Multisig Execution

A multisig wallet is defined by a threshold signature scheme (e.g., m-of-n), where m approvals from n designated signers are required to execute a transaction. This distributes trust and prevents single points of failure. Common configurations include:

• 2-of-3: One key can be lost without locking funds.
• 4-of-7: Common for DAO treasuries requiring broad consensus.
• 1-of-1: A standard, single-signer wallet for comparison.

Approvals can be managed on-chain or off-chain, each with distinct trade-offs.

• On-Chain Execution: Each approval is a separate transaction (e.g., Gnosis Safe), providing a transparent, immutable audit trail but incurring gas costs per signature.
• Off-Chain Execution: Signatures are collected via secure protocols (like EIP-712 signed messages) and submitted in a single batch transaction, reducing gas fees and blockchain bloat. The execution is still enforced on-chain.

Multisig wallets manage execution order and prevent replay attacks using nonces. A transaction proposed to a multisig contract is assigned a unique nonce. Key features include:

• Sequential Execution: Transactions must be executed in strict nonce order.
• Proposal Lifecycle: A transaction exists in a proposed state until the threshold of signatures is met, after which any signer can execute it.
• Cancellation: A transaction with a higher nonce can be executed to invalidate a stale proposal, a process known as 'out-of-order execution.'

Advanced multisig implementations support granular role-based access control (RBAC). This allows different signers to have specific permissions, such as:

• Proposer: Can create a transaction for others to sign.
• Executor: Can submit the fully-signed transaction to the network.
• Admin: Can add or remove signers and change the approval threshold. This structure is critical for complex DAO operations and corporate treasury management.

Multisig wallets provide a robust framework for account recovery and security maintenance without relying on a central entity.

• Social Recovery: A set of trusted guardians (the other signers) can collectively approve a transaction to change the wallet's signer set if a key is lost.
• Proactive Key Rotation: Compromised or outdated signing keys (e.g., hardware wallets) can be systematically replaced by the existing signer group, enhancing long-term security.

A practical challenge is that the signer submitting the final execution transaction must pay the gas fee. Systems address this through:

• Gas Relay Networks: A third-party service (relayer) pays the gas fee and is reimbursed in the transaction itself or via a fee mechanism.
• Sponsored Transactions: The multisig contract or a designated benefactor can prepay or promise to reimburse gas costs.
• Native Gas Tokens: Some chains allow fees to be paid in the chain's native token from the multisig's own balance.

The security of a multisig is only as strong as its individual signers. Attackers may target signers through:

• Phishing attacks to steal private keys or seed phrases.
• Physical coercion or extortion against key holders.
• Insider threats from a malicious or compromised signer.

A 2-of-3 multisig is vulnerable if two keys are compromised, despite the multisig setup.

In some implementations, an attacker can intercept and alter a signed transaction's outer details (like its ID) before it's broadcast, potentially invalidating other signatures or causing confusion. This is a form of transaction malleability. Proper multisig schemes use Schnorr signatures or script hashing to bind all signatures to the exact transaction data, preventing replay on altered transactions.

Multisig setups can fail due to non-technical reasons:

• Signer unavailability (lost keys, death, departure).
• Disagreements leading to refusal to sign, freezing funds.
• Insufficient signers online to meet the threshold.

This requires clear off-chain governance procedures, key rotation policies, and possibly time-locked fallback mechanisms to recover from paralysis.

On blockchains like Ethereum, multisig logic is enforced by a smart contract (e.g., Gnosis Safe). Bugs in this contract are catastrophic:

• Reentrancy attacks could drain the wallet.
• Logic errors in signature verification.
• Upgradeability risks if the contract has an admin key.

Audits are critical, but not foolproof. Use well-audited, time-tested contracts over custom implementations.

Users may develop approval fatigue, hastily signing transactions without verifying details. Combined with blind signing (signing data you can't interpret, common with hardware wallets), this allows malicious proposals to be approved. Defenses include:

• Transaction simulation before signing.
• Multi-step approvals with clear human-readable descriptions.
• Limiting signer permissions to specific functions.

In decentralized autonomous organization (DAO) multisigs where signers are elected, an attacker may attempt a Sybil attack—creating many fake identities to gain enough voting power to control the treasury. This is mitigated by sybil-resistant identity systems (like proof-of-stake, social graph analysis) or high proposal quorums that make attacks economically impractical.