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BlockTheory recently hosted a meetup with Harish Narayanan, a marketer who has created world-class teams that have broken records and grown businesses exponentially. With a remarkable career spanning over a decade, Harish has held executive roles at **P&G, Google, Myntra, and UpStock**. During the talk, he shared his insights on self-growth and productivity.

Harish first drew our attention to the value of time and the limited opportunities to make a meaningful impact in this world. He puts it into perspective:

Imagine you are 40 years old. From this point onward, you have approximately 2,000 weeks left before age 80. Within these weeks lies the potential for you to make a significant difference in the world, provided that you are productive.

 He emphasized the importance of ***creating a burning desire within each of us*** and shared his journey of self-exploration ***on how to get better.***  He emphasized the importance of ***creating a burning desire within each of us*** and shared his journey of self-exploration ***on how to get better.*** 

Starting from uncertainty to finding clarity about who he is, what he wants to do, and where he wants to go. He explained how his journey perfectly aligned with his career, team management, and leadership success. And encouraged us to embark on our journey of self-discovery, where we can truly understand ourselves and work towards our calling.



<div id="self_growth"></div>
## 📈 Now, let's dive into the 3 steps of Self-growth that Harish highlighted:
<br/>

### 🪄 1. Be- Recognize the Miracles Within Us

He wants us to see our self-worth and not get caught up in everyday complaints and urges, "Don't settle for mediocrity." He underlines the importance of flipping the script and recognizing that we are all amazing miracles on this planet. Furthermore, he shares profound spiritual and philosophical reflections, pointing out the interconnectedness between rare elements in the universe and within the human body. These deeply spiritual encounters serve as a means for him to recognize that we all possess unique and special qualities, and each of us is a miracle.

### 💬 2. Think - Even if you come across a seemingly negative person, take the good from them and become unbeatable.

It's about absorbing the positive qualities of others, even in challenging times. We can become unstoppable if we take the good we see in people. He quotes a beautiful example drawing inspired by the remarkable tale of *Bali* in Ramayana, who derived strength from whomever he encountered. We can interpret this as "even if we meet an average person or a new person and try to take whatever is good of them into ourselves, then we become unbeatable."

### 💁🏻 3 . Do - Your life is shaped by what you pay attention to.


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Harish firmly believes that our life is a series of moments we choose. And he gave us ***practical tips*** to apply in our daily lives:

**🎧 Focus on your priorities in the first four hours of your day** -Don't avoid uncertainty or procrastinate. Tackle the most challenging tasks, as they are often the most important. The more resistance you feel, the more you must prioritize those tasks.

**📵 Ensure that you don't let responsiveness hinder your progress**-Focus in accomplishing the main tasks, such as crafting compelling brand stories or launching large campaigns. By avoiding constant back-and-forth messages and notifications, we can experience a noticeable boost in productivity.

**🗓️ Goal Management**- This is a game changer in terms of successful planning. We should begin planning yearly, quarterly, monthly, weekly, and daily. Whereas a week is an adequate period to accomplish anything. —it's a manageable yet predictable scope for goal planning. Apply color-coding methods to effectively organize tasks by categorizing them into personal and work-related priorities.

**💡 Calendar is your best friend -** He says, "*Calendar is our best friend, and the to-do list is our enemy."* To-do is a list that demands our time, whereas Calendar is used for allocating specific time slots for different goals/activities. He highlights that our mind is a beautiful machine that should be used only for ideas, so don't use it to remember anything." The toughest part is to predict how much time a certain task will take, but eventually, we get better at it; once we make this a practice of putting down our day-to-day tasks on the calendars. Harish highlighted the importance of using calendars to externalize tasks, freeing up mental space for generating ideas and concepts.



<div id="thinking_framework"></div>
>In nutshell, Harish really wants us to recognize the miracles within ourselves. Even if we meet negative people, we can still take the good from them and become unstoppable, just like Bali in the Ramayana. 

He gives us practical tips to follow in our daily lives, like focusing on priorities in the first four hours of the day and avoiding distractions that hinder our progress. Harish drew attention to goal management and planning on different time scales, from yearly to daily. He also highlights the importance of using calendars instead of to-do lists to allocate specific task time slots. By doing this, we free up our minds for creative thinking.

He further touched upon the **Level 4 Thinking Framework** - inspired by a beautiful blog, "*[Wait, But Why](https://waitbutwhy.com/), "- wherein he further explains it -*

1. Level 1: Imagine a scenario where John approaches the cashier to make a payment. After handing over the required amount, the cashier throws the change while returning it. Surprised by this unexpected incident, John exclaims, "How dare the cashier behave like this!" At this moment, John's ego takes control, and his focus is solely on himself. He fails to see beyond his perspective and the obstacle before him.

2. Level 2: As John steps forward, the human part of his brain kicks in. Empathy plays a bigger role, and he becomes more aware of the cashier's perspective and emotions. Instead of solely focusing on himself, he takes a moment to consider that the cashier could be having a bad day. John's reaction shifts from anger to curiosity and understanding.

3. Level 3: John realizes that he and the cashier share a connection. He understands that everyone is prone to making mistakes and that finding a solution requires working together. Instead of dwelling on the incident, he approaches the cashier with empathy and calmly asks if everything is alright. They work together to resolve the situation, knowing their interaction goes beyond a simple transaction.

4. Level 4: After practicing Level 3 for years, John achieves a higher level of consciousness. He seeks the ultimate truth with humility, even in difficult situations. He maintains peace and open-mindedness in this state, enabling him to navigate challenges with grace and wisdom. *Destruction of Ego is such a powerful concept at that moment where you don't matter anymore. It's about the entirety of the environment and people around you.* *Many people yell at you, or something bad is happening, but instead, you are seeking knowledge."*


<div id="conclusion"></div>
To wrap it up, Harish finally shared the *secret to all his habits and learnings—Reading*. He believes it's the fundamental habit that creates all other habits. He encouraged us to "**fall in love with reading, devour any material that interests us, and dedicate time in our calendars for reading. It truly has the power to transform our minds**."

> ***Remember, productivity isn't the ultimate goal—it's a means to free up time to embark on our self-growth journey from level one to level four.***


[Watch the full talk ](https://www.youtube.com/watch?v=uQ2hZUCRQU0)

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Harish musings on the journey of self-discovery and creating a strong desire to work towards one's calling for self-growth and productivity.

Key Insights from Harish's Talk on Self-Growth and Productivity

<div id="intro"></div>
According to recent research conducted by CryptoAssetRecovery.com, a large number of Ethereum owners have lost access to their wallets. The study revealed that approximately 7% of the Ethereum purchased during the initial "presale" in 2014 has remained untouched in its original wallets, indicating that the owners have lost control of their private keys. 


>The cumulative value of these lost wallets is estimated to be around $1.6 billion, with the largest individual wallet holding approximately $60 million worth of Ethereum.

Crypto wallets are often secured with private keys that the wallet owner must securely store. If users lose or forget the private key, they can no longer access their wallet. With a private key, all the power lies in the hands of the user, so there is no central authority that can assist in retrieving the private keys if it is lost.


<div id="crypto_work"></div>
## 🧐 Let's understand how the Crypto wallet or accounts on Ethereum work

Ethereum has two main types of accounts: Externally Owned Accounts (EOAs) and Contract Accounts.

### 🔗 Externally Owned Accounts

Ethereum accounts are secured using a pair of cryptographic keys: public and private keys. An Ethereum Externally Owned Account (EOA) is active, can initiate transactions, pay gas fees, and execute operations on the Ethereum Virtual Machine (EVM). However, EOAs are solely controlled by a private key. Losing access to the private key means losing control over the account and the associated funds.

### 📄 Contract Accounts

Contract accounts (CA) in Ethereum have a distinctive characteristic: the smart contract code determines the ownership and control of assets within them. However, contract accounts are considered "passive" in practice. This means they can only initiate transactions when triggered by transactions from externally owned accounts (EOA). Their actions are governed by the logic defined within their code.


>_In 2021, Wallet Recovery Services, a company specializing in assisting individuals in locating their lost digital keys, witnessed a significant surge in demand. They received an average of 70 recovery requests daily._


In the blockchain world, private keys are the gatekeepers to our digital wealth but have inherent flaws. Once lost, they are gone forever, along with all the digital assets they protect.

Wait, what if I told you that the concept of account abstraction is here to revolutionize how we handle private keys? Imagine a world where our private keys become smart, allowing us to create fallback mechanisms and regain control of our digital assets if it's lost or even disappear entirely.


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### Let's dive into the concept of account abstraction and explore in detail-

Account abstraction has emerged as a powerful concept that aims to blur the boundaries between EOAs and Contract Accounts (CAs) in Ethereum. CAs are passive and require EOAs to trigger their actions. But with account abstraction, a new paradigm comes into play-

Account abstraction ( AA) tackles these concerns by merging CAs and EOAs into a unified framework. The process involves separating the transaction signing logic from the account itself, resulting in the term "Account Abstraction."

AA in Ethereum is about making managing our accounts easier and more flexible. It brings in these "smart contracts" that take care of our Ethereum account. Instead of relying solely on private keys, Ethereum now allows delegating authority to smart contracts. These smart contracts act as intermediaries, abstracting away the complexities of account management.

And the best thing is we can set up all sorts of custom rules for spending our cryptos, initiating transactions, and maintaining our crypto assets. It's like having a trusted assistant to handle our account on behalf of us!

Okay, let's break it down -

Now, from a **user perspective**, account abstraction means we don't have to worry about the technical complexities of interacting with Ethereum accounts. The tricky stuff is hidden behind user-friendly interfaces, making it easier for users to use their wallets.

But let's clear up some confusion. Account abstraction doesn't mean our accounts are completely detached from us. We still have a wallet address to receive funds, and we'll have a signing key to ensure we can only spend those funds. It's more like using a smart contract account that handles some blockchain interactions while we still have control over our tokens.

This breakthrough in account abstraction brings a whole new level of flexibility. It allows us to create accounts with add-on features like multi-signature support, two-factor authentication (extra security!), withdrawal limits (spending control!), and even adding trusted guardians (like having backup buddies!). It's like the blockchain version of credit cards but with even more possibilities.

<div id="use_cases"></div>
### 
## Top use cases of Account Abstraction

### 💵 Batching Multiple Transactions

In Externally Owned Account (EOA) wallets, there is inefficiency and inconvenience of executing multiple transactions sequentially, resulting in long wait times and high gas fees. It often occurs when attempting a simple task, such as swapping one token for another, which requires multiple transaction steps.

Account abstraction addresses this issue by enabling the batching of multiple transactions into one transaction. With AA, users can initiate a series of actions or transactions as a single unit, reducing the overall gas fees and waiting time while interacting with DApps or smart contracts. This batching capability allows us to complete multiple steps or actions in a single click or interaction, streamlining the user experience and making it more efficient.

### ⛽️ Pay Gas fees on your choice of token

In the Ethereum network, gas fees are exclusively paid in Ether. This means that whenever we want to initiate a transaction or execute a smart contract on the Ethereum blockchain, we must have enough Ether in our account to cover the associated gas fees. With account abstraction, this limitation is overcome. Account abstraction enables users to pay gas fees using any token they hold, not just Ether. This means that we can utilize the tokens from our wallets to directly pay for gas fees without converting them to Ether first.

### 🏢  Gasless Transactions

Gasless transactions, also known as sponsored transactions, allow users to initiate transactions without directly paying the associated gas fees. In this process, a smart contract or program acts as a sponsor, taking care of the gas fees on behalf of the user. This feature brings users a lot of convenience and simplicity, especially in decentralized finance (DeFi) applications.

With gasless transactions, users are no longer required to hold and spend the native cryptocurrency for gas fees. Instead, the sponsor steps in and covers those fees. The sponsor can consider it an "acquisition cost" or ask the user to pay in a different token. This mechanism effectively bridges the gap between DeFi and traditional finance by allowing users to transact without the need for specific tokens for gas fees.

![Gasless Transactions](https://ds-storage.sgp1.cdn.digitaloceanspaces.com/blocktheory/website/strapi/uploads/b071d347442504a4da978480fd528716.png)

### 🤝🔒 Social Recovery

In current wallet recovery methods, we typically rely on a recovery phrase or seed phrase to regain access to their wallet. However, if we lose the recovery phrase, wallet funds become permanently inaccessible. Account abstraction with social recovery addresses this issue by introducing a more secure recovery process. By designating multiple trusted individuals as recovery agents, we can distribute the responsibility of account recovery among a network of trusted contacts. This decentralized approach mitigates the risks of relying solely on a single recovery phrase.

![Social Recovery.png](https://ds-storage.sgp1.cdn.digitaloceanspaces.com/blocktheory/website/strapi/uploads/3dc965793444b70c6a503c124a3e33d2.png)

### ✍️👥 Multi-Signature Authorisation

Traditional blockchain systems typically implement multi-sig wallets as separate smart contracts interacting with externally owned accounts (EOAs). The process involves EOAs initiating transactions, paying the gas fees, and then calling the multi-sig smart contract to request transaction execution. Once the required number of signatures is obtained, the multi-sig contract refunds the initial gas fee paid by the EOA.

However, with account abstraction, every account is inherently a smart contract. In this scenario, when we initiate a transaction from our account (smart contract), the account's programming includes the requirement for multiple signatures. The account logic verifies that the transaction proposal includes the necessary valid signatures before processing the transaction. Hence, it simplifies the process and eliminates the additional steps and complexity associated with interacting with a separate multi-sig contract.

### 🛡️ Transaction Guards

Wallets can potentially transform users' self-custody experience by implementing an account abstraction concept called "Transaction Guards." This concept allows users to establish predefined conditions and rules that must be satisfied before a transaction can be executed. By incorporating Transaction Guards, wallets provide an additional layer of security and control, empowering us to enforce specific transaction requirements according to our preferences. This use case encompasses various features, including the ability to set withdrawal limits, define daily spending limits, etc.

![Transaction Guards.png](https://ds-storage.sgp1.cdn.digitaloceanspaces.com/blocktheory/website/strapi/uploads/cfe827baa5fd3bceb984847fab27778e.png)

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## 🔒 The Future of Account Abstraction

The adoption of account abstraction, introduced by Vitalik Buterin, continues to be in discussions and debates even years later. EIP-4337 has received broad support within the Ethereum community as it offers a viable approach to implementing account abstraction without requiring significant changes to the Ethereum protocol. It signifies a paradigm shift that brings about profound changes and advancements-multi-signature support, withdrawal limits, two-factor authentication, etc.

One of the key beneficiaries of account abstraction will be DApps, particularly those in the decentralized finance (DeFi) and non-fungible token (NFT) sectors. The synchronization of user wallets with smart contracts, made possible by ERC-4337, will create a seamless and intuitive user experience. Moreover, DApp developers will no longer be bound by the limitations of a single blockchain, as smart contract wallets will eventually be able to connect and interact across different chains. This interoperability will allow developers to create chain-agnostic services, expanding the reach and impact of their projects.

In conclusion, ERC-4337 has paved the way for a more user-friendly and inclusive blockchain ecosystem. By simplifying complex tasks and abstracting the underlying technicalities, this standard has made blockchain applications more accessible to everyday users. As the technology continues to advance, we can expect even greater simplification and accessibility, opening up new opportunities for individuals to engage with and benefit from the transformative potential of blockchain technology.

As the Ethereum community evaluates the various proposals and their implications, finding a consensus on the best way to implement account abstraction remains an ongoing process. The ultimate goal is to balance introducing innovation and minimizing disruption to the existing Ethereum ecosystem.


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Discover the concept of account abstraction and its significance, and explore its primary use cases.

What is Account Abstraction and it’s use-cases?

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With the recent collapse of FTX, centralized exchanges as 'custodians' have failed to provide users with actual ownership over their cryptos.

This has piqued a lot of interest in MPC technology.


Why?

Because MPC has some exciting applications that can make your crypto wallets even more 'SECURE'!

<div id="mpc"></div>
## Few reasons why people are eager to shift to MPC technology -

First, traditional custodial wallets rely on a single private key for access, making them the potential point of a single failure.

Second, conventional wallets, especially those offered by centralized exchanges or custodial services, store private keys on centralized servers. This concentration of keys is prone to cyberattacks

<div id="hot_and_cold_wallets"></div>
Here's the key insight: 

When we look at the current landscape of custodial wallets , it is divided into two distinct categories – hot wallets and cold wallets.


| Hot Wallets | Cold Wallets |
| --- | --- |
| Hot wallets encompass a variety of cryptocurrency wallets ( Metamask, TrustWallet, Frontier Wallet, and Exodus Wallet) accessible through internet-connected devices. This includes desktop wallets, mobile wallets, and even wallets provided by exchanges.  | Cold wallets (hardware, paper wallets) represent a form of crypto storage that prioritizes security. They keep your private keys offline, completely detached from the internet. |
| These wallets offer convenience for day-to-day transactions, allowing swift access to your assets. However, the trade-off lies in their security vulnerability. Since your private keys are exposed to potential online threats such as hacking or malware attacks, there's an inherent risk involved. | While they might be less convenient for everyday transactions since you'll have to import keys to an online device when required, they provide robust security against online threats. 


![Hot v Cold.png](https://ds-storage.sgp1.cdn.digitaloceanspaces.com/blocktheory/website/strapi/uploads/bd885e339dd5bda9a3f34f4da3529e99.png)

Whenever you examine a hot wallet or a self-custodial wallet like MetaMask, two vital factors should always be taken into consideration-

- **Key Storage**: How are those private keys actually stored in the wallet?
- **Access and Control**: Whether you have direct access and control over these keys?

These two factors are intricately intertwined and play a pivotal role while evaluating the **functionality** and **security** of a wallet.


*This article seeks to provide you with insights into the current paradigm of key management in self-custodial Web3 wallets-*
<div id="type_custody"></div>
Let's take a closer look at the crypto wallet spectrum to get a comprehensive understanding-


| Custody  | Types ||
| --- | --- | -- |
| Self-Custody | Non Distributed Self-Custody | Distributed Self-Custody |
| Shared-Custody | Enterprise Shared Custody  | P2P Shared Custody  |
| Delegated Custody | Designated non distributed custody  | Designated distributed custody |


<div id="self_custody"></div>
## **A. Self-Custody**:

When you use self-custody wallets, you have  perpetual access and control over your digital assets. The great thing is, the self-custody wallet service provider can't hold you back from exporting your wallet or switching to another one. Whether the private keys are stored in their entirety or distributed among multiple parties (such as in MPC wallets), users retain absolute control over their keys. This control is crucial for securing their assets against unauthorized access.You're always in the driver's seat!

This is further subdivided in two parts - 


 | Non Distributed Self-Custody | Distributed Self-Custody |
 | --- | --- |
 | A non-distributed self-custodial wallet is a wallet where the entire responsibility of storing and controlling private keys lies with a single location or device. This setup can offer convenience but might carry a higher risk if that single point of control is compromised, such as loss or theft of the private key. | A distributed self-custodial wallet refers to a type of wallet where the responsibility of storing and managing private keys is spread across multiple locations or devices. This approach enhances security by reducing the risk of a single point of failure. It's like having backup keys in different places.|
 | Hardware or paper wallets are the real life examples of several types of non distributed self-custodial wallets. | MPC-TSS wallets - Zengo, Jade , Unipass, Particle network are the real life examples of the distributed self custodial wallets.  
 
<div id="shared_custody"></div>
## **B.** **Shared-Custody**:

Under some approaches, wallets are linked to distributed key shares that are divided among the user, the wallet provider (or a group of enterprises), or a group of guardians. To perform actions like generating signatures, a minimum number of these parties need to come together and participate, either at the same time or independently. Alternatively, multi-sig smart contract wallets can also involve a minimum number of affiliated guardians to validate transactions. This adds an extra layer of security and flexibility to the wallet setup.

This is further subdivided in two parts - 



| Enterprise Shared Custody  | P2P Shared Custody  |
| --- | --- |
| In this setup, signatures in wallets involves sharing key shares between phone wallets, enterprise servers, cloud services, or storage. | In this setup, signing authorities, which allow transactions to be authorized and executed, are divided among the peers. Each peer holds a portion of the private key or a unique key share and come together to execute the transaction. |
 | Zengo and Coinbase are real life examples that have significantly improved security compared to traditional wallets relying solely on seed phrases and single private keys.  | Examples of P2P Shared Custody wallet implementations include social multi-sig wallets like Gnosis SAFE and custody solutions based on Multi-Party Computation (MPC). 

<div id="delegated_custody"></div>
## **C.** **Delegated Custody**:

Delegated Custody is another method in which the management of keys or key shares is entrusted to external entities- ‘delegated enterprises or a network’. In this setup, user delegate the control and storage of their private keys to these external entities. A common example is when users hold their digital assets on centralized exchanges.

This is further subdivided in two parts - 



| Designated non distributed custody | Designated distributed custody |
 | --- | --- |
 | The key responsibility for holding and managing the private keys or access to the digital assets is entrusted to a one specific delegated enterprise or a network.  | The key responsibility for managing the private key is shared or access to digital assets is distributed among a group of enterprises or nodes. |
 | BitGo , Free wallet are few examples of designated non distributed custody  | Coinbase, Free wallet are few examples of designated distributed custody |



The current state of private key storage in crypto wallets raises concerns due to the challenges and risks associated with each category. While self-custody provides maximum control, the entire key is locally stored on your device, which means if you lose access to your device for any reason, you lose access to your wallet. Thus, your device becomes a **single point of failure (SPOF).** On the other hand, shared custody and delegated custody introduce complexities around trust, reliance on third parties, and potential vulnerabilities.

What if your self-custody wallet not only supercharges security but also takes away the hassle of remembering, storing, and protecting private keys?

Exactly! This is where the concept of Multi-Party Computation (MPC) comes into the picture, where you, as a user of a self-custodial wallet- distribute your private keys among several trusted devices.

<div id="conclusion"></div>
##Conclusion

To sum up, the idea of "distributed - self custody" is the ideal spot in managing digital assets at both enterprise and retail level . By dispersing ownership or control of private keys among multiple entities, the risks associated with a single point of failure is reduced.

This concept stands in contrast to shared and delegated custody , which have demonstrated vulnerabilities in real-world use cases.

Whereas, distributed self-custody approach resonates with the core principles of decentralization, security, and individual empowerment that form the cornerstone of the entire crypto industry.
<br/><br/>
*The next article discusses different methods of securing digital assets while also highlighting how innovative wallet solutions rooted in MPC (Multi-Party Computation) and TSS (Threshold Signature Schemes) have opened pathways towards adoption of distributed self-custody.*
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### References

https://medium.com/silence-laboratories/redefining-nomenclature-of-custody-81ee28f20731



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Insights into the current paradigm of key management in Web3 wallets

Current Web3 wallet key management landscape and how MPC is reshaping it?

<div id="intro"></div>
This article delves into the realm of securing digital assets and explores different methods for delegating key responsibilities among multiple parties. And, how innovative solutions like Multi-Party Computation (MPC) and the Threshold Signature Scheme (TSS) have paved the way towards secure MPC based TSS wallets, addressing the intricate challenges associated with managing digital assets.

As discussed in the [previous](https://blocktheory.com/blog/current-web3-wallet-key-management-landscape-and-how-mpc-is-reshaping-it/) blog post , that conventional crypto wallets have a problem , *once key is lost, all the assets associated with the wallet is lost*. Instead of getting caught up in the idea of making copies of the key, let's think about doing something different ! 

What If, we **share the responsibility of managing the key with multiple parties** 

This responsibility of distributing the key with multiple parties strengthen the security of private keys by reducing the chances of permanent loss due to misplacement or attacks. Moreover, in situations of urgency, a multi-party key management system has the capability to retrieve lost keys.


Lets look at the evolution of different methods that have been designed to make your digital assets ‘SECURE’ - 
<div id="multi_sig"></div>
##Multi Signature Wallets ( Multi Sigs)

Imagine you have a self custodial wallet that holds your digital assets. Now, instead of just having one lock and one key to open your wallet, multisig sets up multiple locks and keys for this wallet. This means that to access your digital assets, you need a certain number of keys to work together. This sharing of key responsibility adds an extra layer of security to your assets.

![Multisig.png](https://ds-storage.sgp1.cdn.digitaloceanspaces.com/blocktheory/website/strapi/uploads/1ac2f33fd3d8a1bd2a67f5497ee5d561.png)



| Pros | Cons |
| --- | --- |
| The security of wallet is strengthened- incase even one key is compromised, the entire wallet remains secure. | Multi Signature wallets are not compatible with all the blockchains. |
| It's possible to recover and create backups through trusted parties. | One significant downside of multisig wallets is that their transaction speed is relatively slow because they depend on multiple parties to approve the transactions. |


<div id="shamir_secret"></div>
## Shamir-Secret Sharing Scheme (SSSS)

It divides the key into multiple parts, or shares, and distributes them among different participants. A predefined number of shares are required to sign the transactions, but any subset of shares(shares=n) is fewer than that threshold value(threshold value = t) , the results aren’t generated. (t<n).

![Shamir Secret Sharing.png](https://ds-storage.sgp1.cdn.digitaloceanspaces.com/blocktheory/website/strapi/uploads/75bedd312e7420ee0f6a75cef2d644cc.png)


| Pros | Cons |
| --- | --- |
| It provides a unique advantage in terms of flexibility and extensibility. The algorithm allows the secret owner to adjust the number of shares, add new shares, modify existing shares, or even remove shares without requiring any changes to the original secret. | SSSS has a major drawback: When the key is generated initially or reassembled to unlock the wallet, it is again stored in its original full form. This weakness or storage of keys locally is prone to cyberattacks.  |
| SSS supports disaster recovery scenarios. If some shares are lost or compromised, the secret can be reconstructed by gathering the required threshold of shares. This ensures data resilience. | The reconstruction process depends on a stable network connection if shares are distributed across different locations. Network disruptions could impact the process. 


Can we design a system where multiple keys are always kept separate and never combined, while still appearing as a single lock?

This is precisely what Threshold Signatures achieve. These signatures are built on the principles of Multi-Party Computation (MPC) in cryptography. Think of Threshold Signatures as a fusion of the strengths from both Shamir's Secret Sharing Scheme (SSS) and MultiSig.

<div id="threshold_sign"></div>

##Threshold Signature Scheme (TSS)

At its core, TSS operates by necessitating a selected subset of authorized participants to collaboratively generate digital signatures on behalf of a collective entity. The crux of this mechanism rests upon the concept of a "threshold" value, denoted as 't,' which signifies the minimum number of participants  required for the successful generation of a valid signature. Correspondingly, the aggregate number of participants is designated as 'n.' This threshold safeguard ensures that no single participant—whether unintentionally or maliciously—can autonomously execute a signature. Instead, the collective participation of a  minimum number of signatories is requisite, thus adding extra layer of security.

In a broader context, the integration of TSS has the potential to profoundly impact the architecture of key management systems in crypto wallets, and pave the way for seamless integration within decentralized finance (DeFi) use cases.

![TSS.png](https://ds-storage.sgp1.cdn.digitaloceanspaces.com/blocktheory/website/strapi/uploads/a64740cba7d797720b94c04b596ccdd4.png)


| Pros  | Cons |
| --- | --- |
| It is significantly harder for attackers to gain access to a TSS-based crypto wallet, because there is no single point of failure – multiple parties must be compromised in order to get access to the private key. | TSS wallets might have limited compatibility with existing cryptocurrency networks and platforms. Not all blockchains support TSS-based transactions, which could restrict their usage. |
| By involving multiple parties in transaction signing, MPC-based TSS wallets distribute trust. This minimizes reliance on a single trusted entity or third-party, aligning with the decentralized nature of blockchain technology. | TSS are primarily designed for secret sharing and reconstruction, which may not be suitable for all cryptographic applications. Their usage is mainly focused on scenarios where a secret needs to be distributed among multiple parties securely. 


<div id="multi_party_comput"></div>

## What is **Multi- Party Computation ?**

Multi-Party Computation (MPC) stands as a cutting-edge cryptographic innovation, offering a secure haven for collaborative computations among multiple participants. This technique help individuals to collectively process functions over their individual private inputs, all while keeping those inputs hidden from each other. 

Instead of entrusting sensitive data to a central entity, MPC orchestrates a unique approach: it fragments the data into encrypted fragments, enabling a group of participants to carry out computations on this distributed information without compromising its confidentiality.

> MPC is a ‘**keyless solution’** since no private keys are shared across the network, only ‘separate’ key shares form the signature.
> 

##How Does MPC Work ?

Imagine a scenario where John, Alice, and Charlie want to find out who among them has the highest salary, but they don't want to reveal their actual salary amounts to each other. They decide to use MPC to solve this problem securely.

1. **Setup**: John, Alice, and Charlie agree on a secure MPC protocol and generate cryptographic keys. These keys are used to encrypt and protect their private information.
2. **Input Sharing**: Each person privately shares their salary information using a cryptographic technique called secret sharing. For example, Alice splits her salary into two parts: one encrypted share goes to John, and another encrypted share goes to Charlie. John and Charlie do the same with their salaries, sharing encrypted pieces with the other participants.
3. **Computation**: Using the encrypted shares they received, John, Charlie, and Alice can jointly perform computations without decrypting the shares. In this case, they compare the encrypted salary shares to determine the highest one.
4. **Result Extraction**: After the computation, the MPC protocol produces an output without revealing any individual's salary. For example, the output could indicate that "Alice” has the highest salary" without disclosing the actual salary values.

In this hypothetical example, MPC allows John, Alice and Charlie to collectively determine the highest salary without exposing their individual salary amounts. Each participant keeps their salary private and only contributes their encrypted share for the computation. Through MPC, they can collaborate on finding the answer while keeping their personal information confidential.

Multi-party computation (MPC) protocols must guarantee two fundamental properties: privacy and accuracy.

1. **Privacy**: A robust MPC protocol ensures that the private information held by the participating parties remains concealed and cannot be deduced from the protocol's execution. This means that even if an adversary actively observes the protocol's interactions, they should not gain any knowledge about the individual inputs or any confidential information of the parties involved. Privacy protection is crucial to preserve the integrity and confidentiality of sensitive data throughout the computation. 

2. **Accuracy**: Another critical property of an MPC protocol is accuracy. It ensures that even if a subset of parties collude or deviate from the prescribed instructions during the protocol execution, they cannot manipulate the honest parties to generate incorrect outputs or reveal their confidential information. The protocol should maintain the integrity of the computation, guaranteeing that the final result reflects the agreed-upon rules and inputs provided by the honest parties.


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## **MPC -TSS Wallets**

MPC wallets offer a solution to eliminate the vulnerability posed by a ***single point of failure*** by implementing a Threshold Signature Scheme (TSS). In this approach, the private key is divided into multiple shares, ensuring that no individual person or machine possesses complete control over the private key. This cryptographic technique is known as Distributed Key Generation (DKG).

In an MPC-based threshold signature scheme, the secret key is split into pieces and these pieces are divided among different participants. When a signature is needed, these pieces work together without actually coming together to create the signature. It's like a puzzle where each piece contributes to making the signature without revealing the whole secret key.

*The original private key never appear together.*

TSS based wallet has an additional security feature- private key rotation. Private key rotation refers to the process of periodically changing the secret shares that constitute a private key without altering the corresponding public key and blockchain address. 

This time-based dimension adds an extra layer of complexity for potential attackers, enhancing the overall security of threshold wallets by making it difficult for attackers to attack/hack.


| Pros | Cons  |
| --- | --- |
| TSS-based wallets have an additional security feature that allows private key rotation without updating the public key or blockchain address.  | The reliance on multiple parties to sign transactions in MPC-based TSS wallets means a stable network connection is crucial. Delays or network issues can slow down transaction processing compared to some other wallet types. |
| MPC-based TSS wallets simplify the user experience. Users don't have to manage their private keys directly, which can be complex and error-prone. This user-friendliness encourages broader adoption. | The technical complexity of MPC-based TSS wallets and their relatively limited availability might hinder their widespread adoption. 

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## ****Which Web3 wallets are using MPC?****

Few real life examples of Web3 wallets are listed below- 

**[Fireblocks](https://www.fireblocks.com/):**
It  provides a secure digital asset management platform for institutions. They utilize MPC technology to secure private keys across multiple parties. Their platform is designed to enable secure storage, transfer, and issuance of digital assets.

**Curv:**
It is a cloud-based institutional digital asset wallet that employs MPC technology for securing private keys. It supports a wide range of cryptocurrencies and enables secure management of assets without the need for traditional hardware wallets.

**[ZenGo:](https://zengo.com/)**
It is a mobile cryptocurrency wallet that employs MPC to enhance security and user experience. The wallet aims to simplify the process of managing and transacting cryptocurrencies, while maintaining a high level of security through its MPC-based architecture.

**[OKX](https://www.okx.com/web3)**
In April 2023, OKX enhanced its decentralized wallet with MPC technology. This wallet is non-custodial, ensuring users have full control over their assets. It supports numerous blockchain standards and is particularly beneficial for active traders who frequently exchange tokens and seek to earn yields. Additionally, the OKX wallet comes with a bridge aggregator that links to more than 200 decentralized exchanges (DEXs).

**[Spatium](https://spatium.net/)** 

It is a ‘no-fee’ MPC wallet loaded with comprehensive security features. Available as an MPC app on both iOS and Android platforms, it offers safeguarding through fingerprint ID, facial recognition, and dual-factor authentication. Users can also set up transaction limits and even add whitelisted IP wallet addresses. Thousands of cryptocurrencies are supported, including Bitcoin, Ethereum, and BNB.

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## **Conclusion**

In summary, MPC wallet development introduces a novel and forward-looking approach to enhance the security of cryptocurrency wallets. It brings about elevated security protocols, guarding against potential breaches, and minimizes the susceptibility to human errors.The implementation process of an MPC wallet involves the careful selection of trusted participants, requisite number of parties necessary for configuration, integrating threshold signatures, and opting for a crypto wallet that aligns with compatibility. MPC technology emerges as a dependable avenue for ensuring the secure custody of  digital assets.


Deep dive into different methods of securing digital assets & delegation of key responsibilities among multiple parties

MPC-TSS wallets - Next Wave of Digital Asset Security

 <div id="intro"></div>
                                                                                       
EIP-4844 is part of Ethereum's long-term roadmap's "The [Surge](https://x.com/VitalikButerin/status/1741190491578810445?s=20)" phase.

As we know, Ethereum, is the go-to platform for blockchain applications but faces a crucial challenge: scalability. The sheer volume of activity on the network, from platforms and protocols to apps and tokens, leads to slow transaction processing and high gas fees.

In the past, transaction fees on Ethereum have peaked at over $200 during busy periods, and they're currently above $20. These high fees make it difficult to use Ethereum for small transactions.

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## Sharding

To address these concerns, Ethereum's roadmap includes various upgrades. The initial plan involved sharding, a technique aimed at cutting down network congestion and lowering gas fees by dividing the vast Ethereum blockchain into smaller segments. While the switch to proof-of-stake with "The Merge" significantly reduced gas consumption, but ethereum still needs some improvements to make transactions truly fast and affordable.

## Danksharding

However, the current solution being explored is danksharding. Unlike sharding, dank sharding seeks to achieve cost improvements and faster transaction speed without the complexities associated with fragmenting the entire blockchain. So, Ethereum's geared up for its next big upgrade, called Proto-Danksharding (PDS), which is all about reducing transaction fees on layer2 rollups.

ProtoDanksharding, the name comes after the main brains behind the concept- [Protolambda and Dankrad Feist](https://www.youtube.com/watch?v=N5p0TB77flM).

***Now, you might be wondering, then, what exactly are these layer2 rollups meant for?***

Well, in the existing market scenario, L2 rollups vie for blockspace alongside all other transactions on the mainnet (layer1 ). Approx. 10-15% of blockspace is consumed by rollups, with nearly 90% of rollup transaction costs allocated to pay for Layer 1 blockspace.

In simpler terms, Layer 2 (L2) rollups handle tasks like computation and compression, and Layer 1 focuses on keeping things in agreement and making sure data is accessible.

Right now, rollups rely on something called CALLDATA, which is basically the most budget-friendly way to stash data on Layer 1. However, call data is permanently stored by nodes and requires 4 or 16 units of gas per byte—depending on whether the byte is zero or non-zero. This where, Proto-Danksharding(PDS) or EIP-4844 steps in-

<div id="protodankshard"></div>

## EIP4844: Proto-Danksharding

EIP-4844 lowers the cost of sending bundled transactions to the Ethereum mainnet. It sets the stage for the implementation of danksharding, a development that is expected to boost Ethereum's throughput to 100,000 transactions per second (TPS).

The protocol introduces a new method for managing transactions through the use of "blobs" of data. These blobs are cost-efficient solutions for L2 networks aiming to transmit large amounts of data to Ethereum's mainnet network (L1). They're already used in programming languages like JavaScript and Python. 

But what's new is the idea of using them in smart contracts?!

<div id="blob"></div>

## Blobs

Blobs, short for Binary Large Objects, are hefty chunks of binary data, each comprising over a million bits, or bits and bytes. In simpler terms, they're like big containers filled with zeros and ones.

Blobs are designed to store non-essential data for Ethereum's blockchain operations. This data is accessible to off-chain systems, such as Layer 2 scaling solutions like rollups. Blobs are placed within Ethereum's consensus layer, separate from execution layer where the EVM operates, to maintain efficiency.

Unlike Ethereum's traditional method of storing all data indefinitely on every node, which can be quite resource-intensive, blobs offer a more cost-effective solution. They come with an expiration date, lasting roughly 18 days before they're automatically purged. Plus, each blob can hold a substantial amount of data, up to 128 KB, and a single block can accommodate up to 16 blobs. This streamlined approach means Ethereum can store less data per block over the long haul.

![blob.png](https://ds-storage.sgp1.cdn.digitaloceanspaces.com/blocktheory/website/strapi/uploads/e223ac486d542c65cca58eb27b2d6a3e.png)
##### Now, there's something referred to as ***blob-carrying transactions***

Blob-carrying transactions are a fresh addition to the Ethereum network customised for handling blobs. These transactions include a validity proof, enabling the Ethereum chain to verify their authenticity without the need to read the blob itself. They employ a KZG commitment scheme via ZK(zero knowledge) proofs to ensure that while the Ethereum Virtual Machine (EVM) can view a commitment to a blob, it cannot access the blob data directly.

These transactions have their separate mempool from the EVM, which enhances data security while optimizing block space. Furthermore, they feature a new fee mechanism inspired by EIP-1559, where fees are dynamic, fluctuating based on supply and demand. Generally, including more than three blobs per transaction leads to higher fees.

<div id="eth"></div>

## Journey of Dencun Upgrade through Ethereum's layers

Ethereum network is made up of two layers: the execution layer and the consensus layer.

1. The execution layer handles smart contract logic and transaction processing, while the consensus layer ensures agreement on the state of the network.
2. Upgrades to Ethereum's layers are implemented simultaneously, and the Cancun-Deneb upgrade is a combination of two separate upgrades: Cancun (execution layer) and Deneb (consensus layer).

![dencun upgrade](https://ds-storage.sgp1.cdn.digitaloceanspaces.com/blocktheory/website/strapi/uploads/f357bdb6738515bf205f9fc1c6fcf2ce.png)

#### Upgrading Efficiency in Smart Contracts Layer

These upgrades are part of the execution layer of the Ethereum

1. EIP-1153, known as Transient Storage Opcodes, is set to enhance how Ethereum handles transaction data. By introducing transient storage opcodes, this proposal aims to boost the efficiency of smart contracts and lower gas costs. The focus is on improving the effectiveness and reducing expenses related to storage operations during the execution of smart contracts.
2. EIP-6780 aims to strike a balance between improving security and maintaining compatibility with existing Ethereum smart contracts. It achieves this by **limiting** the functionality of the **SELFDESTRUCT opcode**, a feature that can be misused and cause security vulnerabilities.
3. EIP-5656 introduces MCOPY, a more efficient memory copying instruction, enhancing EVM performance without affecting existing functionalities. Thus making it faster and cheaper for developers to build on the platform.

#### Upgrading Efficiency in Validation Management

Now we focus on the upgrades in the consensus layer of the Ethereum -

1. EIP-7044 simplifies the process for validators to exit their roles in Ethereum staking, making it easier for them to withdraw their funds. Additionally, it ensures that their exit actions remain valid even across future upgrades or forks of the Ethereum network.
2. EIP-7045 upgrade extends the window for including attestations in Ethereum blocks, allowing validators more time to attest to block correctness.
3. EIP-7514 focuses on regulating the pace at which new validators can enter Ethereum's network. By establishing a maximum churn limit of 8 per epoch, Ethereum aims to prevent its system from being inundated with excessive data. This adjustment is designed to maintain the network's operational efficiency and reliability.

EIP-7516 is a proposed update for Ethereum that introduces a new opcode called BLOBBASEFEE. This opcode allows smart contracts to access the current base fee for data blobs directly on the blockchain. This feature benefits rollup contracts by enabling them to effectively manage and predict their data blob costs, leading to improved efficiency and predictability in contract execution.

### EIP-4788 aims to reduce the external dependence

EIP-4788, known as the Beacon Block Root proposal, makes it easier for different parts of the Ethereum layers ( consensus and execution layer) to talk to each other. It does this by adding a special piece of information, called the parent beacon block root, to every block that gets processed on Ethereum. This information is then stored in a new kind of smart contract.

In simpler terms, EIP-4788 acts like a messenger that delivers important updates about Ethereum's overall status directly to the main Ethereum network. This means developers don't have to rely as much on external sources to get information about what's happening in Ethereum. This is especially useful for things like staking pools and arrangements where knowing Ethereum's current status is really important.

<div id="fee"></div>

## How Does Proto-Danksharding Reduces Gas Fees?

EIP-4844 reduces the gas fee on layer 2 through following ways-

- Increase data capacity- Blobs are large bundles of information that don't hang around forever on Ethereum. They're like temporary storage units that make room for more stuff by disappearing after they're done.

- Increase Efficiency- Layer 2 Rollups can handle lots of transactions outside of the main Ethereum network. They bundle up all these transactions into one big blob of data and then send it to the main network. This saves time and makes Ethereum work faster.

- Offload the burden on Ethereum Mainnet- Ethereum moves a big chunk of its transaction data away from its main network to blobs. These blobs hold onto the data temporarily, which helps to keep the main Ethereum network running smoothly without getting too bogged down. This shift away from on-chain storage leads to improved performance and speed for Ethereum.

<div id="benefit"></div>

## Benefits of Implementing EIP4844

- Reduced Transaction Fees: By leveraging off-chain solutions for data storage, EIP-4844 is poised to slash transaction fees substantially. This cost reduction is anticipated to democratize access to Ethereum, making it more inclusive for a broader spectrum of users.

- Enhanced User Experience: The combination of lower transaction fees and quick transaction processing time is expected to elevate the overall user experience within the Ethereum ecosystem. Users can anticipate smoother and more affordable interactions with the network, contributing to a more seamless and satisfying experience overall.

<div id="impact"></div>

## Impact of EIP-4844 post its Launch

The founder of zkSync, Alex Gluchowski, shared the gas fee reduction on Layer 2 rollups post-4844 implementation

![blob fee zksync.png](https://ds-storage.sgp1.cdn.digitaloceanspaces.com/blocktheory/website/strapi/uploads/88180dfb49d8d820109e6550cddf1b3a.png)

Jessak Pollak, founder of Base, equally shared the rise in the number of active wallet addresses on Base post 4844 with a sudden fall in gas fees.

![base tweet blob .png](https://ds-storage.sgp1.cdn.digitaloceanspaces.com/blocktheory/website/strapi/uploads/89e2f0d5dcec404e6bfbed9e805cadb4.png)

Also, based on the data available on the Dashboard by Kofi on [Gasfees.io](http://gasfees.io/) reflects the marginal drop in gas fee post the 4844 upgrade on L2 Rollups with Blobs compared to the L2s without the Blobs.

![gasfees.io.png](https://ds-storage.sgp1.cdn.digitaloceanspaces.com/blocktheory/website/strapi/uploads/265a69ed1815a23775800dab4d56aee5.png)

For an easy peasy go through explainer on EIP4844, you can just swipe in to **[WTF’s EIP 4844?](https://eip4844.wtf/)**

There’s a blob calculator on the page that helps you track gas fee on various L2’s 

![blob gas fee.](https://ds-storage.sgp1.cdn.digitaloceanspaces.com/blocktheory/website/strapi/uploads/6908c767f8095de118f02db3902015a8.png)

<div id="conc"></div>

## Conclusion

EIP-4844 is poised to decrease transaction fees, signaling a substantial transformation in Ethereum's revenue model. Despite this, the future still looks positive. Cheaper Layer 2 transactions could encourage more activity on the network, potentially resulting in more transactions. Also, reduced transaction costs might make it easier for everyday users to adopt web3 apps by making user-signed transactions less complicated. The implementation of EIP-4844 is a big step in Ethereum's development and requires careful attention from both developers and users.

### References

1. https://medium.com/@chaincom/a-complete-guide-to-ethereums-dencun-upgrade-fb35257c57f5

2. https://medium.com/coinmonks/an-introduction-to-ethereums-next-major-upgrade-proto-danksharding-3b9d73651802

3. https://medium.com/@thecryptologyacademy/unfolding-eip-4844-a-deep-dive-into-proto-dankshardings-impact-on-ethereum-s-future-80c997a271d4 https://medium.com/@devudilip/eip4844-proto-danksharding-with-simple-story-778f0b7cabe1 https://medium.com/@devudilip/eip4844-proto-danksharding-with-simple-story-778f0b7cabe1

4. https://www.coindesk.com/tech/2024/01/17/ethereums-dencun-upgrade-goes-live-but-fails-to-finalize-on-testnet/

5. https://consensys.io/blog/ethereum-dencun-upgrade-explained-part-1

6. https://www.alchemy.com/overviews/danksharding

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EIP-4844, or Proto-Danksharding, improves Ethereum's scalability and reduces transaction fees by managing data more efficiently with blobs, making transactions faster and cheaper on Layer 2 rollups.