A Composability Analysis Framework for Web3 Wallet Recovery Mechanisms

Modern Web3 wallets offer hybrid recovery solutions that combine multiple key recovery methods to balance security, availability, and usability. These methods include secret sharing of wallet private keys, encrypted cloud storage, and smart contract-based advanced recovery functionalities. However, such combined approaches can introduce new attack vectors that are not present in standalone recovery solutions. In this work, we propose a formal security analysis frame-work for blockchain/Web3 wallet designs with key or asset recovery functionalities. To assess whether a wallet design is secure, our framework considers several factors, including user availability and responsiveness to malicious actions, co-custodianship with external parties, the total value of assets managed by the wallet, and the reputation of the entities chosen by the user to facilitate spending or recovery functionalities. Through probabilistic model checking, our framework identifies the conditions under which a wallet design remains secure. We also include two examples of Web3 wallet designs with composite recovery mechanisms (inspired by existing designs) to demonstrate the effectiveness of our framework.