Common Mistakes

Introduction

Most treasury losses are not caused by smart contract failures.

They are caused by avoidable human mistakes.

This page highlights common errors that teams make when managing vaults and explains how to avoid them.

Using A Threshold That Is Too Low

A common mistake is creating large treasuries with minimal approval requirements.

Examples:

1-of-2
1-of-3
1-of-5

In these configurations, a single compromised signer may be able to move treasury funds.

As treasury value increases, approval requirements should increase accordingly.

Using A Threshold That Is Too High

The opposite problem also exists.

Examples:

5-of-5
7-of-7

These configurations can make normal operations difficult.

If one signer becomes unavailable, the vault may become temporarily unusable.

Security and usability must remain balanced.

Giving Every Member Equal Authority

Not every participant needs treasury authority.

Consider separating:

Treasury managers
Contributors
Advisors
Observers

Only members who require signing authority should be granted signer access.

Approving Without Reviewing

Proposal fatigue is dangerous.

Members sometimes approve proposals simply because they recognize the creator.

Always review:

Destination address
Transfer amount
Configuration changes
Proposal details

Every approval should be intentional.

Leaving Former Members In The Vault

Inactive members create unnecessary risk.

Common examples include:

Former employees
Departed contributors
Previous advisors
Contractors

Review membership periodically and remove access that is no longer needed.

Storing All Signer Wallets Together

A multisig loses much of its security if all signer wallets are controlled by one person or stored on the same device.

Signer distribution is a key security principle.

Avoid concentrating authority in a single location.

Ignoring Proposal Rejections

Rejected proposals provide useful information.

Frequent rejections may indicate:

Misaligned expectations
Poor governance processes
Communication problems
Insufficient proposal review

Rejections should be understood, not ignored.

Using Public Channels For Sensitive Discussions

Treasury strategy discussions often reveal valuable information.

Examples include:

Upcoming payments
Vendor negotiations
Treasury restructuring
Governance disputes

Sensitive discussions should not automatically occur in public communication channels.

Treating Privacy As Anonymity

Privacy and anonymity are not the same thing.

Privacy Pump reduces unnecessary information exposure.

It does not guarantee complete anonymity.

Users should understand the limitations of any privacy system.

Ignoring Operational Security

The strongest vault configuration cannot protect against poor operational practices.

Examples:

Weak device security
Shared seed phrases
Unsafe backups
Unverified transactions

Operational security remains critical.

Failing To Plan For Emergencies

Unexpected events happen.

Teams should consider:

Lost devices
Signer unavailability
Key rotation procedures
Membership changes

Planning ahead reduces risk during emergencies.

Assuming More Complexity Equals More Security

Adding additional signers, privacy layers, or governance rules does not automatically improve security.

Complex systems can introduce:

Operational friction
Human error
Delayed responses
Governance bottlenecks

The best security model is usually the simplest model that satisfies the vault’s requirements.

Key Takeaway

Most security failures are predictable.

They occur when teams ignore basic governance, signer management, and operational discipline.

Avoiding common mistakes is often more important than adding additional security mechanisms.