Threshold Signature Scheme (TSS)
A cryptographic technique letting a group of parties jointly produce a single valid signature, requiring only a threshold number of them to participate, without any party holding the full private key.
A threshold signature scheme splits the ability to sign transactions across multiple parties using secure multi-party computation, so that any threshold number of them (for example, three out of five) can jointly generate a valid signature without ever reconstructing or exposing a single, complete private key at any point. Each party holds only a cryptographic share, and the signing protocol combines these shares through a computation that never requires the full key to exist in one place.
TSS achieves a similar practical goal to a multi-signature wallet (see Kaavon's "Multi-Signature Wallet" glossary definition) — requiring multiple approvals before funds move — but does so off-chain within the signature-generation process itself, producing a single, standard-looking signature rather than an on-chain contract that explicitly enforces an M-of-N approval rule. This can make TSS-secured transactions cheaper and less visibly distinguishable on-chain, though it depends on the security of the underlying multi-party computation protocol and the parties' individual key shares rather than smart contract logic.
Examples
- An institutional custodian might use a 3-of-5 threshold signature scheme across geographically distributed servers so no single compromised machine can produce a valid signature alone.
- Unlike a multisig smart contract, a TSS-generated signature looks identical on-chain to an ordinary single-key signature, since the multi-party coordination happens entirely off-chain.