Master's Thesis Lucas Kissling

Design and Evaluation of Secure Multi-Party Computation Approaches for Non-Custodial Crypto Wallets with a Focus on User Experience and Security

Abstract

The growing adoption of digital assets has led to an increased development of non-custodial crypto wallets, which grant users full control over their private keys and assets. This control on the other side comes with notable security challenges, particularly given a widespread lack of understanding of the fundamental cryptographic mechanisms and frequent security lapses. As a consequence, many users are either reluctant to engage with digital assets or turn to centralized exchanges with their associated risks. In this research we evaluate the capabilities of Multi-Party Computation (MPC) in improving the security and user experience of non-custodial crypto wallets. By dividing private keys into multiple shares held by distinct parties, MPC can eliminate this single point of failure besides enabling further novel features, striving to enhance the security and usability of non-custodial wallets. Employing a design science research approach in this study, we iteratively develop threshold signature and MPC based wallet recovery architectures. These are subjected to fault and attack tree analyses, supplemented with expert interviews. Based on these MPC signature and recovery architectures, we iteratively design a wallet prototype and assess the individual prototype artifacts using semi-structured user interviews to gauge user interaction and feedback. This research provides insights on achieving an optimal interplay between user experience and security in MPC-integrated crypto wallets for retail users, thereby offering guidance for developers and potentially fostering wider acceptance and use of digital assets.

Research Questions

RQ01: How can inherent security and usability challenges in crypto wallets be technologically addressed and what design requirements, principles and features emerge for enhancing wallet solutions?

a) What challenges in digital asset management and transaction security are addressed by Multi-Party Computation (MPC) and Account Abstraction technologies?

b) How can we leverage MPC techniques to implement new features in crypto wallets, such as recoverability, transaction limits or inheritance of assets, while maintaining security and useability?

RQ02: How can the application of Multi-Party Computation (MPC) in non-custodial mobile cryptocurrency wallets improve their security and user experience, thus enabling mass adoption of digital assets?

a) How do different recovery mechanisms and their associated threshold signature schemes (2-2 and 2-3) affect the security and user experience?

b) How is the security and user experience perceived compared to other non-custodial and custodial solutions?

External Advisor: Filip Rezabek (TUM I8)