My paper, "Optimal Thresholds in Bitcoin," co-authored with @btcsindura has been accepted at this year's IEEE International Conference on Blockchain Computing and Applications. Sindura presented it at Bitcoin MENA and the Bitcoin Conference in Las Vegas this year.
Threshold signatures are a fantastic way to secure Bitcoin and a native security feature. An open question is how to choose the threshold, such as when to use a one-of-three versus a two-of-three setup. Most practices rely on rules of thumb, but we build a microeconomic model for this decision. We show that decaying multisig, where the threshold degrades over time, is an optimal structure and can be uniquely implemented in Taproot.
Threshold signatures are a fantastic way to secure Bitcoin and a native security feature. An open question is how to choose the threshold, such as when to use a one-of-three versus a two-of-three setup. Most practices rely on rules of thumb, but we build a microeconomic model for this decision. We show that decaying multisig, where the threshold degrades over time, is an optimal structure and can be uniquely implemented in Taproot.
