A single multisignature cryptocurrency wallet, authorized by 12 different blockchain networks, poses a significant risk. If this wallet is ever compromised, it could lead to the draining of funds from all 12 networks, potentially resulting in losses amounting to $121 million.

These networks, including Zora, Aevo, Hypr, Orderly, Ancient8, Lyra, Mode, Pgn, Parallel, and Metal, were established using the Conduit rollup creation software, as revealed by L2Beat researcher Luca Donno on May 19. Despite the shared wallet permissions, Conduit founder Andrew Huang clarified that transactions require three out of five signatures from the team. The private keys for these signatures are safeguarded in hardware wallets, making a compromise feasible only through the physical compromise of 3 out of 5 individuals.

To enhance security, Huang announced plans to transition to a five out of seven multisignature system in the upcoming weeks, aiming to mitigate centralization risks. He also mentioned that further decentralization will occur as layer 2 networks progress to the next stage of decentralization.

The data indicates that various Conduit-based networks utilize the same wallet for functions like network bridge upgrades. For instance, Aevo, with over $72 million in total value locked (TVL), grants its account unlimited upgrade power, potentially allowing access to all funds. Similarly, Lyra, with over $20 million TVL, shares the same wallet, known as "ConduitMultisig," with access to all funds.

Similar permissions are observed across other Conduit networks like Zora, Hypr, Orderly, Ancient8, Mode, Pgn, Parallel, and Metal, collectively holding approximately $121 million in TVL linked to a single multisignature wallet.

While layer 2 networks have significantly reduced gas fees for Ethereum users, concerns about centralization and user experience persist among critics. Developers of layer 2 networks, however, assert that these blockchains will evolve towards greater decentralization in alignment with Ethereum founder Vitalik Buterin's decentralization roadmap outlined in November 2022.