HD (Hierarchy for Deterministic) Wallets for Cardano

Abstract

Cardano extends the BIP44 by adding new chains used for different purposes. This document outlines how key derivation is done and acts as a registry for different chains used by Cardano wallets.

Motivation: why is this CIP necessary?

For Cardano, we use a new purpose field 1852' instead of 44' like in BIP44. There are three main reasons for this:

1. During the Byron-era, 44' was used. Since Byron wallets use a different algorithm for generating addresses from public keys, using a different purpose type allows software to easily know which address generation algorithm given just the derivation path (ex: given m / 44' / 1815' / 0' / 0 / 0, wallet software would know to handle this as a Byron-era wallet and not a Shelley-era wallet).
2. Using a new purpose helps bring attention to the fact Cardano is using BIP32-Ed25519 and not standard BIP32.
3. Using a new purpose allows us to extend this registry to include more Cardano-specific functionality in the future

1852 was chosen as it is the year of death of Ada Lovelace (following the fact that the coin_type value for Cardano is 1815 for her year of birth)

Specification

Using 1852' as the purpose field, we defined the following derivation path:

m / purpose' / coin_type' / account' / role / index

Example: m / 1852' / 1815' / 0' / 0 / 0

Here, role can be the following

Wallets MUST implement this new scheme using the master node derivation algorithm from Icarus with sequential addressing (see CIP3 for more information)

Rationale: how does this CIP achieve its goals?

Derivation style

Cardano does not use BIP32 but actually uses BIP32-Ed25519. The -Ed25519 suffix is often dropped in practice (ex: we say the Byron release of Cardano supports BIP44 but in reality this is BIP44-Ed25519).

The Byron implementation of Cardano uses purpose = 44' (note: this was already a slight abuse of notation because Cardano implements BIP44-Ed25519 and not standard BIP44).

There are two (incompatible) implementations of BIP32-Ed25519 in Cardano:

1. HD Random (notably used initially in Daedalus)
2. HD Sequential (notably used initially in Icarus)

The difference is explained in more detail in CIP-0003.

Future extensions

As a general pattern, new wallet schemes should use a different purpose if they intend to piggy-back on the same structure but for a different use-case (see for instance CIP-1854).

The role can however be extending with new roles so long as they have no overlapping semantic with existing roles. If they do, then they likely fall into the first category of extension and would better be done via a new purpose.

Path to Active

Acceptance Criteria

• Standardisation of this derivation path among all wallets as of the Shelley ledger era.

Implementation Plan

• Common agreement on the above Motivation, Rationale and Specification during the planning of Cardano's Shelley release.

Copyright

This CIP is licensed under CC-BY-4.0.