Glossary · M
Multisig
A smart contract wallet that requires multiple private keys to sign transactions before they execute — for example, 3-of-5 multisig requires 3 out of 5 keyholders to approve. Multisigs are used by DeFi protocols, DAOs, and high-value wallets to prevent any single point of compromise. Safe (formerly Gnosis Safe) is the dominant multisig wallet on Ethereum, used by most major DeFi protocols for treasury management.
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How Multisig works in practice
A multisig wallet requires several private keys to authorise a transaction, so no single person can move funds alone. Most DeFi protocols hold their treasury and admin keys in one, and its configuration is a direct measure of how decentralised the protocol actually is.
Worked example
A 5-of-9 multisig needs five of nine designated signers to approve. One compromised key achieves nothing; five would be needed, ideally held by independent parties on separate hardware.
Figures are illustrative and chosen to be checkable, not live market data.
The mistake that costs people money
A multisig is only as good as its signer independence. A 5-of-9 where all nine signers are employees of one company is functionally a single point of failure with extra steps. Look for who the signers are, not just the threshold.
Multisig: common questions
- What is Multisig?
- A smart contract wallet that requires multiple private keys to sign transactions before they execute — for example, 3-of-5 multisig requires 3 out of 5 keyholders to approve. Multisigs are used by DeFi protocols, DAOs, and high-value wallets to prevent any single point of compromise. Safe (formerly Gnosis Safe) is the dominant multisig wallet on Ethereum, used by most major DeFi protocols for treasury management.
- How does Multisig work in practice?
- A multisig wallet requires several private keys to authorise a transaction, so no single person can move funds alone. Most DeFi protocols hold their treasury and admin keys in one, and its configuration is a direct measure of how decentralised the protocol actually is.
- Can you give an example of Multisig?
- A 5-of-9 multisig needs five of nine designated signers to approve. One compromised key achieves nothing; five would be needed, ideally held by independent parties on separate hardware.
- What do people get wrong about Multisig?
- A multisig is only as good as its signer independence. A 5-of-9 where all nine signers are employees of one company is functionally a single point of failure with extra steps. Look for who the signers are, not just the threshold.