The Correct Way to Manage MPC Wallets: Lessons Learned from the Multichain Incident

Recently, the Multichain project has encountered a major crisis, with its CEO taken away by the police and losing contact with the team, resulting in the revocation of access keys for MPC node servers. This incident reveals that even with the use of MPC technology, if not managed properly, serious risks may still arise.

This article will explore the MPC wallet management issues exposed by the Multichain incident and propose some improvement suggestions:

1. The Fundamental Cause of the Multichain Incident

Although Multichain uses MPC technology to manage assets, its actual operation is no different from that of a single signature Wallet. All node servers operate under the personal account of the CEO, and this highly centralized management approach completely contradicts the principles of decentralization.

Merely adopting decentralized technology is not enough to ensure the decentralization of the system. Both the application of technology and the management methods need to follow the principles of decentralization; both are essential.

2. Key Points for Effectively Leveraging MPC Technology Advantages

1. Enhance transparency and prevent conflicts of interest.

As both service providers and users, Multichain can easily create a "black box" effect. Introducing a neutral third-party MPC service provider can enhance transparency, allowing external verification of the reliability of the custody solution.

2. Strictly adhere to the principles of decentralized custody.

It is essential to ensure the distribution of servers, access permissions, and geographical locations. Measures such as multi-signature schemes, multi-level private key derivation designs, as well as geographically distributed active storage and multi-level backups should be adopted to minimize single point risks.

3. Develop contingency plans for extreme situations

Consider setting up "SOS mode" to activate the backup private key shards for emergency transfer or disposal of assets in special circumstances. At the same time, set appropriate restrictions to prevent abuse.

3. Conclusion

The Multichain incident has rung the alarm bells for us. While adopting advanced technologies, it is also necessary to establish corresponding management mechanisms and risk prevention measures. Only by advancing both technology and management can we truly leverage the advantages of decentralized technologies such as MPC to provide users with safer and more reliable asset management services.