 "unique" MPC wallets.
• No Native Reputation: Trust graphs and social attestations cannot be anchored.
• Vulnerable to Airdrop Farming: Defeats the purpose of identity-based distributions.

MPC schemes are not standardized across chains or applications. A key share generated for Ethereum cannot be used to sign on Solana or Avalanche without a trusted bridge of operators, fragmenting the identity layer it aims to unify.

• Chain-Locked Identities: Defeats the promise of a portable, chain-agnostic identity.
• Vendor Lock-In: Users are tied to the MPC provider's supported networks.
• Contradicts Composability: Cannot natively interact with diverse dApps across the modular stack.

Multi-Party Computation secures a private key, but identity requires a consensus layer for attestations and a social layer for recovery. MPC alone gives you a fragile, isolated secret.

• No On-Chain Verifiability: A signature proves key control, not the legitimacy of the underlying claim.
• Single Point of Failure: Losing key shares or provider custody means permanent identity loss.
• Creates Walled Gardens: Proprietary MPC networks fragment user identity across providers like Fireblocks and Coinbase WaaS.

EAS decouples the credential (attestation) from the signing mechanism. Use MPC for secure signing, but anchor trust to a public, portable graph of signed statements.

• Portable Identity Graph: Attestations live on-chain (or on IPFS), independent of any MPC vendor.
• Composable Trust: Build complex credentials (e.g., KYC + DAO membership) via linked attestations.
• Protocol-Level Standard: Creates a shared language for verifiable data, akin to ERC-20 for identity.

SIWE provides the standardized authentication layer MPC lacks. It binds a decentralized identifier (DID) to a cryptographic key, which can be secured via MPC.

• Universal Protocol: A single login flow for any app, replacing countless username/password combos.
• User-Custodied Sessions: MPC manages the signing key, but the user owns the DID and attestations.
• Killer Combo: Projects like Privy and Dynamic use this hybrid to abstract MPC complexity for mainstream users.

This architecture solves MPC's fatal recovery problem by embedding identity within a social graph. The signing key (MPC-secured) is a disposable asset.

• Non-Custodial Recovery: Use trusted contacts (Circles) or Safe modules to rotate a compromised MPC key.
• Progressive Decentralization: Start with enterprise MPC, migrate to pure smart contract wallets.
• Real-World Adoption: Safe{Wallet} and Zerion leverage this for recoverable smart accounts.

MPC distributes key shares, not key authority. The protocol operator who orchestrates the computation retains ultimate control, creating a centralized failure point and legal liability. This defeats the core Web3 promise of self-sovereignty.

• Centralized Legal Attack Vector: Operator can be compelled to reconstruct the key.
• Single Point of Technical Failure: Server downtime equals identity lockout.
• Misaligned Incentives: Operator's profit motive conflicts with user security.

MPC ceremonies require continuous, synchronous online participation from a threshold of nodes. This creates prohibitive operational overhead and unpredictable gas costs for users, making it unfit for mass adoption or frequent, low-value transactions.

• ~500ms-2s Latency per signature, unsuitable for high-frequency dApps.
• Spiking Gas Fees for on-chain coordination during network congestion.
• Node Churn Risk: Participant dropout can freeze the entire system.

Pure MPC systems have no native mechanism for key rotation or inheritance. Losing a device means losing your identity forever. They also fail to integrate with the broader DeFi and governance stack, acting as isolated silos unlike composable smart contract wallets like Safe or Argent.

• No Trust-Minimized Recovery: Requires fallback to centralized custodian.
• Zero DeFi Composability: Cannot natively interact with Uniswap, Aave, or DAO tooling.
• Fragmented UX: Users manage separate MPC wallets outside their main Web3 stack.

Who verifies the MPC nodes are honest? Without an underlying blockchain for consensus and slashing, you must trust a permissioned set. This recreates the Certificate Authority problem, vulnerable to Sybil attacks and collusion. Contrast with Ethereum's validator set or Cosmos zones secured by bonded stake.

• Unverifiable Trust: Users cannot cryptographically audit node honesty.
• Sybil Attack Surface: Cheap to spin up fake nodes to reach threshold.
• No Crypto-Economic Security: Missing slashing mechanisms for misbehavior.