Add ERC: HD wallet In Treasury Management

ERCS/erc-7908.md

@@ -0,0 +1,367 @@
+---
+eip: 7908
+title: HD wallet In Treasury Management
+description: HD wallets for treasury systems, isolating entities and departments via cryptographic key paths.
+author: Xiaoyu Liu (@elizabethxiaoyu) <[email protected]>, Yuxiang Fu (@tmac4096) <[email protected]>, Yanyi Liang <[email protected]>, Hao Zou (@BruceZH0915) <[email protected]>, Siyuan Zheng (@andrewcoder666) <[email protected]>, yuanshanhshan (@xunayuan) <[email protected]>
+discussions-to: https://ethereum-magicians.org/t/new-erc-deterministic-account-hierarchy-in-treasury-management/23073
+status: Draft
+type: Standards Track
+category: ERC
+created: 2025-03-07
+---
+
+## Abstract
+
+This proposal aims to provide a standardized method for on-chain treasury management of institutional assets, ensuring secure private key generation, hierarchical management, and departmental permission isolation while supporting asset security and transaction efficiency in multi-chain environments. By defining a unified derivation path and security mechanisms, this proposal offers an efficient and secure solution for treasury management.
+
+## Motivation
+
+With the rapid development of blockchain and DeFi, secure management of on-chain assets has become critical. Traditional private key management struggles to meet the security demands of large organizations in complex scenarios, where hierarchical key management, permission controls, and multi-signature mechanisms are essential. This proposal provides a standardized solution for institutional treasury management, ensuring asset security and transaction efficiency.
+
+## Specification
+
+### Derivation Path
+
+For secure on-chain treasury account key management, implementations **MUST** use the following hierarchical
+deterministic (HD) path:
+
+```latex
+m/44'/60'/entity_id' / department_id' / account_index
+```
+
+Path Components:
+
+1. **Master Key (**`m`**)**
+
+   - **SHALL** represent the root HD wallet private key.
+
+2. **BIP-44 Compliance Layer (`44'`)**
+
+   - **MUST** use `44'` (hardened) to indicate BIP-44 compliance.
+
+3. **Coin Type Layer ( `60'` )**
+
+   - **SHALL** use `60'` (hardened) for Ethereum and EVM-compatible chains.
+
+4. **Entity Identifier ( `entity_id'`**)
+
+   - **MUST** be derived by hashing the subsidiary name into a hardened index.
+   - **MUST NOT** reuse the same `entity_id'` across distinct subsidiaries.
+
+5. **Department Identifier (**`department_id'`**)**
+
+   - **SHALL** be derived by hashing the department name into a hardened index.
+   - **MUST** isolate keys between departments via hardened derivation.
+
+6. **Account Index (**`account_index`**)**
+
+   - **MUST** use non-hardened derivation to allow unified account management.
+
+**Note on BIP-44 Adaptation**:
+
+- The BIP-44 `change` layer **SHOULD** be omitted for Ethereum/EVMs due to their account model (not UTXO).
+
+### Hash Conversion
+
+To derive `entity_id` and `department_id`:
+
+1. **Entity Index Calculation**
+
+   - **SHALL** compute `entity_id` as:
+
+```python
+entity_hash = sha256(f"ENTITY:{entity}".encode()).digest()  
+entity_index = int.from_bytes(entity_hash[:4], "big") | 0x80000000   # 2^31 ≤ index < 2^32
+```
+
+2. **Department Index Calculation**
+
+   - **MUST** compute `department_id` as:
+
+```python
+dept_hash = sha256(f"DEPT:{entity_hash}:{department}".encode()).digest()  
+dept_index = int.from_bytes(dept_hash[:4], "big") | 0x80000000   # 2^31 ≤ index < 2^32
+```
+
+3. **Output Constraints**
+
+   - Generated indices **MUST** be integers in `[2^31, 2^32-1]` to enforce hardened derivation.
+
+### Extended Path for Role-Based Access
+
+For finer access control (e.g., roles within departments):
+
+```latex
+m/60'/entity_id' / department_id' /role_id'/ account_index
+```
+
+1. **Role Identifier (**`role_id'`**)**
+
+   - **SHOULD** use hardened derivation to isolate role-specific keys.
+
+**Compatibility Note**:
+
+- Omitting the `44'` layer **MAY** cause incompatibility with standard wallets (e.g., MetaMask).
+- Integrations with such wallets **MUST** implement custom plugins to handle this deviation.
+
+### Simplified Path for Smaller Entities
+
+For entities without subsidiaries:
+
+```latex
+m/44'/60' / department_id' /0/ account_index
+```
+
+**Compatibility Guarantee**
+
+- This structure **SHOULD** ensure compatibility with mainstream BIP-44 wallets.
+
+### Key Derivation Algorithm
+
+Implementations **MUST** adhere to:
+
+```latex
+E = Map<entity, List<Department>>
+n = Layer2 curve order
+path = m/44'/60'/entity_id' / department_id' / account_index
+BIP32() = Official BIP-0032 derivation function on secp256k1
+hash = SHA256
+root_key = BIP32(path)
+for each E:
+	key = hash(root_key|hierarchical_hash_to_index(entity,department))
+	return key
+```
+
+**Cryptographic Requirements**:
+
+- **SHALL** use BIP-0032 with `secp256k1` for HD derivation.
+- **MUST** concatenate hashes with root keys to prevent cross-layer key leakage.
+
+### **Compatibility Considerations**
+
+This specification is inspired by BIP-44 (`m/purpose'/coin_type'/account'/change/address_index`), but:
+
+- **SHALL NOT** use the `change` layer for Ethereum-based systems.
+- **MAY** extend the hierarchy beyond BIP-44’s 5-layer structure for organizational needs.
+
+## Rationale
+
+The scenarios for which the proposal applies are:
+
+1. **Company and Department Isolation**: Different subsidiaries within the group, as well as different departments within each subsidiary, can create isolated on-chain accounts. Enhanced derivation is used to isolate exposure risks.
+2. **Group Unified Management Authority**: The group administrator holds the master private key, which can derive all subsidiary private keys, granting the highest authority to view and initiate transactions across the entire group, facilitating unified management by the group administrator.
+3. **Shared Department Private Key**: If subsidiary A's administrator, Alice, needs to share accounts under subsidiary A with a new administrator, Bob, she only needs to share the master private key of subsidiary A. Accounts from various departments can then be derived from this key.
+4. **Shared Audit Public Key**: If the audit department needs to audit transactions under a specific department, the extended public key of the specified department can be shared with the audit department. Through this extended public key, all subordinate public keys under the department can be derived, allowing the audit department to track all transactions associated with these public key addresses.
+
+## Backwards Compatibility
+
+This standard complies with BIP39、BIP32、BIP44.
+
+## Reference Implementation
+
+```python
+"""
+Secure Treasury Management System
+Enterprise-grade hierarchical deterministic wallet implementation compliant with BIP-44
+"""
+
+import hashlib
+import logging
+from typing import Tuple, Dict
+from bip32utils import BIP32Key
+from eth_account import Account
+from mnemonic import Mnemonic  # Add BIP39 support
+
+# Configure logging
+logging.basicConfig(level=logging.INFO)
+logger = logging.getLogger("TreasurySystem")
+
+class TreasurySystem:
+    def __init__(self, mnemonic: str):
+        """
+        Initialize the treasury system
+        :param mnemonic: BIP-39 mnemonic (12/24 words)
+        """
+        if not Mnemonic("english").check(mnemonic):
+            raise ValueError("Invalid BIP-39 mnemonic")
+
+        # Generate seed using standard BIP-39
+        self.seed = Mnemonic.to_seed(mnemonic, passphrase="")
+        self.root_key = BIP32Key.fromEntropy(self.seed)
+
+        logger.info("Treasury system initialized. Master key fingerprint: %s", 
+                  self.root_key.Fingerprint().hex())
+
+    @staticmethod
+    def _hierarchical_hash(entity: str, department: str) -> Tuple[int, int]:
+        """
+        Hierarchical hash calculation (compliant with proposal spec)
+        Returns: (entity_index, department_index)
+        """
+        # Entity hash
+        entity_hash = hashlib.sha256(f"ENTITY:{entity}".encode()).digest()
+        entity_index = int.from_bytes(entity_hash[:4], 'big') | 0x80000000
+
+        # Department hash (chained)
+        dept_input = f"DEPT:{entity_hash.hex()}:{department}".encode()
+        dept_hash = hashlib.sha256(dept_input).digest()
+        dept_index = int.from_bytes(dept_hash[:4], 'big') | 0x80000000
+
+        return entity_index, dept_index
+
+    def _derive_key(self, path: list) -> BIP32Key:
+        """General key derivation method"""
+        current_key = self.root_key
+        for index in path:
+            if not isinstance(index, int):
+                raise TypeError(f"Invalid derivation index type: {type(index)}")
+            current_key = current_key.ChildKey(index)
+        return current_key
+
+    def generate_account(self, entity: str, department: str, 
+                        account_idx: int = 0) -> Dict[str, str]:
+        """
+        Generate department account (BIP44 5-layer structure)
+        Path: m/44'/60'/entity'/dept'/account_idx
+        """
+        e_idx, d_idx = self._hierarchical_hash(entity, department)
+
+        # BIP-44 standard path
+        derivation_path = [
+            0x8000002C,  # 44' (hardened)
+            0x8000003C,  # 60' (Ethereum)
+            e_idx,       # entity_index (hardened)
+            d_idx,       # department_index (hardened)
+            account_idx  # address index
+        ]
+
+        key = self._derive_key(derivation_path)
+        priv_key = key.PrivateKey().hex()
+
+        return {
+            'path': f"m/44'/60'/{e_idx}'/{d_idx}'/{account_idx}",
+            'private_key': priv_key,  # Warning: Never expose this in production
+            'address': Account.from_key(priv_key).address
+        }
+
+    def get_audit_xpub(self, entity: str, department: str) -> str:
+        """
+        Retrieve department-level extended public key (for auditing)
+        Path: m/44'/60'/entity'/dept'
+        """
+        e_idx, d_idx = self._hierarchical_hash(entity, department)
+        path = [
+            0x8000002C,  # 44'
+            0x8000003C,  # 60'
+            e_idx,       # entity'
+            d_idx        # dept'
+        ]
+        return self._derive_key(path).ExtendedKey()
+
+    def get_dept_xprv(self, entity: str, department: str) -> str:
+        """
+        Get department-level extended private key (strictly controlled)
+        Path: m/44'/60'/entity'/dept'
+        """
+        e_idx, d_idx = self._hierarchical_hash(entity, department)
+        path = [
+            0x8000002C,  # 44'
+            0x8000003C,  # 60'
+            e_idx,       # entity'
+            d_idx        # dept'
+        ]
+        return self._derive_key(path).ExtendedKey()
+
+
+    @staticmethod
+    def derive_addresses_from_xpub(xpub: str, count: int = 20) -> list:
+        """Derive addresses from extended public key (audit use)"""
+        audit_key = BIP32Key.fromExtendedKey(xpub)
+        return [
+            Account.from_key(
+                audit_key
+                        .ChildKey(i)   # Address index
+                        .PrivateKey()
+            ).address
+            for i in range(count)
+        ]
+
+
+if __name__ == "__main__":
+    # Example usage (remove private key printing in production)
+    try:
+        # Use standard mnemonic
+        mnemo = Mnemonic("english")
+        mnemonic = mnemo.generate(strength=256)
+        treasury = TreasurySystem(mnemonic)
+        print(f"mnemonic: {mnemonic}")
+
+        print("\n=== Finance Department Account Generation ===")
+        finance_acc1 = treasury.generate_account("GroupA", "Finance", 0)
+        finance_acc2 = treasury.generate_account("GroupA", "Finance", 1)
+        print(f"Account1 path: {finance_acc1['path']}")
+        print(f"Account1 address: {finance_acc1['address']}")
+        print(f"Account1 private key: {finance_acc1['private_key']}")
+        print(f"Account2 path: {finance_acc2['path']}")
+        print(f"Account2 address: {finance_acc2['address']}")
+        print(f"Account2 private key: {finance_acc2['private_key']}")
+
+        print("\n=== Audit Verification Test===")
+        audit_xpub = treasury.get_audit_xpub("GroupA", "Finance")
+        print(f"Audit xpub: {audit_xpub}")
+        audit_addresses = TreasurySystem.derive_addresses_from_xpub(audit_xpub, 2)
+        print(f"Audit-derived addresses: {audit_addresses}")
+
+        assert finance_acc1['address'] in audit_addresses, "Audit verification failed"
+        assert finance_acc2['address'] in audit_addresses, "Audit verification failed"
+        print("✅ Audit verification successful")
+
+        print("\n=== Department Isolation Test ===")
+        other_dept_acc = treasury.generate_account("GroupA", "Audit", 0)
+        print(f"Account3 path: {other_dept_acc['path']}")
+        print(f"Account3 address: {other_dept_acc['address']}")
+        assert other_dept_acc['address'] not in audit_addresses, "Isolation breach"
+        print("✅ Department isolation effective")
+
+
+        print("\n=== Department Private Key Sharing Test ===")
+        # Gets the department layer extension private key
+        dept_xprv = treasury.get_audit_xpub("GroupA", "Finance").replace('xpub', 'xprv')  # 实际应通过专用方法获取
+        print(f"Fiance xprv: {dept_xprv}")
+        # Derive the account private key from the extension private key
+        dept_key = BIP32Key.fromExtendedKey(dept_xprv)
+        derived_acc0_key = dept_key.ChildKey(0).PrivateKey().hex()
+        derived_acc1_key = dept_key.ChildKey(1).PrivateKey().hex()
+        print(f"Fiance derived_acc0_key: {derived_acc0_key}")
+        print(f"Fiance derived_acc1_key: {derived_acc1_key}")
+        # Verify the private key derivation capability
+        assert derived_acc0_key == finance_acc1['private_key'], \
+            "Account 0 private key derivation failed"
+        assert derived_acc1_key == finance_acc2['private_key'], \
+            "Account 1 private key derivation failed"
+        print("✅ Private key derivation from department xprv successful")
+
+    except Exception as e:
+        logger.error("System error: %s", e, exc_info=True)
+```
+
+run script:
+
+```shell
+pip install bip32utils eth_account
+
+python stms.py
+```
+
+output：
+
+![](../assets/eip-7908/img.png)
+
+## Security Considerations
+
+For treasury managers, hierarchical deterministic wallet management is more convenient, but it requires additional consideration of protective measures for the master key, such as schemes for splitting and storing mnemonic phrases or master keys.
+
+
+## Copyright
+
+Copyright and related rights waived via [CC0](../LICENSE.md).