Key Custody Environment

Evaluates how the keys controlling privileged roles are stored and whether a single point of failure exists. The cryptographic and operational protection around private keys is the primary input.

Tier	Reasoning	Evidence
Software or undisclosed custody	Software-resident keys are extractable by malware or server breach; the cryptographic protocol provides no defense against extraction.	Eleven documented key custody failures total approximately $1.44B in losses. Ronin (Mar 2022, $625M, plaintext keys on operator servers), Harmony (Jun 2022, $100M, plaintext keys), and StakeDAO (May 2026, vsdCRV reconfigured via compromised deployer key) anchor this tier.
Hardware-protected custody	Hardware-protected keys are held in tamper-resistant chips that do not release them in plaintext, but a complete key still exists somewhere and remains a single point of failure if the device or its operator is compromised.	Resolv (March 2026) confirmed that hardware-protected keys produce the same loss profile as plaintext EOAs when on-chain controls are absent — the device protects the key, not the authority it holds.
True MPC with verified operator diversity	True MPC removes the single point of failure entirely by distributing shares across independent operators across organizations and jurisdictions, with operator diversity verified externally.	Multichain (Jul 2023, $126M) shows the failure mode of nominal MPC: its centrally-administered MPC was effectively a single point of control, underscoring why external verification of operator diversity is required for the top tier.