Abstract
The rise of cryptocurrencies and decentralized fi- nance (DeFi) has highlighted the importance of secure and collaborative management systems for digital assets. Multi-party crypto vaults provide a way to ensure distributed control, privacy, and fault tolerance by involving multiple participants in the management and approval of transactions. This paper explores the two primary approaches—Multi-Signature (Multi-Sig) and Multi-Party Computation (MPC)—that underpin these vaults. Multi-Sig schemes offer fast, scalable solutions for real-time applications, while MPC ensures strong privacy and security by allowing encrypted computations without exposing private keys. In addition key management models, such as split-key and blockchain-based methods, and fault tolerance mechanisms, including social recovery and time-locked protocols, which ensure that vault systems remain secure and operational even in cases of participant failure. This paper recommends MPC as the optimal approach for high-security, privacy-sensitive applications, such as institutional custody and financial systems, while outlining av- enues for future research, including post-quantum cryptography and latency reduction in MPC protocols. Index Terms—Multi-Party Computation (MPC), Multi- Signature (Multi-Sig), Crypto Vaults, Threshold Cryptography, Blockchain Key Management, Decentralized Finance (DeFi),, Threshold ECDSA, Social Recovery Mechanism, Time-Locked Withdrawal Protocol, Fault Tolerance in Cryptography, Split- Key Management, Smart Contracts, Privacy-Preserving Cryp- tography, Institutional Crypto Custody
Published Version
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