Day 3 of NovemBlog
Today I thought I'd try a little article review and rebuttal.
Multisignature crypto wallets are the safest bet for DAOs - cointelegraph
For those that don't want to click through let's summarize the points first.
It's true, even here on Hive. We have some projects that need very little funds management, like PeakD for example. If they lost their keys they'd have to dig deeper for server bills... but they would be able to recover their services by pointing to new funding accounts and asking all of us to change our DHF votes.
Toward the middle of the spectrum we have community vote bots. Hive has some tremendous advantages toward this area. With delegation and content voting this can be done almost with out risk, worst case you lose about 5 days of votes.
At the opposite end we have layer 2 token architectures like Hive-Engine and HoneyComb. These use different approaches to collect and send funds. In most senses these are both DAOs, and HoneyComb builds a multi-signature wallet around it's DEX account on Hive.
Gerald Cotten — who was the sole possessor of the cryptographic keys to the QuadrigaCX exchange wallet — died and left funds worth $198,435,000 in an unrecoverable state. Tornado Cash Multi-Signature Key holders coordinated to return unspent ETH.
This particularly sad incident isn't anywhere near as common as a rugpull.
Whatever the opposite of a rugpull is happened when Tornado cash developers relinquished multi-signature control of a community funding account to the DAO itself. Basically stopping a petty cash account after sanctions from the US government.
Finally I want to bring this back to Hive and my HoneyComb Software. HoneyComb autonomously builds and signs multi-signature accounts and transactions. This is required on Hive as we lack a virtual machine / smart contract layer. It is at it's heart a Proof of Stake system with some price controls that that keep the Wallet small enough (through refunds of open orders) that hope to prevent a profitable situation arises that would benefit a theft. If coordination occurs, the community should be able to completely refund the multi-sig wallet by buying the Stake from the collaborators and places those funds in a new wallet.
HoneyComb is autonomous which makes proper coordination as easy as running the software. There still isn't Multi-Signing tools that are user friendly here. Passing transactions around with signatures is a very technical process, and it all has to be done in under an hour.
We do run into some hard coded limits here. For example with a cap of 40 signatories in an account the Proof-of-Stake method will only allow as much capital as 40 people are willing to put forth. "sharding" into smaller accounts would allow several more people to pool their resources and provide more possible liquidity safely.
SPK network will likely benefit from this arrangement with 2 wallets, one for the LARYNX pair and one for the SPK pair.
Hive needs a layer 2 to build nearly any financial service more complex than a vote-bot. We're getting them and they are secure, manageable, and fast.
