FROST can be used with the Zcash cryptocurrency, allowing the creation of a wallet shared between multiple participants where multiple participants must authorize a transaction before it can go through.
In a regular Zcash wallet, the spending key (commonly derived from a seed phrase) allows freely spending from the wallet. If the key is lost or gets hacked, then the wallet owner will lose access to their funds forever.
With FROST, only shares of the related spend authorization key will exist, between multiple participants. During wallet creation, a threshold is set, and only that number of participants (or more) can jointly create a transaction that spends funds from the wallet.
Some possible applications are:
- Creating a wallet that is shared between members of a organization that manages certain funds. For example, a 3-of-5 wallet can be created which will require 3 members to authorize spending the funds.
- Shared custody services can be created so that users can have their own wallet and can spend their funds with the help of the service, and will not lose access to the funds in case they lose the device with their key share. For example, a 2-of-3 wallet where the user keeps one share, the service keeps another, and the third share is backed up in the user's cloud.
FROST thus helps addressing one of the biggest challenges in cryptocurrencies, which is the protecting the wallet key from either being accidentally lost or being hacked. Before, users needed to choose to either manage their own funds will puts a huge amount of responsibility on them and is well known to work greatly in practice, or to leave their funds to be managed by some custody service which is also known to be a risk. With FROST, users can share the responsibility between multiple entities or persons (or even multiple devices they own).
This section describes in more details how FROST can be used with Zcash.