How Liminal Custody Combines MPC and Multi-Signature Technology for Enhanced Wallet Security

1. www.liminalcustody.com HOW LIMINAL CUSTODY COMBINES MPC AND MULTI-SIGNATURE TECHNOLOGY FOR ENHANCED WALLET SECURITY

2. In today’s digital asset landscape, wallet security is the backbone of trust. • As institutions scale their crypto operations across multiple blockchains, they face increasing pressure to protect funds from both external and internal risks. • At Liminal Custody, we recognize that no single cryptographic model fits every organization. • wallet infrastructure seamlessly integrates Multi-Party Computation (MPC) and Multi-Signature (Multi-Sig) technologies — combining their strengths to deliver unparalleled resilience, privacy, and operational flexibility. • This hybrid approach ensures that institutions can safeguard assets without compromising on performance, compliance, or user experience.

3. THE CHALLENGE: BALANCING SECURITY AND ACCESSIBILITY • Traditional wallet systems face a trade-off between strong cryptographic protection and operational agility: • Centralized wallets risk single points of failure. • Basic multisig setups can be transparent but lack privacy and flexibility. • Standalone MPC systems offer advanced cryptography but are complex to manage. • Liminal’s hybrid model bridges this gap, offering multi-layered security that evolves with institutional needs — from daily trading flows to long-term custody.

4. UNDERSTANDING THE CORE TECHNOLOGIES • 1. Multi-Signature (Multi-Sig) Wallets • Multi-Sig wallets require multiple private keys to authorize a transaction (for example, 2-of-3 or 3-of-5 approvals). Each signer holds a unique key, and all or a threshold number of them must sign before the transaction executes. • Advantages: • Transparent authorization — clear accountability on who signed. • Simpler key distribution and revocation. • Ideal for regulated environments that demand visibility. • However, on-chain visibility of signers and static configurations can limit flexibility.

5. UNDERSTANDING THE CORE TECHNOLOGIES • 2. Multi-Party Computation (MPC) Wallets • MPC wallets split a private key into cryptographic “shares” across multiple parties. • When signing, the parties collaboratively compute a single valid signature — without ever reconstructing the full key. • Advantages: • Enhanced key privacy — no full key exposure, even during signing. • Chain-agnostic — produces a single signature compatible with any chain. • Dynamic threshold and participant management. • This makes MPC ideal for high-frequency operations and multi-chain institutional workflows.

6. LIMINAL’S HYBRID MODEL: THE BEST OF BOTH WORLDS Liminal combines both models into one configurable security framework: Layer: Hot Wallet Layer Technology: MPC Purpose: Enables fast, automated, and private transaction execution. Layer: Cold Wallet Layer Technology: Multi-Sig Purpose: Adds transparent governance, approval workflows, and auditable controls. Layer: Automation & Policy Layer Technology: Liminal Firewall + APIs Purpose: Bridges both cryptographic layers for unified management. This hybrid structure provides flexibility, scalability, and auditability — critical for exchanges, custodians, fintech platforms, and funds operating at scale.

7. SECURITY ARCHITECTURE IN ACTION • 1. Key Sharding & Distribution • Using MPC, private keys are never generated or stored in a single location. • Each share resides in isolated hardware or cloud modules, reducing the attack surface exponentially. • 2. Policy Enforcement through Firewall • Every transaction passes through Liminal’s Firewall, which verifies: • Signer authorization • Transaction context and destination • Spending limits and timing windows • This ensures that every operation adheres to institutional policy before it’s broadcast.

8. SECURITY ARCHITECTURE IN ACTION • 3. Transparent Approval via Multi-Sig • On top of MPC, Multi-Sig governance provides human-readable control: board approvals, compliance sign-offs, and multi-department validation — all without disrupting MPC’s cryptographic flow. • 4. Compliance-Ready Infrastructure • Liminal’s hybrid wallets meet global security benchmarks: • CCSS Level-3 QSP Certified • ISO 27001 / 27701 Information Security & Privacy • SOC II Type II Verified for institutional data controls

9. WHY HYBRID WALLET SECURITY MATTERS Institutions using hybrid MPC + Multi-Sig enjoy several key advantages: ✅ Reduced risk — No single entity can compromise or reconstruct private keys. ✅ Operational flexibility — Dynamic threshold control for hot and cold wallets. ✅ Audit-ready transparency — All approvals are logged for compliance. ✅ Cross-chain compatibility — Works seamlessly across EVM, Bitcoin, and custom protocols. ✅ Policy integration — Built-in transaction screening and firewall automation. This architecture future-proofs institutional custody, balancing both security and usability.

10. INTEGRATING WITH LIMINAL’S WALLET INFRASTRUCTURE • Our hybrid cryptographic approach is deeply embedded inLiminal Wallet Infrastructure — a complete wallet management platform offering: • API-first design through Liminal Express APIs • Automation workflows for sweeping, refilling, and monitoring wallets • Real-time alerts and reporting dashboards • Support for HSM devices and hybrid cold storage • With these capabilities, institutions can run MPC and Multi-Sig wallets side by side, governed by a unified compliance framework.

11. FINAL THOUGHTS • Security in Web3 is not about choosing one technology over another — it’s about combining the best of cryptography and control. • At Liminal Custody, we’ve designed our wallet systems to do exactly that: merging MPC’s mathematical robustness with Multi-Sig’s governance clarity. • Whether you’re scaling exchange operations, managing fund custody, or building a compliant fintech product, our hybrid wallet framework gives you peace of mind without compromise.