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Who is the future of Web3: OKX's successive layout of MPC and AA wallets?

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An article explaining the differences between MPC and AA wallets for novice users.

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Source: OKX

Just like the transition from button phones to touch screen phones, the first generation EOA wallet is evolving towards more user-friendly second generation wallets - the MPC wallet and the AA wallet.

Web3 technology company OKX, based on the technology of the first-generation EOA wallet, has successively laid out MPC non-private key wallets and AA smart contract wallets to meet the different needs and large-scale growth of Web3 users.

As a "star player" in the Web3 wallet industry, MPC Wallet and AA Wallet are often compared, including Ethereum founder Vitalik Buterin (V God) who participated in the discussion. Vitalik believes that EOA wallets based on MPC have fundamental flaws because they cannot revoke keys, and smart contract wallets are the only choice for the future of Web3.

Vitalik's remarks once pushed the dispute between MPC and AA wallets to a climax, triggering many industry OGs to join the discussion, and even sparking a "MPC for Justice" movement in the Chinese community. So, who is the future of Web3, MPC or AA wallets?

MPC Wallet will go all the way without private keys or mnemonic phrases

The default verification method for Ethereum is that users must sign transactions with their private keys to ensure the authenticity and legality of the transactions. Therefore, the first-generation EOA wallet cannot bypass the issue of private keys.

The birth of MPC wallet cleverly solves the problem of private keys.

In layman's terms, the MPC wallet uses MPC technology to divide a private key into multiple pieces and distribute them to multiple parties. When signing, the multiple pieces are combined into a complete private key. This process not only protects the privacy of each party, but also ensures that no party can control the complete private key. If a single piece is lost, the MPC wallet can still ensure the security of assets in the wallet and update the pieces without changing the private key, completing the recovery. With the MPC wallet, users can use Web3 wallets without the need to keep the private key.

Unlike multi-signature wallets, although MPC also implements multi-signature functionality, the approaches to implementation are different. MPC is an off-chain solution, while multi-signature wallets are built on smart contracts, which are more resource-efficient.

The MPC wallet does not have an industry standard, and its threshold signature scheme and storage scheme are not unified. This means that it is possible to divide a private key into 2 or 3 pieces, and it is flexible to require all 3 pieces or at least 2 pieces to participate in the signature.

OKX MPC is a typical MPC wallet without private key. It generates 3 private key fragments from 1 complete private key and stores them separately. OKX server generates private key fragment 1, user device generates private key fragment 2 and private key fragment 3. Private key fragment 2 is encrypted and stored on the user device, and private key fragment 3 is encrypted and backed up to iCloud or Google Drive. When signing, 2 of the private key fragments can be used to complete the signature, such as private key fragment 1 + private key fragment 2, and private key fragment 3 is used for backup. During this process, a complete private key will not be generated.

By encrypting the private key fragments 3 and backing them up to the cloud, even if the user loses or has their private key fragments stolen due to a lost phone, the OKX MPC non-private key wallet can not only help the user recover access to the wallet securely and conveniently anytime and anywhere, but also replace each original private key fragment with a new one by executing the refresh function of the private key fragment. At this point, the lost or stolen fragment is equivalent to being "lost", greatly reducing the cost of private key recovery.

In addition, OKX MPC non-private key wallet also pioneered the emergency export function. If users encounter emergency situations, they can export the private key and withdraw assets through the two private key fragments they fully control, ensuring the maximum security of user assets.

The MPC wallet eliminates single point of failure, allowing users to use Web3 wallets safely and conveniently without having to keep their private keys, and enjoy a smoother experience, thus helping Web2 users enter the Web3 world with lower barriers to entry. However, it should be noted that the sharding storage scheme of the MPC wallet depends on the hosting party not doing evil.