Do I need multisig for my wallet?

Modified on Tue, 30 Apr 2024 at 11:35 AM

If you are not sure if you should use LOBSTR Vault app and enable multisig for your Stellar wallet, this guide may help with your decision.

 

Depending on your cases of day-to-day usage, you may want to enable multisig for your main Stellar wallet in the following scenarios:

  • Additional security and hack prevention

If you are concerned that your private key may be compromised or stolen, enabling multisig will prevent the problems caused by the loss or theft of a private key.

   

Your funds will be safe even if one of the keys is compromised.

   

All transactions will require two or more signatures - hackers will not be able to authorize transactions unless they have access to both your main and signer accounts.

  • Storing significant funds

As for your other valuables, if you are storing a significant amount of Stellar lumens or other assets in your Stellar wallet, you may want to double up on the security of your account by enabling multisig.

  • Joint account

Multisig can be used if you want to share a Stellar wallet with another person.

   

You can set up a multisig solution on that account where you both will need to sign a transaction for it to occur on the Stellar Network.

   

Anyone will be able to deposit funds into the account, but making transactions will require signatures from the main account and both signing parties.

  • Business decisions

You may use a multisig solution to control access to a company’s funds stored in the Stellar wallet.

   

For example, you may set up a solution where each board member holds the signing key (or a Signer Card) and a transaction may only occur if all or part of the board members agree on the decision.

   

Using a multisig solution, you can make sure that the funds are not misused.

 

However, there are certain cases when using multisig may not be ideal for you:

  • You can lock yourself out of your Stellar wallet

Using multisig technology can be dangerous if you are not careful and do not store your multiple copies of Recovery Phrase in secure locations.

   

A loss of your Recovery Phrase will also result in you losing control of your main account, as you will not be able to sign outgoing transactions due to the lack of required signatures.

  • Storing an insignificant amount of funds

If you have an insignificant amount of funds stored in your account, you may want to avoid enabling multisig for your account at first for the sake of simplicity of use.

   

Not all services fully support multisig accounts as of right now and the multisig concept may be challenging for beginners.

   

If required, you can enable multisig for your wallet on LOBSTR or StellarTerm at a later date.

  • High account activity

If you engage in active asset trading on the Stellar Network or perform a lot of transactions daily, it may not be very practical to have multisig enabled on your account.  

   

In this case, you may want to create a separate multisig account to store the majority of your funds.

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