Author: Bryan Bishop 2019-08-07 20:32:47
Published on: 2019-08-07T20:32:47+00:00
The vault scheme faces a major threat from attackers who can silently steal the hot wallet private key and wait for the owner to initiate a delayed-spend transaction. To prevent this, it is important to choose a stipend or withdrawal amount per withdrawal period like x% of the funds, limiting the total stolen funds to x%. A loss limiter would be the way to go since there is currently no way to force an attacker to reveal his key on the blockchain while also forcing the attacker to use a timelock before the key can spend the coins. The smallest least invasive soft-fork that could enable this kind of timelock is unknown. There are many covenant proposals at this point. Previous work related to this proposal includes a post by Oleg Andreev on how Segwit makes security better and a video on Bitcoin Multisig Vaults. Bryan suggests checking out these links for more information.
Updated on: 2023-06-13T20:52:04.130995+00:00