A compromised key can jeopardize DAO funds, governance, and operations. Let’s explore strategies to prevent, detect, and recover from key-related security incidents.

Preventing Key Compromise

Best Practices

  • Use hardware wallets for signing transactions.
  • Store private keys in cold storage for critical operations.
  • Require multisig approvals for high-risk actions.
  • Implement role-based access control (RBAC) to limit key usage.
  • Regularly update firmware and security patches for wallet devices.

Common Pitfalls to Avoid

  • Using a single signer for critical operations.
  • Storing keys on hot wallets or online storage.
  • Using the same private key for multiple roles.

Detecting Key Compromise Early

Best Practices

  • Enable real-time monitoring for unusual activity.
  • Set up alerts for large or unexpected transactions.
  • Use circuit breakers (e.g., transaction delays or withdrawal caps).
  • Conduct regular security audits of key management practices.

Common Pitfalls to Avoid

  • Ignoring small unauthorized transactions (potential test attacks).
  • Lack of on-chain analytics or monitoring tools.
  • Failing to review access logs and activity patterns.

Recovery Strategies for Key Compromise

Best Practices

  • Implement emergency multisigs to override compromised keys.
  • Use time-locked transactions to allow rollback in case of an attack.
  • Have backup keys stored securely and separate from primary keys.
  • Utilize social recovery mechanisms for key restoration.

Common Pitfalls to Avoid

  • No contingency plan for lost or stolen keys.
  • Relying on a single recovery method (e.g., one backup keyholder).
  • Slow response time after detecting a compromise.

Minimizing the Impact of a Compromised Key

Best Practices

  • Implement tiered access levels (limit high-privilege key usage).
  • Use ephemeral keys that expire after a set period.
  • Set up modular governance to isolate risks (e.g., subDAOs with independent control).
  • Enable automated kill switches to revoke compromised permissions.

Common Pitfalls to Avoid

  • Granting all permissions to a single key or entity.
  • Failing to revoke access quickly after a compromise.
  • Using a rigid governance system that lacks emergency response flexibility.

Final Thoughts

  • Prevent key compromise with secure storage and access control.
  • Detect issues early with monitoring and alerts.
  • Recover quickly with backup multisigs and emergency procedures.
  • Minimize impact using tiered access and kill switches.