Proper key management is critical for DAOs to prevent unauthorized access, mitigate risks, and ensure continuity. Let’s explore best practices for storage and backup, rotation and recovery, access control and key generation.

Secure Key Generation

Best Practices

  • Consider using a hardware wallet (e.g., Ledger, Trezor) to generate and store keys.
  • Generate keys offline using trusted, air-gapped devices.
  • Use a strong, unique passphrase for added security.
  • Avoid storing private keys on internet-connected devices.

Common Pitfalls to Avoid

  • Using weak passwords or reusing old ones.
  • Copying keys into plaintext files, cloud storage, or screenshots.
  • Generating keys on untrusted or compromised devices.

Secure Storage & Backup

Best Practices

  • Store private keys in hardware wallets or cold storage solutions.
  • Use multi-location backups (e.g., split across multiple secure locations).
  • Encrypt backups and store them offline (e.g., in safety deposit boxes or fireproof safes).
  • Use Shamir’s Secret Sharing (SSS) to distribute key fragments securely.

Common Pitfalls to Avoid

  • Storing keys in password managers or centralized cloud services.
  • Keeping only a single copy of critical keys.
  • Writing down keys in unencrypted text files.

Access Control & Role-Based Permissions

Best Practices

  • Use multisig wallets to distribute signing authority.
  • Implement role-based access control (RBAC) to limit key usage.
  • Require M out of N approvals for high-risk actions.
  • Regularly audit who has access and remove inactive signers.

Common Pitfalls to Avoid

  • Granting unnecessary admin privileges to users.
  • Relying on a single point of failure (e.g., one keyholder).
  • Failing to rotate access when team members leave.

Key Rotation & Recovery Strategies

Best Practices

  • Rotate keys regularly to reduce exposure.
  • Use timelocks or gradual key transitions to prevent disruptions.
  • Implement emergency recovery plans (e.g., social recovery, backup multisigs).
  • Monitor DAO activity for unexpected key usage or transfers.

Common Pitfalls to Avoid

  • Delaying key rotation after security breaches.
  • Losing access to backups or recovery methods.
  • Failing to notify stakeholders about key updates.

Incident Response & Emergency Procedures

Best Practices

  • Set up emergency multisigs for immediate response to compromises.
  • Define clear incident response protocols (who does what in an attack).
  • Use audit logs and on-chain monitoring to detect anomalies.
  • Have a failsafe mechanism for revoking compromised keys.

Common Pitfalls to Avoid

  • No pre-planned recovery strategy in case of key loss or compromise.
  • Ignoring security alerts or unusual transactions.
  • Overcomplicating recovery methods, making them hard to execute.

Final Thoughts

  • Use hardware wallets & cold storage to protect keys.
  • Implement multisig & RBAC for access control.
  • Maintain secure backups & recovery plans.
  • Rotate keys proactively and respond swiftly to threats.