Threshold Signature Schemes (TSS) vs Multisig for Cross-Chain Asset Custody

Single on-chain transaction: TSS generates one signature from distributed key shares, resulting in lower gas fees and faster finality. This matters for high-frequency operations like DeFi yield strategies or cross-chain DEX arbitrage on chains like Ethereum and Arbitrum.

No on-chain key exposure: The private key never exists in one place, mitigating single-point-of-failure risks inherent in multisig setup scripts. This matters for institutional custody where the attack surface (e.g., via social engineering or compromised signers) must be minimized.

Transparent on-chain governance: Every signature and approval is verifiable on-chain (e.g., via Gnosis Safe on Ethereum, Squads on Solana). This matters for DAO treasuries or protocols like Uniswap where permission changes require full transparency and historical audit trails.

Native chain support: Works with any EVM, Cosmos, or Solana wallet without custom integration. Social recovery and time-locks are standard (e.g., Safe's recovery module). This matters for teams prioritizing vendor-agnostic tooling and straightforward, non-custodial account recovery options.

Single on-chain transaction: Signing is performed off-chain, producing one signature. This reduces gas costs by ~50-80% vs. a 3-of-5 multisig and enables faster transaction finality. This matters for high-frequency operations like DEX treasury management or cross-chain messaging (e.g., Wormhole, Axelar).

No on-chain key disclosure: The distributed private key never exists in full, reducing attack surface. Supports flexible, dynamic participant sets (e.g., Fireblocks, ZenGo) without costly smart contract redeploys. This matters for institutions requiring audit trails and compliance without exposing governance structure.

Transparent on-chain verification: Every signer and approval is publicly auditable on the blockchain (e.g., Gnosis Safe on Ethereum, Squads on Solana). This provides irrefutable governance logs, crucial for DAOs like Uniswap or Aave where voter accountability is paramount.

Native wallet & tooling support: Widely integrated by every major wallet (MetaMask, Phantom) and dApp. M-of-N logic is standardized (EIP-4337, SPL). This matters for protocols prioritizing user/developer familiarity and avoiding proprietary SDK dependencies (e.g., TSS libraries from Sepior, Curv).

Reliance on specialized vendors: Robust implementation requires complex cryptographic libraries (GG18/20). Introduces supply-chain risk and often leads to vendor lock-in. This is a critical drawback for teams lacking in-house cryptography expertise.

Linear gas cost growth: Each additional signer adds another transaction/verification cost. On congested networks like Ethereum L1, this makes routine operations prohibitively expensive for active treasuries. Finality is slower due to sequential approval gathering.

Single-signature transaction footprint: A TSS wallet produces a single, standard signature on-chain, indistinguishable from a regular wallet. This avoids the gas overhead and complex contract interactions of a Gnosis Safe or native multisig, saving 50-80% on transaction fees on EVM chains. This matters for high-frequency operations like treasury management or cross-chain bridging.

Protocol-agnostic key generation: The cryptographic scheme (e.g., ECDSA, EdDSA) is independent of any blockchain's VM. A single TSS setup can secure assets natively on Ethereum (ECDSA), Bitcoin (Schnorr), and Cosmos (Ed25519) without deploying new contracts. This matters for protocols like Axelar or Wormhole that require uniform signing across heterogeneous chains.

Heavy cryptographic overhead: Implementing and auditing a secure TSS library (e.g., ZenGo's, Binance's tss-lib) is far more complex than auditing a battle-tested Solidity contract like Gnosis Safe. Requires deep expertise in MPC protocols and zero-knowledge proofs. This matters for teams without dedicated cryptography engineers, increasing implementation risk.

No on-chain recovery mechanism: Share rotation or participant changes require a completely new off-chain key generation ceremony. Losing shares below the threshold can permanently brick the wallet. Contrast with multisigs, where signers can be changed via an on-chain proposal. This matters for long-lived DAO treasuries where participant turnover is expected.

Fully auditable on-chain policy: Every action—transactions, adding/removing signers, changing thresholds—is a visible contract call on Etherscan or Solana Explorer. Frameworks like Gnosis Safe, Squads, and DAO tooling (Compound Governor) build on this. This matters for regulated entities or DAOs requiring explicit, immutable governance records.

Massive ecosystem integration: Gnosis Safe alone secures over $100B+ in assets. This maturity means deep integration with every major DeFi protocol (Aave, Uniswap), wallet (Metamask, Rainbow), and monitoring tool (OpenZeppelin Defender, Tenderly). This matters for teams that prioritize security through widespread audit and real-world testing over novel cryptography.

Per-chain smart contract deployment: You must deploy and fund a new multisig contract on each chain (e.g., Safe on Arbitrum, Squads on Solana). This creates fragmented liquidity and recurring gas costs for simple approvals. This matters for operations spanning 10+ chains, where deployment and maintenance overhead becomes significant.

VM dependency: A Solidity-based multisig cannot be deployed on non-EVM chains like Bitcoin, Cosmos, or Solana without a completely different codebase (e.g., CosmWasm, native programs). This forces the use of wrapped assets or insecure bridges for cross-chain holdings. This matters for custody of native BTC or ATOM without introducing bridge risk.