It happens more frequently than we'd like to admit - a big wallet is compromised and drained.
Multisig and proxy. What are they? How do I set them up? How do I use them?
What is a Multisig
A multisig is a wallet that cannot make transactions on its own. It is controlled by a set of wallets, where a required number of wallet owners must agree for any transaction to take place.
Imagine you own a subnet (or run a validator) with 3 other people. Basically, there's a wallet with a lot of tao/alpha in it.
Click "With a Multisig" to see how a multisig protects the wallet.
Click "Without a Multisig" to see how easy it is to drain a regular wallet.
There are 2 specifications required; a list of wallets who can sign for the multisig, and the threshold.
Wallets: Any substrate wallet is fine. Ledger wallets work.
Thresholds: If there are 4 wallets involved in the multisig, there are 4 possible thresholds:
- 1: Useless - one compromised wallet drains the system
- 2: Good - Two team wallets have to sign. It's faster than getting three and still requires half of the team.
- 3: Most secure - Three team members must sign. Tradeoff is speed.
- 4: Dangerous - Do not do this. If any one of the four wallets is lost - the multisig is dead. Any tao/alpha on the wallet is orphaned. Always leave one slot off the signing in case a wallet is lost or compromised.
With a Pro plan, you can Create a Multisig on taostats.
Here's the video tutorial:
The new wallet that is created is based on the wallet addresses and the threshold. Using the same 4 wallets, a 2 threshold and a 3 threshold multisig will have a different address. Your multisig is the address that will hold your tokens.
If you have a multisig already created, use the same Actions tool to import it into taostats. This will make creating and signing transactions easier.
All of the trading tools you're used to won't work. Each transaction must now be wrapped in a multisig operation. It's no longer a simple staking operation - instead it's a staking action wrapped in a multisig.
In the past, creating multisig transactions was complicated and kludgy. Now you can Create a Multsig Transaction on taostats easily.
- Choose your multisig that you created or imported into taostats.
- Public or Private. A public call is shared on chain with the first signature - anyone can see what's in your transaction. Private: only a hash goes on chain while signatures are collected. Co-signers need the full call data from you to check and approve it. If the action is predictable, someone can guess it and match the hash, so use "Make unguessable". Everything becomes public when it executes.
- Call data. This is the transaction you want to perform. Here you'd paste in the hex encoded transaction.
The call data is decoded so you can review the transaction. If you are happy, click Review Transaction, and then sign with your wallet extension.
So another member of the team has created a transaction. To sign it, head to the Approve Multisig page. Assuming that you have imported the multisig wallet, all pending transactions will appear. Open the transaction, review it, and sign. Note: you will need the hex to proceed. Taostats will auto-populate this for public transactions.
Here is the end to end tutorial of creating and approving a multisig transaction.
Only the creator of a multisig transaction can cancel. To keep teams from leaving multisig operations unfinished on chain, the chain reserves a small tao deposit from the creator. So cancelling returns that to the creator's wallet.
A proxy is a wallet that can perform actions for another wallet. You can specify the type of proxy, giving a least privileged access to the wallet (this means just enough permission to do the job, but no more). A staking wallet can buy and sell alpha, but it cannot transfer tokens out of the wallet. A non-fungible proxy can be used to change subnet settings (but being non-fungible - has no permission around moving tokens). The taostats docs have a full table of all proxy types and their permission levels.
A subnet owner may share a multisig with investors. To change a small value on chain - they have to call the investors, and probably explain why. With a wallet that has been set as an owner proxy - the subnet owner can modify values that affect subnet operations. The investors can sleep at night knowing the tokens are safe.
You might be a trader. Do you really want to pull out a couple of ledgers for every buy or sell? Setting up a staking proxy wallet allows you to perform staking quickly. If the proxy wallet is compromised, only staking actions can be run - no tokens can leave the wallet.
There's a taostats Action for this too. The owner wallet must sign the transaction to authorize the proxy using the add prxy transaction. If the owner wallet is a multisig, build the add proxy transaction, choose the proxy type, and the delay (most people use 0). After clicking Review Transaction, click the "Sign as multisig" button I described earlier to create the multisig transaction. Then the regular multsig signing process to meet the threshold must be followed.
Wallets that are proxies cannot use the traditional staking tools however, taostats Actions work with proxies.
On taostats, connect to the proxy wallet. Complete the action you wish to do on the main wallet. Then click "Complete as proxy for" - taostats will populate all of the wallets that the proxy wallet can act for. Select the wallet. The page will determine if the proxy can complete the transaction. If it can, the "Review Transaction" button will become available:
You can use the BYO Action with a hex encoded transaction as a proxy.
Security of your tokens is critical.
Multisig wallets are best suited for teams collaborating and sharing access to tokens. They can also be used by individuals to secure large wallets. Proxies can simplify day-to-day use on the multisig wallet.
But these tools are not foolproof. A multisig that cannot reach its threshold is locked. Multisigs are slow. Proxies can help speed up transactions, but do not provide access to the functions of the multisig wallet. A staking proxy can still result in losses (through poorly designed trades).
It's important to look at your own risk management. What works for you, and what makes you feel comfortable, with as much security as possible. taostats actions are here to make it easier to interact with both proxies and multisig wallets.
If you have more questions - feel free to reach out on our Discord.
