Recovery Mechanism

A recovery mechanism where control is distributed among a set of guardians (trusted individuals or devices) rather than a single entity. Recovery requires a threshold of approvals (e.g., 3-of-5), eliminating single points of failure. This contrasts with centralized exchanges or traditional bank account recovery.

• Example: A user designates friends, family members, and hardware wallets as guardians.
• Security Model: Relies on social trust and cryptographic multi-signature schemes.

A security feature that imposes a mandatory waiting period between initiating a recovery request and its execution. This delay (e.g., 7 days) acts as a crucial defense, providing a window to detect and cancel fraudulent recovery attempts.

• Primary Function: Mitigates attacks from compromised guardians or social engineering.
• User Action: Legitimate users can monitor their account and cancel any unauthorized recovery flow during the delay period.

Modern recovery systems are built as smart contract modules that can be attached to a user's primary wallet account. This allows for:

• Post-deployment configuration: Guardians and thresholds can be added or removed.
• Future-proofing: The recovery logic can be upgraded without migrating assets, adapting to new security standards.
• Composability: The same recovery module can secure different types of assets (tokens, NFTs) within one account.

A specific implementation of decentralized custody where guardians are known, real-world contacts of the user. It leverages existing social graphs for trust.

• Process: To recover a wallet, the user contacts their guardians offline, who then cryptographically approve the recovery request from their own wallets.
• Key Innovation: Shifts security from memorizing a secret phrase (seed phrase) to managing social relationships, which are often more resilient to loss.

A proactive application of recovery mechanisms designed for asset transfer upon death or incapacity. It formalizes a process that is often legally complex for digital assets.

• Setup: A user pre-configures beneficiaries and the conditions for access (e.g., proof of death from multiple sources).
• Contrasts with Wills: Executes automatically via code upon verified conditions, reducing probate delays and the risk of lost keys.

An advanced feature where the recovery process simulates the outcome of the proposed recovery transaction before execution. This allows guardians or the user to review:

• Destination Address: Is it the user's verified new wallet?
• Asset List: Are all expected assets being transferred?
• Risk Scoring: Systems can flag transactions to unknown or high-risk addresses. This adds a critical layer of verification, preventing recovery into a hacker-controlled wallet.

Used primarily by institutions, this involves redundant, geographically distributed HSMs that store private keys. If the primary HSM fails or is compromised, a quorum of backup HSMs can be activated to generate valid signatures and recover access. This is a physical and logical redundancy model.

• Process: Key material is sharded using techniques like Shamir's Secret Sharing (SSS) and stored in separate, hardened devices.
• Advantage: Provides high availability and disaster recovery for critical signing infrastructure, meeting enterprise compliance requirements.

Recovery is built into the key generation process. A private key is split into multiple secret shares distributed among parties or devices. Transactions require a threshold of shares (e.g., 2-of-3). Recovery involves the collaborating parties generating a new key set. This eliminates single private keys but introduces complexity in share management and potential liveness issues if the threshold cannot be met.

The service provider (e.g., an exchange) holds the private keys and manages recovery through traditional identity verification (KYC, email, 2FA). This offers familiar user experience but introduces counterparty risk and censorship risk. The user trades sovereignty for convenience, relying entirely on the security practices and solvency of the custodian.

A proactive recovery mechanism using smart contracts. Assets can be programmed to be claimable by a beneficiary address after a predefined timelock period if the owner does not submit a periodic "proof of life" transaction. This mitigates permanent loss but requires upfront setup and exposes a future attack vector if the beneficiary's key is compromised.

The 12 or 24-word mnemonic seed phrase is the ultimate recovery tool for non-custodial wallets. Its strength is its simplicity and independence. The trade-off is immense user responsibility: it becomes a single point of catastrophic failure. If lost, access is permanently gone; if discovered, all derived assets are forfeited. This highlights the core dilemma of user-controlled cryptography.

Every recovery mechanism introduces new attack surfaces and trust assumptions.

• Social Recovery: Susceptible to social engineering attacks on guardians or Sybil attacks to create fake guardians.
• MPC: Relies on the security of the key generation ceremony and the integrity of the parties holding shares.
• Custodial: Trust in the institution's security and honesty.
• Timelocks: Trust that the future security environment will not compromise the beneficiary.

A wallet security model that replaces a single private key with a guardian-based recovery system. If access is lost, a predefined majority of trusted guardians (e.g., friends, devices, institutions) can collectively authorize a wallet reset. This shifts security from individual key management to social consensus.

• Example: Ethereum's Smart Contract Wallets (like Safe) often implement this.
• Benefit: Eliminates single points of failure for seed phrases.

A consensus-based access control mechanism requiring multiple private keys to authorize a transaction. It is a foundational recovery and security primitive.

• Use Case: A 2-of-3 multi-sig setup for a treasury, where two of three designated signers must approve any withdrawal.
• Function: Acts as both a security measure (preventing unilateral action) and a recovery mechanism (if one key is lost, others can still act).

A security feature that enforces a mandatory waiting period before a transaction or recovery action can be executed. This provides a critical window to detect and cancel unauthorized recovery attempts.

• Implementation: Often used in conjunction with multi-sig, where a recovery transaction proposed by one party is delayed for 24-48 hours, allowing other parties to veto it.
• Purpose: Protects against insider threats or key compromise by introducing a reversible grace period.

In Proof-of-Stake (PoS) networks, this is the protocol-enforced penalty and removal mechanism for validators who act maliciously or fail. It protects network security by disincentivizing bad behavior.

• Slashing: A portion of the validator's staked assets is burned for provable attacks (e.g., double-signing).
• Exit: A voluntary or forced process for a validator to leave the active set and withdraw their stake, which can be part of a recovery plan for a compromised node.

The core algorithm a blockchain node uses to determine the canonical chain when faced with competing branches (forks). It is the ultimate recovery mechanism for network consensus.

• Example: Ethereum's LMD-GHOST selects the chain with the greatest weight of attestations.
• Role: Resolves temporary network partitions and determines which chain survives after a chain reorganization, ensuring all nodes eventually recover to a single shared state.

A decentralized recovery and upgrade path where token holders or delegates vote on-chain to modify protocol parameters or deploy new code, often to address critical bugs or exploits.

• Process: A governance proposal is submitted, voted on, and, if passed, automatically executed by the protocol.
• Recovery Case: Used to patch vulnerabilities, unfreeze assets, or reverse the effects of a major hack, as seen in Compound or MakerDAO governance actions.