Smart contracts are at the heart of modern blockchains. They’re the small programs that store and transfer assets within their own networks. But they have a big limitation: they can’t affect assets on other blockchains or interact with the real world.
That’s where Chain Signatures come into play. This technology lets smart contracts sign messages in a distributed way, but only when a specific smart contract requests it. With this signature, a message can be processed anywhere — on another blockchain or even in your banking app. The recipient can verify that the message was created by the smart contract. So if it says “Bob deposited 1,000 USDC,” you can trust that he really did.
What Are Chain Signatures?
Chain Signatures are a cryptographic tool that allows smart contracts to have an impact beyond their native blockchain. They enable smart contracts to produce verifiable signatures on messages, opening up interactions with assets on other blockchains and even with systems in the real world.
How Do They Work?
The core idea is to set up a network of independent validators. These validators respond to requests from smart contracts, check their state, and jointly sign messages. They use a Threshold Signature Scheme (TSS), which means that no single validator can compromise the protocol — the signature is only valid when a certain number of validators agree.
Different projects enhance security in various ways. They might use Trusted Execution Environments (TEE) to securely store parts of the private key, light clients to verify blockchain states efficiently, trusted server providers, token-based voting systems, KYB (Know Your Business) processes for validators, and other methods.
By combining these approaches, smart contracts can securely sign messages, guaranteeing their authenticity and origin. Today, some of the main protocols using Chain Signatures are HOT Protocol, LIT Protocol, and NEAR’s Chain Abstractions stack.
What Opportunities Do Chain Signatures Unlock?
Chain Signatures open up new possibilities in Web3. Two of the most exciting applications are Omni tokens and MPC wallets.
Omni Tokens
Omni tokens are universal tokens issued on multiple blockchains simultaneously. Think of USDC — the issuer can mint and burn it on various blockchains, and it’s the same token backed by U.S. dollars. With USDC, a centralized company like Circle controls issuance. Chain Signatures allow this same approach for any token, but in a decentralized way.
You can launch your own wBTC, wSOL, or wDOGE across all blockchains. Cross-chain transfers would cost the same as a regular blockchain transaction. You can swap Omni tokens on the cheapest supported blockchain, saving on gas fees. Instead of a single company controlling issuance and burning, a smart contract handles it, issuing instructions signed through Chain Signatures.
MPC Wallets
Another popular use case is MPC (Multi-Party Computation) wallets. Since smart contracts can sign messages, they can also sign transactions on other blockchains. When these signed transactions are executed, they use the same amount of gas as native transactions. Users can transfer, sell, or customize these MPC wallets. HOT Wallet is actively promoting this approach; according to hotscan.org, they’ve created over 2 million MPC wallets using Chain Signatures.
About the Author
Petr Volnov is the Founder at HOT Labs and co-founder of HERE Wallet, author of HOT Protocol whitepaper. In 2024, Petr became head of innovation development at HOT Labs. His concepts were the basis for the development of HOT Omni Balance and the HOT validator architecture. Petr is also a major contributor to open source development including an improved version of cait-shit crypto libraries.
